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posted 10 months ago
Foreign investors must comply with the Decree on Foreign Exchange Management. And carry out specific procedures at the commercial bank where they establish a payment account when purchasing shares or contributing capital to a company in Vietnam. The following are some points to note:
Foreign Investors and Enterprises must determine which Investment Capital Accounts to use for the payment or receipt of transfer prices of shares or contribution capital amounts according to the specific circumstances of each case.
A bank authorized to conduct business and provide foreign exchange services in Vietnam can use the account of a Foreign-Invested Enterprise to carry out transactions related to foreign direct investment in Vietnam. The authorized bank allows each Foreign-Invested Enterprise to open only one (01) Direct investment capital account in foreign currency (DICA-FC) and one (01) Direct investment capital account in Vietnamese Dong (DICA-VN).
Considering the acquisition or creation of shares or contribution capital amounts of a Foreign Direct Investment Enterprise in Vietnam constitutes foreign direct investment in Vietnam. Foreign Direct Investment Enterprises consist of:
(a) These are economic entities that have Foreign Investors as shareholders or members and have issued investment registration certificates in compliance with investment laws.
(b) Enterprises other than those mentioned in Point (a) above, with Foreign Investors owning a minimum of 51% of the enterprises’ charter capital, including:
(i) Businesses, whether in sectors with or without Foreign Investors’ conditions applied, where Foreign Investors contribute capital or acquire shares or contribution capital amounts, resulting in Foreign Investors owning at minimum 51% of the enterprise’s charter capital;
(ii) Enterprises established through separation, consolidation, or acquisition, resulting in Foreign Investors owning at minimum 51% of the enterprise’s charter capital;
(c) Project-oriented businesses established by Foreign Investors to execute PPP projects according to investment legislation.
A payments account opened by a Foreign Investor in Vietnamese Dong at an eligible bank that performs business and foreign exchange services in Vietnam. Its primary purpose is to carry out authorized revenue and expenditure transactions linked to Foreign Investors’ indirect investment activities in Vietnam.
Various forms of indirect investment, such as capital contribution, or buying and selling shares of enterprises that are not covered under Clause 2, Article 3 of Circular 06/2019/TT-NHNN dated June 26, 2019, and not listed or registered for trading on the Stock Exchanges are allowed. IICAs can be used for the mentioned cases in section 1.1. Indirect investment can also involve buying and selling shares or invested capital amounts of Foreign Investors in enterprises with shares listed or registered for trading on the Stock Exchanges, buying and selling bonds and other types of securities on the Vietnamese securities market, and buying and selling other valuable papers issued in Vietnamese Dong by residents who are licensed organizations within the Vietnamese territory.
Fund management companies, securities companies, and organizations allowed to perform investment entrustment operations according to the existing securities law, as well as credit institutions and foreign bank branches licensed to conduct investment entrustment operations under the regulations of the State Bank can be entrusted with these investment activities. Furthermore, indirect investment activities also comprise capital contribution and transfer of contributed capital of Foreign Investors in securities investment funds and fund management companies in compliance with the provisions on securities law.
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Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Whatapps: 09372 15585
Website: hmlf.vn Mail : [email protected]
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