I. Understanding foreign companies transferring capital
1. What is foreign companies transferring capital?
A foreign company transferring contributed capital means a foreign organization or individual (referred to as a foreign investor) implements the transfer of all or part of its contributed capital or stocks in an enterprise in Vietnam to another organization or individual.
2. Common forms of capital transfer by foreign companies
When a foreign company transfers contributed capital in an enterprise, there are two common forms:
- A foreign company transfers contributed capital or stocks to a foreign individual or organization;
- A foreign company transfers contributed capital or stocks to a Vietnamese individual or organization.
II. Legal regulations on foreign companies transferring capital
1. Conditions for a foreign company to transfer capital
- If the enterprise operates in sectors not on the list of conditional business lines and the transfer ratio is below 51%, the transfer only requires procedures to amend the Enterprise Registration Certificate.
- Conversely, if transferring capital or stocks to a foreign investor, the enterprise must implement procedures to register the capital contribution, and purchase of stocks or contributed capital at the Department of Planning and Investment. Only after completion, the enterprise can proceed to amend the Enterprise Registration Certificate to update information on owners, members, or shareholders.
Specific examples:
- In the tourism sector, the enterprise must ensure at least 10% contributed capital belongs to Vietnamese investors.
- In the freight transport sector, the maximum capital ownership ratio for foreign investors is limited to 49%.
Thus, compliance with these regulations is a key factor to ensure legality and stability in the enterprise’s operations.
2. Procedures for transferring capital by foreign companies
a. Foreign companies transfers capital to foreign individuals or organizations
For companies with the Investment Registration Certificate (direct investment)
Depending on whether the transferee is an external individual or organization or an existing member/shareholder, the process will differ.
- If the transferee is a new foreign investor (not yet contributing capital to the company). Accordingly, the capital/stock transfer process includes three steps:
+ Step 1: Implement the procedures to register capital contribution, and purchase of stocks for the new foreign investor. Dossier includes:
+ Application for registration of capital contribution/stock purchase by the foreign investor;
+ Capital/stock transfer contract between the seller and buyer;
+ Certified passport copy of the foreign investor if an individual, or certified business license of the foreign investor if an organization;
+ Power of attorney for the dossier submitted at at the Department of Planning and Investment of the province/city;
+ Certified copy of citizen identity card of the authorized person submitting the dossier.
The enterprise submits directly to the Department of Investment/ Investment Registration Office of the Department of Planning and Investment of the province/city where the business is registered. After receiving and processing the dossier, the Department of Investment will issue a Notice on eligibility to purchase stocks or contributed capital by the foreign investor.
+ Step 2: Implement procedures to amend the Enterprise Registration Certificate. Accordingly, after completing the capital transfer, the enterprise must amend the owner, member and shareholder information at the Department of Planning and Investment. Dossier includes:
+ Notice on change of owner,member and shareholder;
+ Capital transfer contract between the seller and buyer;
+ Minutes of liquidation of the transfer contract;
+ List of members and shareholders after the change;
+ List of foreign investors & list of their authorized representatives;
+ Power of attorney for the dossier submitted at at the Department of Planning and Investment of the province/city;
+ Certified copy of citizen identity card of the authorized person submitting the dossier.
After fully preparing the dossier, the enterprise submits it directly to the Business Registration Office or online via the National Business Registration Portal. Within 3-5 days from receipt of the valid dossier, the Business Registration Office will check the validity and issue a new Enterprise Registration Certificate.
Note: Changes such as transferring 100% of capital in a single-member LLC (changing owner), or converting from a Joint Stock Company to a Limited Liability Company or from single-member to multi-member (when transferring part of the capital) may occur.
+ Step 3: Implement procedures to amend the Investment Registration Certificate. Dossier includes:
+ Application for adjustment of the investment project;
+ Report on the implementation status of the investment project;
+ Decision on change of Investment Registration Certificate;
+ Documents on the transfer of stocks/contributed capital;
+ Certified copy of the new Business License (result from Step 2);
+ Original Investment Registration Certificate;
+ Certified copy of investor’s personal legal documents: passport (if individual) or notarized translated business license (if organization) plus passport of the authorized representative.
The enterprise submits directly at the Department of Investment where the enterprise is registered. Within about 15 working days from receipt of the valid dossier, the enterprise will be issued a new Investment Registration Certificate.
- If the transferee is a former existing foreign investor (already contributing capital): In this case, the enterprise only needs to adjust the Investment Registration Certificate first, then amend the Business License (performing Steps 2 and 3 as above).
For enterprises without an Investment Registration Certificate (indirect investment)
The enterprise must first obtain the Notice of eligibility to purchase stocks/contributed capital by foreign investor (i.e. register the capital contribution for the investor), then implement procedures to amend the Business License (performing Steps 1 and 2 as above).
b. Foreign company transfers capital to a Vietnamese individual or organization
In this case, the enterprise only needs to amend the Business License at the Business Registration Office to obtain a new one, without procedures at the Investment Authority.
+ Dossier includes:
+ Notice on change of owner, member and shareholder;
+ Transfer contract of contributed capital/stocks;
+ Minutes of liquidation of the transfer contract;
+ List of members and shareholders after the change;
+ Power of attorney for the dossier submitted at at the Department of Planning and Investment of the province/city;
+ Certified copy of citizen identity card of the authorized person submitting the dossier.
III. Questions on foreign companies transferring capital
1. Tax declaration for foreign companies transferring capital?
Within 10 days after signing the transfer contract, the transferor must file a personal income tax return (investor as an individual) or a corporate income tax return (investor as an organization) according to the law.
2. Some notes when foreign companies transfer capital
- Checking the legal conditions and restrictions on foreign investors;
- Implementing registration and notification procedures as required;
- Fully declaring and paying taxes.
IV. Legal consulting services for foreign companies transferring capital
Capital transfer involves multiple areas of law (investment, enterprises, tax, foreign exchange). Therefore, seeking support from a professional legal consulting unit is necessary to ensure the process is smooth and compliant.
At NP LAW, our team of professional lawyers will provide clients with the best quality legal consulting services related to procedures for foreign companies transferring capital. If you have any difficulties or need further clarification, please contact NP LAW via the information below:
