The activities of capital contribution and share acquisition by foreign investors in Vietnamese enterprises have become increasingly common in the context of global integration. However, these transactions must strictly comply with the provisions of investment and enterprise laws. Through the following article, DNP Viet Nam Law Firm provides our valued partners with information on the conditions, procedures, and legal notes when entering the Vietnamese market.
1. Forms of Capital Contribution and Share/Equity Acquisition
1.1. Forms of Capital Contribution
Pursuant to Clause 1, Article 25 of the Law on Investment 2020, foreign investors may contribute capital into Vietnam through the following forms:
- Purchasing newly issued shares or additional shares of a joint-stock company;
- Contributing capital to a limited liability company or partnership;
- Contributing capital to other economic organizations not falling under the above-mentioned cases.
1.2. Forms of Share or Equity Acquisition
According to Clause 2, Article 25 of the Law on Investment 2020, foreign investors may acquire shares or equity in enterprises in Vietnam through the following forms:
- Purchasing shares in a joint-stock company from the company or its shareholders;
- Purchasing equity interest from members of a limited liability company to become a member of that company;
- Purchasing contributed capital from partners in a partnership to become a capital-contributing partner;
- Purchasing capital contributions from members of other economic organizations not covered by the three aforementioned cases.
2. Conditions for Capital Contribution and Share/Equity Acquisition
Pursuant to Clause 2, Article 24 of the Law on Investment 2020, foreign investors contributing capital or acquiring shares/equity in an economic organization must satisfy the following conditions:
- Market access conditions for foreign investors as stipulated in Article 9;
- Assurance of national defense and security;
- Compliance with land-related regulations concerning conditions for receiving land use rights or using land in islands, border communes/wards/townships, and coastal communes/wards/townships.
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3. Investment Procedures for Capital Contribution and Share/Equity Acquisition
Investment procedures for foreign investors contributing capital, purchasing shares or equity in Vietnamese enterprises are guided by Article 66 of Decree No. 31/2021/ND-CP.
3.1. Cases not falling under Clause 2, Article 26 of the Law on Investment 2020
If not falling under Clause 2, Article 26, the economic organization with foreign investors is only required to carry out the procedure for registration of changes in members or shareholders at the business registration authority, in accordance with enterprise law.
3.2. Cases falling under Clause 2, Article 26 of the Law on Investment 2020
If falling under Clause 2, Article 26, the economic organization must submit a registration dossier for capital contribution or share/equity acquisition to the investment registration authority where its headquarters is located.
The dossier includes:
- Written registration of capital contribution, share or equity acquisition (clearly stating enterprise information, business lines, ownership ratio, transaction value, etc.);
- Copies of legal documents of the related parties;
- Memorandum of understanding or agreement in principle between the parties;
- Land use right certificate (if subject to Point b, Clause 4, Article 65 of Decree No. 31/2021/ND-CP).
3.3. Time Limit and Content of Dossier Appraisal
For cases falling under Clause 2, Article 26 of the Law on Investment:
- Time limit for processing: Within 15 days from the date of receipt of a valid dossier;
- Content of appraisal: Evaluation of compliance with capital contribution and share/equity acquisition conditions under Clause 2, Article 24 of the Law on Investment and Clause 4, Article 65 of Decree No. 31/2021/ND-CP;
- Result: The investment registration authority shall issue a written notice to the foreign investor and the concerned economic organization.
3.4. Cases Related to National Defense and Security
If the economic organization holds land use rights in sensitive areas (border, coastal, or national defense and security-sensitive zones):
- The investment registration authority shall consult the Ministry of National Defense and the Ministry of Public Security within 03 working days;
- The two Ministries must respond within 07 working days (no response after the deadline is deemed as agreement);
- Within 15 days, the investment registration authority shall issue a notice based on the dossier and feedback from the Ministries.
3.5. Post-Approval Procedures
Upon receiving the approval notice for capital contribution or share/equity acquisition:
- The economic organization shall proceed with the registration of changes in members or shareholders at the business registration authority;
- The rights and obligations of the foreign investor shall be established after the completion of the registration procedures.
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