Conditions and Procedures for foreign investors to purchase shares or equity capital of companies in VietNam
- Thứ tư - 16/09/2020 22:22
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There are many ways for an investor to buy shares or equity capital of an enterprise in Viet Nam. For instance, a foreign investor may
(i) become a member of a limited liability company by buying equity capital from its members;
(i) become a member of a limited liability company by buying equity capital from its members;
(ii) become a partner of a partnership by purchasing equity capital of partners;
(iii) buy shares offered by a joint – stock company or its shareholders; or
(iv) buy equity capital of economic institution’s members other than those who are mentioned above.
However, not many foreigners know clearly about legal requirements for buying shares or equity capital. Therefore, this article is for introducing Legal Circumstances and Procedures of purchasing equity capital”.
I. Conditions applicable to foreign investors who purchase shares or equity capital of Vietnamese companies
There are some significant circumstances for a foreign party to meet requirements. Those are:
- Foreign investors may own an indefinite amount of charter capital invested in business organizations, except for the following cases:[1]
The holdings of the foreign investors at listed companies, public companies, securities-trading organizations, and securities investment funds are conformable with regulations of law on securities;
The holdings of the foreign investors at state-owned companies that have been equitized or converted are conformable with regulations of law on equitization and conversion of state-owned companies;
Concerning holdings of the foreign investors in other cases than those mentioned in Point a and Point b of this Clause, relevant regulations of law and the international agreements to which the Socialist Republic of Vietnam is a signatory shall apply.
- The form of investment;
- The operating scope;
- Vietnamese partners and other aspects are conformable with the international agreements to which the Socialist Republic of Vietnam is a signatory.
II. Procedures applicable to foreign investors who purchase shares or equity capital of Vietnamese companies
An overseas investor must register the purchase of shares or equity capital in the following cases:[2]
- He purchases shares or equity capital of economic institution that engaged in business lines subject to conditions applied to the foreign investors.
- The purchase of shares and equity capital leads to a fact that the investor and/or a business organization mentioned in Clause 1, Article 23 of Investment Law 2014 hold 51 percentages or more of the economic institution’s capital charter.
Procedures for registration of equity capital or purchase of shares/equity capital:[3]
- The investor shall provide the application at the Department of Planning and Investment of the province where the headquarter of the business organization is situated; the dossier contains:
| An application for registration of purchasing of shares/equity capital | ||
| The investor | Foreign Individual | Foreign Organization |
| Requirement for application |
|
|
- In case, the foreign investor purchasing shares/equity capital satisfies the above conditions, the local Department of Planning and Investment shall send a written notification to the investor within 15 days from the day of receiving of a valid dossier.
- After receiving an approval notification from the Department of Planning and Investment. The investor might follow the procedures for changing shareholders/members at the Business Registration Authority as prescribed by laws. If conditions are not satisfied, the Department of Planning and Investment shall notify the investor in writing and provide an explanation.
- Furthermore, if the field is one of the services in the list of conditional investment for foreign investors, the investor must register the Investment Certificate at the provincial people’s committee which has jurisdiction.