Conditions for transferring capital contributions and shares to foreigners

Transfer of contributed capital and shares to foreigners is the process of transferring ownership of contributed capital and shares of foreigners in a company or organization in Vietnam. Foreigners may want to buy back or receive a transfer of contributed capital or shares from a current member/shareholder/owner of the company. This transfer process is usually carried out through agreement between related parties and in compliance with Vietnamese law. At the same time, it is necessary to meet the legal conditions on transferring capital contributions and shares to foreigners. Below, Truong Quyen Law Office - Davilaw Branch provides the following regulatory information:

For Vietnamese businesses

If the enterprise has 100% Vietnamese capital, when it wants to transfer capital and shares to foreign investors, it must rely on that business line to have any regulations on transferring capital and shares to foreigners. No and what is the maximum percentage of capital contribution that can be transferred?

If the enterprise operates in an unconditional industry and the transfer rate is less than 51%: The enterprise only needs to carry out procedures to change the business registration certificate.

In other cases, when members or shareholders transfer capital or shares to foreigners, they must carry out procedures to register capital contribution, purchase shares, or capital contributions at the Department of Planning and Investment. Only then do the procedures to change the business registration certificate (change owner/member/shareholder).

For businesses with foreign elements

Enterprises with foreign elements here can be understood as Vietnamese enterprises with capital contributions from foreigners or other foreign elements such as a foreign legal representative.

Similar to Vietnamese businesses, when transferring capital contributions and shares to foreigners, businesses with foreign elements will also have to consider business lines and transfer rates, because there are some industries that do not have foreign elements. For foreigners registering operations and some professions, there will be a limit on the percentage of capital contribution.

What documents are required to transfer capital to a foreign company?

Full preparation of documents and records on foreign company capital transfer aims to ensure transparency, compliance with legal regulations and is the legal basis to ensure the rights of related parties. includes current members/shareholders/owners of the company and foreign transferees. Important information about transfer value, ownership ratio, transfer time and other terms are recorded in this document to ensure clarity and fairness for all parties. So what documents are required to transfer capital to a foreign company? We invite readers to read more information below!

Profile of foreign investors

• If the investor is an individual, submit a notarized copy of passport;
• If the investor is an organization, submit a copy of the Certificate of Establishment, business registration license or equivalent document confirming foreign legal status.
• Document registering capital transfer of foreign investors into enterprises in the territory of Vietnam.
• Statement of account balance (for individuals) and financial report (for organizations) proving the completion of full capital contribution by foreign investors.
• Authorization document for the organization/individual to represent the capital contribution and carry out procedures (if any).

Profile of Vietnamese businesses

• Business license;
• Decision/meeting minutes on changing members and shareholders of the company;
• List of new shareholders or new shareholder register;
• Capital transfer contract and documents certifying the completed transfer such as (liquidation minutes) certified by the company's legal representative.
• In addition, if the transfer of capital affects the number of shareholder members and the type of business of the company, the company needs to carry out procedures to change the type of business with the following documents:
  – Notice of change in business registration content, or conversion of company type.
  – If you are a joint stock company, you must submit the minutes of the meeting of the general meeting of shareholders
  – If it is a limited liability company with 2 members, submit the meeting minutes of the board of members
  – If it is a one-member limited liability company, submit the company owner's decision to allow capital transfer to foreigners.
• Authorization document for the organization/individual to carry out the procedure (if any).

Order and procedures for transferring capital to foreign investors

Implementing the correct order and procedures for capital transfer to foreign investors helps state management agencies manage and monitor the capital transfer process. This helps ensure transparency and clarity and avoid invalid capital transfer activities or violations of legal regulations. Complying with procedures in the process of transferring capital to foreign investors creates trust and increases the attractiveness of the domestic investment environment. This can attract more foreign investors and contribute to local economic development.

Step 1: Register to contribute capital, buy shares, or contribute capital

1. Applicable in case the transferee of capital contribution is an investor with foreign investment capital. In the procedural process of this step, it needs to be done at the Investment Department - Department of Planning and Investment of the province or city where the investment project is implemented.

2. Documents to carry out procedures for registering capital contribution, purchasing shares, and capital contributions require the following categories:

– The registration document for capital contribution, share purchase, capital contribution includes the following contents: information about the economic organization to which the foreign investor intends to contribute capital, buy shares, or capital contribution; Charter capital ownership ratio of foreign investors after contributing capital, purchasing shares, or capital contributions to economic organizations;

– Passport for individual investors; Certificate of establishment or other equivalent document confirming legal status for institutional investors.

3. Within 15 working days from the date of receipt of valid documents, the Business Registration Authority shall issue a notice of satisfaction of the conditions for capital contribution, share purchase, capital contribution and Vietnamese enterprises. Male.

Step 2: Change business registration for foreign invested companies

1. Foreign-invested companies operating in Vietnam are also governed by enterprise law, so when there is a change in capital transfer between investors, they will also have to carry out change procedures. change business registration. If the investor receiving capital transfer is a foreign investor, the procedure for changing the business registration will be carried out after completing the procedure for registering capital contribution, purchasing shares, and contributing capital to the investor. Foreign investment. If the transferee is a Vietnamese investor, this step is always done when a capital transfer transaction takes place.

2. The following documents must be provided in the submitted application:

– Meeting minutes/decisions on capital transfer

– Transfer contract and minutes of capital transfer liquidation and transfer

– Notice of change in business registration content

– Citizen identification card/Passport of the person receiving the capital contribution transfer

3. Within 3 working days from the date of receipt of complete and valid documents, the Business Registration Authority will notify you of the validity of the documents for capital transfer.

Step 3: Carry out procedures for adjusting investment certificates, also known as procedures for changing investment certificates

This step is done to adjust the information on the investment certificate about the investor because the investment certificate shows information about the project's investors, but it should be noted that not all In all cases, this procedure for adjusting the investment certificate must be carried out, but only investment projects that have already been granted an investment certificate need to carry out this step.

Note when transferring capital or shares to foreigners

In addition to the legal regulations and procedures, entities participating in transactions transferring capital contributions and shares to foreigners should note a number of things before transferring capital contributions and shares to foreigners. , should carefully research and comply with relevant legal regulations to ensure compliance and avoid potential legal issues.

1. Within 10 days from the date of transfer, the Vietnamese member or shareholder transferring the capital contribution to a foreigner must submit a personal income tax declaration to the competent tax authority.

2. For joint stock companies, transferring individuals must both submit a personal income tax declaration and pay personal income tax of 0.1% on the transfer value.

3. For limited liability companies, the transferring individual only needs to submit a personal income tax declaration within 10 days from the date of completion of the transfer.