Based on the guiding documents for the implementation of the Investment Law and the Enterprise Law 2014, which regulate foreign investment in Vietnamese companies, Expertis will provide you with detailed information on important points to note when carrying out these procedures. Procedures for capital contribution, withdrawal, and borrowing by foreign investors in 2019 in Vietnam to ensure safety and convenience during the process.
In addition, this information will also support accountants in foreign-invested enterprises to follow the correct procedures during the execution of their accounting tasks.
First, let's summarize the key regulations regarding investment forms and business licenses for foreign investors in Vietnam.
Foreign-invested companies investing in Vietnam can make direct or indirect investments.
Investment options in Vietnam
I. Investment in establishing economic organizations
According to Article 36, Clauses 1 and 2 of the 2014 Investment Law, the procedures for issuing an investment registration certificate are as follows:
“1. Cases requiring the issuance of an Investment Registration Certificate:
a) Investment projects by foreign investors;
b) Investment projects of economic organizations as stipulated in Clause 1, Article 23 of this Law.
2. Cases where the procedure for issuing an Investment Registration Certificate is not required:
a) Investment projects by domestic investors;
b) Investment projects of economic organizations as stipulated in Clause 2, Article 23 of this Law;
c) Investment in the form of capital contribution, purchase of shares, or capital contributions of economic organizations.
Therefore, for projects by foreign investors, or projects by economic organizations with capital meeting the conditions in Article 23, Clause 1, operating as foreign investors (charter capital of 51% or more), the following must be implemented. procedures for issuing investment certificates.
After completing the investment registration procedure, if you wish to establish a business, you must carry out the business registration procedure in accordance with the regulations of the Enterprise Law on business establishment registration, depending on the ratio of your charter capital to that of other investors.
II. Foreign investors investing in Vietnam in the form of capital contribution, purchase of shares, or equity stake in companies already established in Vietnam.
Conversely, for foreign investment in Vietnam through the contribution of capital by foreign investors to purchase shares or equity in Vietnam, for business sectors subject to conditions applicable to foreign investors, or for capital contribution or share purchase resulting in the foreign investor owning 51% or more of the charter capital of the enterprise, the foreign investor must register the purchase of equity with the Department of Planning and Investment without needing to obtain an Investment Registration Certificate; however, a certificate is required. "Notice regarding the conditions for capital contribution/share purchase/acquisition of capital contributions by foreign investors"
Business license
Foreign investors investing in businesses in Vietnam in certain specific sectors must go through the procedure of applying for a business license.
The following entities are required to apply for a business license for foreign investors:
According to Clause 1, Article 5 of Decree 09/2018/ND-CP, a business license is granted to economic organizations with foreign investment capital when they carry out the following activities:
✓ Exercise the right to retail distribution of goods, excluding goods specified in point c, clause 4, Article 9 of Decree 09/2018/ND-CP;
✓ Exercise the right to import and the right to wholesale distribution of goods as stipulated in point c, clause 4, Article 9 of Decree 09/2018/ND-CP;
✓ Exercise the right to retail distribution of goods as stipulated in point c, clause 4, Article 9 of Decree 09/2018/ND-CP;
✓ Providing logistics services; excluding logistics service sub-sectors for which Vietnam has committed to market opening in international treaties to which Vietnam is a signatory;
✓ Leasing of goods, excluding financial leasing; except for leasing of construction equipment to operators;
✓ Providing trade promotion services, excluding advertising services;
✓ Providing commercial intermediary services;
✓ Providing e-commerce services;
✓ Providing services for organizing tenders for goods and services.
Point c, Clause 4, Article 9 stipulates:
“c) For goods such as rice; sugar; recorded items; books, newspapers and magazines: consider granting licenses for retail distribution rights to foreign-invested economic organizations that already have retail outlets in the form of supermarkets, mini-supermarkets, and convenience stores to sell at those outlets.”
The Department of Industry and Trade in the locality where the foreign-invested economic organization has its head office is responsible for issuing, reissuing, adjusting, and revoking business licenses.
Procedures for capital contribution, profit withdrawal, and borrowing by foreign investors in 2019
According to Circular No. 06/2019/TT-NHNN dated June 26, 2019, the procedures for capital contribution, profit withdrawal, and borrowing by foreign investors are summarized as follows:
I. Investment capital contribution procedures
a) Procedures for contributing investment capital in the case of direct investment
B1: Prepare the investment project registration dossier and obtain the Investment Certificate.
B2: Open a direct investment account (Account holder name: Company name)
B3: Transfer money from abroad into the capital investment account to conduct business.
b) Procedures for contributing investment capital in the case of indirect investment
Step 1: Register with the Department of Planning and Investment regarding the purchase of shares and capital contributions, and obtain a certificate of eligibility for foreign investors to contribute capital/purchase shares.
B2: Open an indirect investment account at the bank (account holder: name of the foreign individual investor)
B3: Transfer funds from the indirect investment account to purchase capital contributions and shares.
II. Withdrawal of profits and investment capital
When a foreign-invested company (both direct and indirect investment) distributes profits and the investor withdraws their investment capital, the funds must be transferred back through the above steps via the direct investment account at the company or the indirect investment account of the foreign investor.
III. Borrowing capital from foreign investors/foreign organizations
This applies to cases where domestic enterprises or organizations borrow from foreign investors/foreign organizations.
B1: Have all the required loan application documents.
B2: Open a loan account and receive loan funds. loan account (Payment accounts cannot be used)
B3: Interest and principal payments are both made using the investment account/loan account.
Note:
- Short-term loans of less than 12 months do not require registration with the State Bank of Vietnam and must be repaid on time.
- Short-term loans that are not repaid on time, as well as medium and long-term loans, must be registered with the State Bank of Vietnam.
