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Investment

How is capital investment change regulated?

During the implementation of the investment project, the investor has the right to adjust the target, transfer part or all of the investment project, merge projects or divide, separate a project into several projects, use land and property use rights on land of the investment project to contribute capital to the establishment of the enterprise, offer cooperation on business or other content. All of them must be in accordance with the law. Thus, how is a change in capital investment regulated by law, and what changes in its procedure? Let's find out with NPLaw in the article below.

1. What is the capital investment change?

According to civil law and international treaties to which the Socialist Republic of Vietnam is a member to carry out business investment activities, investment capital is money and other assets

The total capital investment of a project is written in Section 5 of the investment registration certificate issued to a foreign-invested company in Vietnam or a Vietnamese company registered to invest in the project. This information includes:

- The total capital investment in Vietnamese dong and foreign currency converted (if any)

- The capital contribution in Vietnamese dong and foreign currency converted (if any)

- The percentage of capital contribution for carrying out a project of each investor in the total capital contribution.

- The duration of contributing capital of the investor and the duration of raising the loan (if any)

Capital investment change is adjusting the investor's capital contribution and mobilized capital.

2. Cases of capital investment change

2.1. Increase the capital investment

a. What increasing capital investment is

Increasing capital investment is pouring an additional amount of capital into the project and the company by raising additional capital from members and existing shareholders of the company, calling on outside investors to contribute capital to the company or borrowing funds, raising capital from other sources to expand production, business or maintain and restore the company.

b. Forms of increasing capital investment

Capital investment, which is the capital contribution to an investment project of a business, includes money and other assets in accordance with Vietnamese law. This information is specified on the Investment certificate. Investment capital is used to carry out business investment activities, including investor's capital contributed to the project and capital raised from other resources.

Thus increasing the total investment capital is the form of increasing the capital source in one of the following cases:

- The investor contributes more capital to implement the project.

- Increasing mobilized capital may include:

+ Loans from credit institutions;

+ Mobilized capital from shareholders, members, from other entities;

- Mobilized capital from other sources

2.2. Reduce the capital investment

CONDITIONS FOR REDUCING CAPITAL INVESTMENT ON INVESTMENT CERTIFICATES

According to the Clause 2, Article 41 of the Law on Investment 2020: “The investor performs the procedure for adjusting the investment registration certificate in case the adjustment of the investment project changes the contents of the investment registration certificate.”

Reducing capital investment is the change of one of the contents of the investment registration certificate; therefore, the investor must adjust the capital on the investment certificate.

According to Clause 3, Article 41 of the Law on Investment 2020, investors whose investment project has been approved for investment policies must implement the procedure for approving the adjustment of investment policies if the project is subject to the case of changing the total capital investment from 20% or more to change the scale of the investment project.

In addition, for investment projects approved for the investment policy, the investor is not entitled to adjust the progress of implementation of the investment project for more than 24 months compared to the progress of implementation of the investment project specified in the document for approval of investment policy for the first time, unless the total investment capital increase from 20% or more to change the scale of the investment project.

3. Procedure for capital investment change

In the process of implementing the investment project, in addition to the initial registered capital investment specified in the investment registration certificate, investors can change that increase or decrease the investment capital. In case of capital adjustment, investors need to implement the procedure for adjusting the investment registration certificate in accordance with the law.

For an investment project that has been granted an investment certificate and is not subject to adjustment approval for investment policy, the capital investment adjustment dossier specified on the investment registration certificate includes documents as follows:

- Written proposal to adjust the Investment Certificate;

- Report on the implementation of investment projects to the time of adjustment; Investment reports (corporate reports submitted online on the page dautunuocngoai.gov.vn)

- Decision on the adjustment of the investor's investment project;

- Investment project proposal includes the following contents: investor implementing the project, investment objectives, investment scale, capital investment and plan for raising capital, location, duration, investment progress, demand for labor, proposal for investment incentives, assessment of effect and socio-economic efficiency of the project (for projects that have not been granted investment registration and enterprise registration certificates);

- 01 certified copy of Investment Certificate;

- 01 certified copy of tax registration (for projects that have not been granted a certificate of investment registration and business registration);

- 01 certified copy of Business registration certificate;

- A document to confirm that has contributed enough capital to the time of adjustment: 01 certified copy of the audit of the financial statement made latest compared to the time of adjustment or confirmation of the bank that the investor has contributed enough capital.

