Business investment means an investor puts capital into a business activity. A foreign investor is an individual with a foreign nationality or an organization established under foreign law that conducts investment activities in Vietnam. After being issued an Investment Registration Certificate, such an investor is required to contribute capital as registered to implement the project. In many cases, foreign investors may not be able to contribute their capital on time and must go through procedures for extending a capital contribution deadline. To help readers better understand the process of extending capital contributions for foreign investors, NPLaw would like to share the following information.

I. Fines for failing to extend capital contributions for foreign investors

* Why is it necessary to contribute capital on time? 

Capital contribution is understood as an act of contributing assets to form the charter capital of a company. Capital contribution is one of the key conditions for establishing an enterprise, so contribution on time is of a significant importance. However, due to various objective factors in the process of investment and business activities, there are cases where foreign investors fail to contribute capital on time. The legal consequence is that foreign investors must face administrative fines as stipulated in Clause 3 and Clause 5 of Article 46 of Decree No. 122/2021/ND-CP, which regulates fines for administrative violations in the fields of planning and investment. 

Point a clause 3, Article 46 stipulates that a fine of between 30,000,000 VND and 50,000,000 VND shall be imposed for failing to implement procedures for adjusting capital or changing founding members or shareholders as prescribed with the business registration authority after a capital contribution deadline has passed, and no founding member or shareholder has made a capital contribution commitment despite the fact that founding members or shareholders do not have sufficient capital.

Point b clause 5, Article 46 also stipulates that it is obliged to adjust capital or change founding members or shareholders for acts violating the provisions in Point a, Clause 3 of this Article.

Thus, a foreign investor may face a fine of 50,000,000 VND, if failing to extend the capital contribution deadline.

II. Regulations on extending capital contributions for foreign investors

Vietnamese law has specific regulations regarding the extension of capital contributions for foreign investors.

Accordingly, for foreign-invested enterprises with the Investment Registration Certificate, the deadline for contributing charter capital for newly established enterprises is 90 days or a longer period as stated in the Investment Registration Certificate (Law on Enterprise 2020)

III. Procedures for extending capital contributions for foreign investors

Pursuant to Decree 31/2021/ND-CP, which guides the Law on Investment 2020, when an investor needs to extend a capital contribution deadline, such an investor must implement procedures for adjusting the Investment Registration Certificate.

1. Dossiers

To implement procedures for extending capital contributions for foreign investors, it is necessary to obtain the following dossiers:

- A proposal requesting the adjustment of the Investment Registration Certificate;

- A report on the progress of the investment project up to the adjustment;

- A decision and a valid copy of the meeting minutes from the Members’ Council/General Meeting of Shareholders/Owner of the foreign-invested enterprise regarding the adjustment of the investment project;

- Documents confirming the information on the investment capital account;

- A copy of the Enterprise Registration Certificate, and the Investment Registration Certificate issued;

- A power of attorney in case an investor does not directly submit the documents.

2. Procedures

Step 1: Preparing dossiers to adjust the Investment Registration Certificate (including the dossiers listed above).

Step 2: Submitting the application for extending the capital contribution deadline

- After preparing dossiers, the investor submits the application to the competent investment registration authority.

- The investor must complete the online declaration of information about the investment project in the national foreign investment information system and submit the dossiers directly to the competent investment registration authority.

- Within 15 working days from the date of the online declaration, the investor must submit the extension application to the investment registration authority.

Step 3: Processing the application and receiving results

- Within 10 days from the date of receiving a valid application, the investment registration authority will adjust the Investment Registration Certificate for the investor, recording the new capital contribution deadline for the investor.

IV. Common questions about the capital contribution extension procedures

1. When is it necessary to implement the procedures to extend the capital contribution deadline?

The Law on Enterprise 2020 stipulates that a foreign-invested enterprise, after being issued the enterprise registration certificate and the investment registration certificate, must complete the capital contribution as committed within 90 days or within a deadline agreed upon with the licensing authority. If the capital has not been fully contributed or is incomplete, the investor has to implement the procedures to extend the capital contribution deadline before the registered deadline.

2. Will there be fines if the capital contribution deadline is missed but the full capital is not contributed?

According to Decree 122/2021/ND-CP, if a capital contribution deadline passes and a foreign investor has not contributed the full capital and has not completed procedures to extend the capital contribution, they will face administrative fines.

3. Can the capital contribution deadline be extended along with the adjustment of the investment registration certificate?

The Law on Investment 2020 does not restrict foreign investors from adjusting the investment registration certificate if the capital has not been fully contributed. Therefore, enterprises are allowed to register the adjustment of the investment registration certificate simultaneously with a request for extending the capital contribution deadline.

4. Where is the capital contribution deadline for foreign-invested enterprises regulated?

The capital contribution deadline for foreign-invested enterprises is regulated in the Law on Enterprise 2020.

5. How long is the capital contribution deadline for foreign-invested companies?

The Law on Investment 2020 does not specify a deadline for fully contributing the investment capital. For capital contributions to establish an enterprise, the deadline is 90 days from the issuance of the enterprise registration certificate. Alternatively, the investor may request the investment management authority for a longer period, but it must align with the project implementation schedule.

6. Which law currently governs the capital contribution deadline for FDI enterprises?

FDI enterprises are understood as enterprises with foreign direct investment, regardless of the proportion of capital contributed by a foreign investor. The capital contribution activities of FDI enterprises are governed by the Law on Investment 2020.

7. Legal consulting services for the capital contribution extension for foreign investors

NPLaw is one of the leading firms in the country providing consulting services for capital contribution extension procedures for foreign investors in Vietnam. With a team of highly skilled and experienced  lawyers and specialists, we offer tailored advice for our clients. You can choose NPLaw’s services to implement the capital contribution extension procedures. When coming to NPLaw, clients will receive full and detailed advice on legal issues, along with the best solutions to resolve any concerns.