In the context of global economic integration and development, attracting and maintaining foreign investors has become an important element in the development strategies of many enterprises in Vietnam. However, the process of changing shareholders who are foreign investors in a joint stock company is not always simple and must strictly comply with legal regulations.

This article by NPLAW will advise on the legal provisions relating to the change of shareholders who are foreign investors, from identifying cases, legal procedures, legal dossiers to related concerns.

I. The need to change foreign investor shareholders

Changing shareholders who are foreign investors in joint stock companies is becoming increasingly common due to the need to expand capital, seek new strategic partners, or adjust business strategies. Foreign investors may change shareholders to increase financial capacity, improve competitiveness, or align with long-term development goals. This helps the company enhance operational efficiency and expand opportunities for international cooperation.

II. Legal regulations on changing foreign investor shareholders 

1. When does the change of shareholders who are foreign investors occur?

Currently, the law does not stipulate specific cases when a change of shareholders who are foreign investors must occur. Such changes may happen in the following cases:

- Restructuring investment capital: When the company wants to change the ownership ratio of foreign shareholders to attract additional investment capital or adjust the shareholder structure.

- Transferring share: When a foreign investor sells or transfers shares to another individual or organization abroad, leading to a change of shareholders in the company.

- Implementing a new cooperation strategy: When the company decides to cooperate with new foreign partners to strengthen financial or technological capacity or expand markets.

- Transferring between foreign investors: When one foreign investor transfers their shares to another foreign investor without changing the overall ownership ratio of foreign investors.

- Adjusting development strategy: When the company needs to change foreign shareholders to match long-term development strategies, scale expansion, or changes in business lines.

2. Notes on changing shareholders who are foreign investors

When a joint stock company (that is not listed) wants to change shareholders who are foreign investors, it must implement procedures to notify changes in enterprise registration content.

According to Point b, Clause 1, Article 31 of the Law on Enterprise 2020, a joint stock company must notify the Business Registration Authority of any changes in registered enterprise information when there is a change of shareholders who are foreign investors (as recorded in the company’s shareholder register) within 10 days from the date of the change.

The procedure for notifying changes in enterprise registration information in the case of unlisted joint stock companies changing foreign investor shareholders is implemented in accordance with Clause 3, Article 31 of the Law on Enterprise 2020 and Article 58 of Decree 01/2021/ND-CP.

3. Dossier for changing shareholders who are foreign investors

The dossier for notifying changes of shareholders who are foreign investors in an unlisted joint stock company is specified in Clause 1, Article 58 of Decree 01/2021/ND-CP, including:

- Notification of change in enterprise registration content signed by the legal representative of the unlisted joint stock company;

- The list of shareholders who are foreign investors after the change;

- Share transfer contract or documents proving the completion of the transfer;

- Copies of legal documents of the individual transferee or copies of legal documents of the organization, copies of legal documents of the authorized representative, and copies of the authorization decision for the authorized representative if the transferee is an organization;

- A document from the investment registration authority approving the capital contribution, share purchase, or purchase of capital contributions by foreign investors under the Law on Investment.

Notes:

- The list of shareholders who are foreign investors must include the signatures of shareholders whose shareholding values have changed, but signatures of shareholders whose shareholding values do not change are not required.

- For shareholders who are foreign organizations, copies of the organization’s legal documents must be legalized by consular authentication.

III. Questions on changing foreign investor shareholders 

1. How long does it take to process the dossier for changing shareholders who are foreign investors?

According to Clause 4, Article 31 of the Law on Enterprise 2020, within 03 (three) working days from the date of receiving a valid dossier, the Business Registration Authority must review its validity and update the information on shareholders who are foreign investors in the National Business Registration Database.

- The Business Registration Office shall issue a Certificate of change in enterprise registration content to the enterprise if requested.

- If the dossier is invalid, the Business Registration Authority must notify in writing the contents that need to be amended or supplemented.

- If it refuses to amend or supplement information according to the notification of change in enterprise registration, it must issue a written notice stating the reason.

2. Conditions for changing shareholders who are foreign investors

According to Article 24 of the Law on Investment 2020, when changing shareholders who are foreign investors, the foreign investor making capital contributions into Vietnam must satisfy conditions on market access (such as nationality of the investor, ownership ratio, business objectives and lines) applicable to foreign investors.

3. Which authority handles procedures for changing shareholders who are foreign investors?

According to Clause 1, Article 58 of Decree 01/2021/ND-CP, the Business Registration Office where the enterprise’s head office is located is the competent authority to handle procedures for changing shareholders who are foreign investors.

4. What legal regulations must be complied with when changing shareholders who are foreign investors in a joint stock company in Vietnam?

When changing shareholders who are foreign investors in a joint stock company in Vietnam, companies and investors must comply with the following legal regulations:

- Law on Investment 2020: Regulations on ownership ratios of foreign investors, as well as ownership ratios in certain sectors and industries which may be restricted. Companies must check and comply to ensure ownership does not exceed statutory limits. Regulations on prohibited investment sectors: Foreign investors are not allowed to invest in prohibited sectors in Vietnam, such as those affecting national security, environmental protection, or those requiring protection of public interests.

- Law on Enterprise 2020: When changing shareholders who are foreign investors, the company must meet conditions and implement procedures to change shareholder information at the Business Registration Authority under the Law on Enterprise 2020.

5. Does changing shareholders who are foreign investors affect existing licenses and business operations of the company?

Changing shareholders who are foreign investors may affect certain licenses and business activities of the company, especially if there are changes in the ownership ratio of foreign investors or if the company operates in industries with foreign ownership restrictions. The company needs to notify and update information on new shareholders at the Business Registration Authority. In addition, if the change of shareholders results in non-compliance with licensing requirements, the company may have to adjust its investment license or business license.

IV. Legal consulting services on changing foreign investor shareholders 

The above is all the detailed information provided by NPLaw to support clients regarding changes of shareholders who are foreign investors. If you have any further questions related to the above or other legal matters, please contact NPLaw directly for consultation and resolution.