Regulation
During the process of investment within Vietnam, businesses with foreign-invested capital and BCC are allowed to restructure their investment by way of division, separation, merger or consolidation, or foreign investors may convert their investment into a different legal form. Foreign investors can also transfer their interest to other entities.
The LOI provides that investors are permitted to (i) contribute capital to; and (ii) purchase shareholding in companies and branches operating in Vietnam. The ratio of capital contribution and purchase of shareholding by foreign investors in a number of sectors, industries and trades will be regulated by the Government.
Investors who intend to contribute capital, purchase shareholding, merge or acquire an enterprise in Vietnam must implement the provisions in the international treaties of which Vietnam is a member, with respect to the ratio of capital contribution, forms of investment and schedule for opening market; comply with the provisions on
conditions for economic concentration of Law on Competition and LOE; and satisfy the conditions for investment if the investment project is in a sector which investment is conditional.
Buying shares in existing companies
Foreign investors who intend to acquire an interest in a joint venture company or a 100% FOE may do so by acquiring the capital contribution portion of another existing foreign investor. A new foreign investor may acquire some or all of the shares in an offshore company that holds the interest of an existing FOE, or the foreign party in a
joint venture may acquire the capital contribution portion of its Vietnamese partner to convert the joint venture to a 100% FOE. A Vietnamese party to a joint venture may also buy the foreign investors’ interest to become a 100% local entity.
Gains from transfer of shares shall be subject to income tax on capital gains.