- In case of changes in capital investment to be provided: confirm the bank has a balance corresponding to the additional capital or document proving the financial capacity for the additional capital contribution;

Procedure for capital adjustment

Number of dossier: 01 set of dossier

A competent agency for adjustment:

- For investment projects in industrial zones, export processing zones, high-tech parks, and economic zones, management boards of these zones adjust investment registration certificates.

- Department of Planning and Investment where the investor sets up or is expected to set up the head office or executive office for receiving investment project, adjusting the investment registration certificate for the following investment project:

- Investment projects are carried out in many centrally run provinces and cities.

- Investment projects are carried out inside and outside of industrial zones, export processing zones, high-tech parks and economic zones.

- Department of Planning and Investment receives and adjusts investment registration certificates for investment projects outside the industrial zones, export processing zones, high-tech parks, and economic zones, except for the above.

Processing duration: Within 10 working days from the date of receiving a valid dossier as prescribed, the investment registration agency adjusts the investment registration certificate for the investor. (In accordance with Clause 2 Article 47 of Decree 31/2021 / ND-CP).

Note:

– In case the investor changes the capital investment and the charter capital specified on the enterprise registration certificate, the investors shall contribute in full within the period specified on the adjusted investment registration certificate and then conduct the procedure for changing the charter capital on the enterprise registration certificate within 10 days from the date on which the value of sufficient capital contribution increases.

- When changing capital investment, the investor shall comply with the period for contributing capital specified on the adjusted investment registration certificate issued.

(CSPL: Clause 1, Article 44, Clause 2, Article 47 of Decree 31/2021/ND-CP; Clause 1, Article 33 of the Investment Law 2020).

4. Things to keep in mind when changing capital investment

4.1. Some note after adjusting to increase capital investment in foreign companies

- Submit the declaration of business license tax before 31st of December of that year;

- Submit to supplement the increased business license tax (if the level of the tax must be paid change)

- For projects with regulations on the margin level from 1% - 3% of the total capital investment of the project, the procedure for adjusting the margin level must be done after the completion of the procedure for raising the charter capital;

- For projects that have made investment policy decisions, the procedure for adjusting the investment policy must be done if the total capital investment increased from 20% or more leading to a change in the scale of the investment project.

- In case investors do not contribute enough capital as committed, the procedure for reducing the charter capital must be conducted within 30 days (from the expiration date of capital contribution) ;

- For cases of reduction of charter capital, foreign-invested enterprises need to ensure 2 conditions:

+ Must operate continuously for 2 years;

+ Must fulfill financial obligations,debts... to customers and partners.

In other words, if there is a change while conducting the procedure for raising charter capital for foreign-invested enterprises affecting any relevant decisions and licenses, the company shall adjust those.

4.2. How much is the level of change in capital investment compared to the total approved investment that does not need to adjust the investment registration certificate?

Pursuant to Clause 2 Article 41 of the Law on Investment 2020, the adjustment of investment projects are as follows:

4.3. The investor conducts the procedure for adjusting the investment registration certificate in case the adjustment of the investment project changes the contents of the investment registration certificate.”

Pursuant to Clause 6 Article 40 of the Investment Law 2020, the investment registration certificate is stipulated as follows:

"Contents of investment registration certificate

5. Capital investment of the investment project (including investor's capital contribution and mobilized capital).

Thus, when the unit wants to change the capital investment, the procedure for adjusting the investment registration certificate must be conducted because the capital investment is the content shown on the investment certificate.

There are currently no regulations on changes under how much % of investment capital there is no need to adjust the investment registration certificate, only a change in the amount of capital compared to the initial level, the unit must perform the procedure for adjusting the investment registration certificate.

6. Consultancy services of capital investment change

With long experience in the field of consulting for enterprises of legal paperwork, investment license adjustment services including procedures of adjusting to increase capital are supported by NPLaw quickly and simply. Benefits of using our services:

- Represent enterprises in conducting adjustment procedures at the investment registration agency;

- Consult and draft records for adjustment corresponding with customer requirements and regulations of the law on investment;

- Complete profile for customers;

- Explain to the licensing authority, receive the investment registration certificate, and hand it back to customers;

- Instruct the enterprise to carry out legal procedures arising after adjusting the investment certificate;

- Support legal issues arising in the course of business activities for investors in Vietnam.

This is the end of the article about the capital investment change. Hopefully, through the article, you can obtain useful information. NPLaw is a law firm specializing in providing comprehensive legal services related to business investment; enterprise; intellectual property; labor; consulting, drafting, negotiating and supporting the signing of trade agreements/contracts in foreign and domestic countries; consulting and assisting in proceeding with the procedure of issuing business license... Therefore, please come to us immediately for assistance if you have any legal issues.