Procedures for capital contribution, share purchase in Vietnamese enterprises by foreign investors

Procedures for capital contribution, share purchase in Vietnamese enterprises by foreign investors includes 4 basic steps

Post date: 12-10-2013

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Capital contribution, share purchase in Vietnamese enterprises by foreign investor is a form of indirect foreign investment in Vietnam, in which the investors are not directly involved in investment management activities.

                        Purchase and contribute shares of Vietnamese enterprises by foreign investors

      Purchase and contribute shares of Vietnamese enterprises by foreign investors
 
Procedures for capital contribution, share purchase in Vietnamese enterprise by foreign investors in accordance with the laws of Vietnam consists of four basis steps.

                                          Procedures for capital contribution, share purchase in Vietnamese enterprises by foreign investors

 Procedures for capital contribution, share purchase in Vietnamese enterprises by foreign investors

1. Approach and negotiation for purchase shares, capital contribution to the Vietnamese enterprises by foreign investors.

  First, foreign investors approach the enterprise to capture its performance for negotiation and entering the agreement of capital contribution and share purchase in Vietnamese enterprise.

 * Notes:
- For multi-members liability limited company, the approval of the member council of the company may be required before the contract of capital contribution and share purchase entered.
- For ordinary shares of founding shareholders of joint-stock companies may be free assigned after 3 years from issuance date of the business registration certificate.     
 
2. Open a VND account for capital contribution and share purchase in Vietnamese enterprise by foreign investor and payment.

 Foreign investors must open a VND account at a bank permitted to conduct foreign exchange activities in Vietnam to carries out the transactions of investment activities, dividends and oversea remittances.

  Note: where the foreign investors purchase the majority of shares of Vietnamese enterprise to become foreign capital enterprise (i.e transfer to foreign direct investment), the enterpirse shall open a foreign currency account at permitted bank to receive capital from foreign investors.      

3. Registration information in the book of shareholder registration and granting a share certificates for foreign investors.

  As foreign investors have fully paid the entire amount of capital contribution and share purchase, tax obligations according to the contract, the Company will record information conducted by foreign investors in the book of shareholder (member) registration and grants the share (or capital contribution) certificate to the foreign investors.

4. Notice of change of business registration contents regarding the capital contribution and share purchase in Vietnamese enterprise by foreign investor.

 Vietnamese Company will give a notice of change of the business registration contents to the business registration agency, including additional information of foreign investors to the business registration, or change shareholders of the Company in the business registration agency. This is the most important step to recognize the share legal ownership of foreign investors.

 Note: Prior to the registration procedures of changing contributing members list, individual transferred shares or enterprise must complete the declaration and payment of personal income tax (regardless of whether profit arises or not under point c Clause 4 of Article 26 of Circular 111/2013/TT-BTC) under standard Form 12/KK-TNCN (in connection with Circular 156/2013/TT-BTC).

 The full implementation of four basic steps that foreign investors contribute capital and purchases shares in Vietnamese enterprises will ensure the legitimate rights and interests in accordance with their laws of Vietnam.

 In fact, some foreign investors have completed 3 initial steps and company issued share certificate, but does not perform step 4, when disputes arise, the state agency can not recognize their rightful share ownership, so the rights and interests of foreign investors are not fully protected.

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Posted texts:
- About the forms of foreign direct and indirect investment in Vietnam

- Drafting service of share sell and purchase agreement in Vietnamese enterprise

- Due diligence for a merger and acquisition of a business in Vietnam 

- Legal service in Mergers and Acquisitions (M&A) in Vietnam

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