On June 18, 2009, the Prime Minister issued Decision No. 88/2009/QD-TTg providing Regulations on capital contribution and purchase of shareholding by foreign investors (FI) in Vietnamese enterprises.
On
Forms of capital contribution and purchase of shareholding
FIs may contribute capital in following three forms:
1. Acquiring the capital contribution portion of a member of a limited liability company (LLC); contributing capital to a LLC in order to become a new member of a limited liability company with more than two members; or acquiring the entire charter capital of the owner of a one-member LLC in order to become the new owner of such one-member LLC.
2. Acquiring the capital contribution portion of a capital contributing member of a partnership; or contributing capital to a partnership in order to become a new capital contributing member.
3. Acquiring a part of the capital of the owner of a private enterprise or contributing capital with the owner of a private enterprise in order to convert the private enterprise into a limited liability with more than two members and become a member of such LLC with more than two members.
FIs may also subscribe for share in following four forms:
1. Subscribing for initially issued shares of shareholding companies.
2. Subscribing for initially issued shares of enterprises with 100
3. Subscribing for shares from quantity of shares eligible to be offered for sale, additionally issued shares of shareholding company.
4. Acquiring shares from shareholders of shareholding companies.
Level of capital contribution and purchase of shareholding
FI may be permitted to contribute capital and purchase shareholding in Vietnamese enterprises at unrestricted level except for the following cases:
1. With regard to Vietnamese enterprises which are public companies: at the ratios stipulated in the law on securities and relevant implementing guidelines.
2. With regard to Vietnamese enterprises operating in sectors and business lines subject to specialized branch laws: at the ratios stipulated in such specialized branch laws.
3. With regard to Vietnamese enterprises conducting business in commercial services: at the ratios in compliance with international treaties of which
4. With regard to Vietnamese enterprises with a multi-sector, multi-business line operation; not in excess of the lowest participation ratio of FI stipulated for such trades and/or sector.
5. With regard to Vietnamese enterprises with 100% State owned capital converting its form of ownership: at the ratios stipulated in the plan approved by the authorized body.
Forms of payment
FI may contribute capital and purchase shareholding in Vietnamese Dong, freely convertible foreign currencies and other lawful assets in Article 2.1 of Decree No. 108/2006/ND-CP
If FI contributes capital and purchases shareholding in foreign currency, the FI must:
- convert into Vietnamese Dong at the purchase exchange rate of a commercial bank licensed to conduct foreign exchange business at the date of capital contribution or share purchase;
- obtain consent of authorized representative of the enterprise;
- comply with the current law on foreign exchange control.
If FI contributes capital and purchases shareholding in the form of other lawful assets, the assets must be valued by either methods:
- valuation by an independent valuation organization as agreed by founding members, shareholders of the enterprise to which capital is being contributed and by the capital contributor;
- the enterprise establishes a council for valuation of assets and reaches an agreement with the capital contributor on the price.
Rights and interests of FI:
- to pledge their shares in credit relations and to use their shares as security for the discharge of civil obligations;
- to transfer ownership of their shares and to trade them on the securities market if the shareholding company is listed;
- to assign their capital contribution portions and to adjust their investment capital during the process of conducting business;
- to convert capital recoveries and profit from their investment activities in
- to participate in management of the enterprise;
- to be entitled to the same rights and interests as domestic investors investing in shareholding companies, limited liability companies and partnerships.
General conditions for FI to become an individual or a organization which contributes capital and purchase shareholding in Vietnamese enterprises are:
- having an investment capital account opened at a commercial bank in
- ensuring such provisions stipulated in the chatter of the enterprise to which the FI contributes capital and/or purchases shareholding are not contrary to law.
- the FI, which is an organization, must has a copy of its business registration certificate or other equivalent document proving its legal status
- the FI who is an individual must has a copy of his/her valid passport.
This Decision takes effect from
(Source: Luatviet)
