During business operations in Vietnam, some foreign investors who are shareholders of Joint Stock Companies desire to transfer their capital to others. The following article will introduce considerable issues regarding the transfer of investment capital by foreign-invested enterprises.


I. Current status of the transfer of investment capital by foreign-invested enterprises 

The rate of foreign investment capital transfer in Vietnam is currently increasing. Most foreign investors transferring investment capital are mainly from South Korea, Japan and Singapore. Business lines attracting lots of such transfers include manufacturing, trade, services and real estate.

The transfer of foreign investment capital can bring many benefits to both foreign investors and Vietnamese enterprises, but it also has some potential risks. To ensure that the transfer of foreign investment capital is implemented smoothly and effectively, close coordination between state management agencies, foreign investors and Vietnamese enterprises is required.

II. Legal regulations on the transfer of investment capital by foreign enterprises

Legal regulations related to the transfer of investment capital by foreign enterprises are as follows:

1. Definition of foreign-invested enterprises transferring investment capital

A foreign-invested enterprise transferring investment capital means a foreign-invested enterprise that transfers part or all of such foreign investor's capital contribution to another investor.

2. Dossiers for the transfer of investment capital by foreign enterprises

Pursuant to Clause 2, Article 66 of Decree No. 31/2021/ND-CP, when transferring investment capital, a foreign-invested enterprise needs to prepare dossiers, as follows:

- Registration document (or Application) of capital contribution, stock purchase or capital contribution purchase includes the following content: 

+ Enterprise registration information of the economic organization in which the foreign investor intends to contribute capital, purchase stocks or purchase capital contributions; 

+ Business lines; 

+ List of owners, members, founding shareholders, or list of owners, members, shareholders who are foreign investors (if any);

+ The foreign investor's charter capital ownership ratio before and after contributing capital, purchasing stocks or purchasing capital contributions to the economic organization; 

+ Expected transaction value of the contracts on capital contribution, stock purchase or capital contribution purchase; 

+ Information about the investment project of the economic organization (if any);

- Copy of legal documents of individuals and organizations contributing capital, purchasing stocks or purchasing capital contributions, and of economic organizations having foreign investors contributing capital, purchasing stocks or purchasing capital contributions;

- Agreement in principles on capital contribution, stock purchase or capital contribution purchase between the foreign investor and the economic organization having foreign investors contributing capital, purchasing stocks or purchasing capital contributions or between the foreign investor and the shareholders or members of such economic organization;

- Copy of the Certificate of Land Use Rights of the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions (for cases specified in Point b, Clause 4 of this Decree).

3. Procedures for the transfer of investment capital by foreign enterprises

Pursuant to Article 66 of Decree No. 31/2021/ND-CP, the procedures for the transfer of investment capital by foreign enterprises are as follows:

Step 1: The investor submits the dossiers to the Investment Department under the Department of Planning and Investment where the economic organization has its headquarters to register for capital contribution, stock purchase or capital contribution purchase to the foreign-invested enterprise.

Step 2: The Department of Planning and Investment considers the fulfillment of the conditions for capital contribution, stock purchase or capital contribution purchase, and notifies the investor, except in cases specified in Clause 4 of this Article. The notification is sent to the foreign investor and the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions.

In case the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions has a Certificate of Land Use Rights on border islands, communes, wards and towns, and coastal communes, wards and towns or other areas affecting national defense and security; the investment registration agency performs the following procedures:

- Within 03 working days from the date of receiving valid dossiers according to the provisions of Clause 2 of this Article, the investment registration agency shall seek the opinions of the Ministry of Defense and the Ministry of Public Security on the fulfillment of the conditions specified in Point b, Clause 4 of Article 65 of this Decree;

- Within 07 working days from the date of receiving the written proposal of the investment registration agency, the Ministry of Defense and the Ministry of Public Security shall have their opinions on the fulfillment of the conditions to ensure national defense and security for the economic organization; If these agencies are no opinion within the required duration, it is considered that they agree with the above conditions for national defense and security for the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions; 

- Within 15 days from the date of receiving valid dossiers, the investment registration agency shall consider the fulfillment of the conditions for capital contribution, stock purchase or capital contribution according to Clause 2, Article 24 of the Investment Law, and Clause 4, Article 65 of this Decree and the opinions of the Ministry of Defense and the Ministry of Public Security to notify the investor of the final results. The notification is sent to the foreign investor and the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions. 

Step 3: After the foreign investor is approved to contribute capital, purchase stocks or purchase capital contributions according to the provisions of Clauses 3 and 4 of this Article, the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions shall perform the procedures for changing members and shareholders at the business registration agency in accordance with the Law on Enterprise and other relevant Laws corresponding to each type of economic organization. The rights and obligations of the foreign investor as members and shareholders are established upon completion of the procedures for changing members and shareholders.

III. Questions regarding the transfer of investment capital by foreign enterprises

1. Is the investment capital transferred by foreign-invested enterprises a land use right?

Pursuant to Point b, Clause 1, Article 169 of the Land Law 2013, the transferees of land use rights are as follows: 

- Economic organizations, households and individuals are entitled to receive the right to use land through the transfer, except as provided for in Article 191 of this Law; Vietnamese citizens residing abroad are entitled to receive the right to use land through the transfer of the land use rights in industrial parks, industrial clusters, export processing zones, high-tech parks and economic zones. Foreign-invested enterprises are entitled to receive the transfer of foreign investment capital, which is the value of land use rights as prescribed by the Government.

Therefore, foreign-invested enterprises are entitled to receive the transfer of foreign investment capital, which is the value of the land use right as prescribed by the Government. 

2. How long does it take to complete the procedures for transferring investment capital by foreign-invested enterprises?

Pursuant to Clause 3, Article 66 of Decree 31/2021/ND-CP, within 15 days from the date of receiving valid dossiers, the investment registration agency shall consider the fulfillment of the conditions for capital contribution, stock purchase and capital contribution purchase as prescribed in Clause 2, Article 24 of the Investment Law and Clause 4 of this Decree, and notify the investor, except as provided for in Clause 4 of this Article. The notification is sent to the foreign investor and the economic organization with foreign investors contributing capital, purchasing stocks or purchasing capital contributions.

Therefore, if dossiers are valid and full, it will take 15 days from the time the enterprise submits the dossiers to complete the procedures for transferring investment capital by foreign-invested enterprises.

The above is information related to the issue of the transfer of investment capital by foreign enterprises. To be supported and to learn about the information and regulations of the Laws on foreign-invested enterprises transferring investment capital, you can contact NPLaw to be consulted by a team of experienced lawyers and legal experts.