PROCEDURES FOR INVESTMENT UNDER THE FORM OF CAPITAL CONTRIBUTION OR PURCHASE OF SHARES OR STAKES

PROCEDURES FOR INVESTMENT UNDER THE FORM OF CAPITAL CONTRIBUTION OR PURCHASE OF SHARES OR STAKES

In recent years, thanks to comprehensive-integration mechanism, Vietnam has attracted various investors to invest in Vietnam under many forms and each form has its own advantages. Investment under the form of capital contribution or purchase of shares or stakes can be performed in a simple procedure and assist investos to access business lines easier.

In order to assist enterprises in above issues, the following article shall provide an in-depth and comprehensive understanding of legal regulations and procedures for investment under the form of capital contribution or purchase of shares or stakes

I. Legal basis

- Law on investment 2014

- Decree 118/2015/ND-CP elaborating some articles of the law on investment

II. Scope of consultation

1. Conditions for investors to invest under the form of capital contribution or purchase of shares or stakes

Investors that wish to penetrate in Vietnamese market in contributing capital, purchasing shares must follow regulations in Law on investment 2014

- Have investment projects and be granted Certificate of investment registration: this is a requirement to identify investing subjects of investors and be approved by competent agencies.

- Establish business organizations: in order for investors to invest, they must establish business organizations.

- Unlimited proportion of possessed capital, except for the cases in Clause 3 Article 22 of Law on investment 2014

- The investor contributes capital, buys shares or capital contributions of business organizations engaged in business lines subject to conditions applied to foreign investors.

- Contributing capital, purchasing shares leads to foreign investors, business organizations prescribed in Clause 1 Article 23 of Law on investment 2014 that hold 51% charter of capital or above.

- Investors can contribute capital in business organizations under these forms:

+ Purchasing shares through IPOs or additional issuance;

+ Contribute capitals to limited liability companies, partnerships

+ Contribute capital to other business organizations

- Investors can purchase shares, stakes of business organizations under these forms:

+ Buying shares from joint-stock companies

+ Buy capital contributions to limited liability companies by their members and become members of limited liability companies

+ Buy capital contributions to partnerships by partners and become partners

+ Buy capital contributions to business organizations other than those mentioned in Points a, b, and c of this Clause from their members.

- Method and scope of investment, partners and other conditions must comply with Conventions that Vietnam is signatory.

2. Procedures for investment under the form of capital contribution or purchase of shares or stakes

a. In circumstances that investors must carry out procedure for the register the capital contribution, purchase of shares, or capital contributions to business organizations

* Composition of dossier:

- A written registration of capital contribution or share or capital contribution purchase, covering information on the economic organization to which or at which the foreign investor intends to contribute capital or purchase shares or capital contributions; the foreign investor’s charter capital holding rate after contributing capital to, or purchasing shares or capital contributions at, the economic organization

- A copy of the identity card or passport, for individual investors; a copy of the establishment decision or another equivalent document certifying the legal status, for institutional investors.

* Procedures for registering capital contribution or share or capital contribution purchase:

- An investor shall submit a dossier to the provincial-level Planning and Investment Department of the locality where the head office of the concerned economic organization is located;

- If the foreign investor’s capital contribution or share or capital contribution purchase meets the conditions, within 15 days after receiving a complete dossier, the provincial-level Planning and Investment Department shall notify in writing the investor thereof for carrying out procedures for change of shareholders or members in accordance with law. In case the investor does not meet the conditions, the provincial-level Planning and Investment Department shall issue a written reply clearly stating the reason.

- Having finished registering capital contribution or share or capital contribution purchase, investors shall carry out procedure to change the content of enterprise registration

b. In circumstances that investors are not required to carry out procedure for the register the capital contribution, purchase of shares, or capital contributions to business organizations

Investors that are not required to carry out procedures for the registration of the capital contribution, purchase of shares, or capital contributions shall carry out procedures to change shareholders, members when contributing capital, purchasing share or contributing capital to business organizations. In case investors wish to register the capital contribution, purchase of shares, or capital contributions to business organizations, they shall follow regulations.

The aforementioned are the consultations about the procedure for investing under the form of capital contribution or purchase of shares or stakes. HTC Law Firm is pleased to accompany clients with all legal problems. For the best consultancy service, please get in touch with us.

For more details, please contact:

HTC Vietnam Law Firm

Address: 15th Floor, Multipurpose Building, 169 Nguyen Ngoc Vu, Trung Hoa Ward, Cau Giay District, Hanoi.

Tel: 0989.386.729; Email: [email protected]

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