How long is the charter capital contribution period?
Depending on the type of enterprise that the Foreign Investor is expected to establish in Vietnam, the time limit for charter capital contribution differs as follows:
- For the type of limited liability company: Within 90 days from the date of issuance of the Certificate of Business registration, the capital contributor in a limited liability company with two or more members or the owner in a one-member limited liability company have the obligation to contribute capital fully and with the right types of assets as committed. After the members of a limited liability company with two or more members contribute their capital fully as committed, the Company must issue a Certificate of capital contribution corresponding to the value of the contributed capital.
- For the type of Joint Stock Company: Shareholders in a Joint Stock Company are obliged to pay the full amount of shares registered to buy within 90 days from the date of issuance of the Enterprise Registration Certificate, except for the Company's charter or the share subscription contract provides for another shorter term. The Board of Directors is responsible for supervising and urging shareholders to make full and timely payment for the registered shares.
Note: The term of capital contribution of a Foreign Investor is usually recorded in the Investment Registration Certificate. For a newly established project, this time limit is normally equal to the time limit for charter capital contribution of 90 days from the date of issue of the Certificate of Business registration of the Foreign Capital Company as mentioned above.
What assets can be used for capital contribution?
Under the Law on Enterprises, assets contributed as capital include the following assets:
- Vietnamese Dong;
- Foreign currency can be converted;
- Gold;
- Value of land use rights, value of intellectual property rights (including copyrights, copyright-related rights, industrial property rights, rights to plant varieties and other intellectual property rights in accordance with the law on intellectual property);
- Technologies, know-how and other assets that can be assessed in Vietnamese Dong.
How Can Foreign Investors Make Money Contribution?
When contributing capital in Vietnamese Dong or a freely convertible foreign currency to a Foreign Company, the Foreign Investor is required to make a transfer through the investment capital account opened at a commercial bank. The invested capital account can be either the Direct Investment Capital Account or the Indirect Investment Capital Account depending on the Foreign Investor's proportion of foreign investors' ownership in charter capital in the Foreign Capital Company. Details as follows:
- In case the Foreign Company opens a direct investment account: The capital contribution through the direct capital account can be made in foreign currency, Vietnam Dong and the amount of capital contributed by the Investor according to the Documents proving the investor's right to contribute capital such as: Certificate of investment registration, Certificate of business registration, Notice of satisfaction of conditions for capital contribution, share purchase, capital contribution redemption ... For each type of capital contribution (VND, foreign currency), the Foreign Company will have to open a direct investment capital account in the respective currency and only open one direct investment account for a currency at an authorized bank, unless a Foreign Investor participates in multiple BCC contracts or directly carries out multiple PPP projects, a separate direct investment account must be opened for each BCC contract, PPP project.
- In case a Foreign Investor opens an Indirect Investment Capital Account: All investment activities of a Foreign Investor in Vietnam must be conducted in Vietnam Dong and through the indirect investment capital account. Transactions related to foreign indirect investment activities in Vietnam by Foreign Investors must be done through 01 (one) only indirect investment capital account opened at an authorized bank.
Where does a Foreign Capital Company have to open a Direct Investment Capital Account?
A Foreign Company must open a Direct Investment Capital Account in the following cases:
- Be established in the form of an investment to establish an economic organization, in which there is a Foreign Investor as a member or shareholder and must carry out the procedures for issuance of an Investment Registration Certificate in accordance with the law. on investment;
- Having a Foreign Investor contributing capital, buying shares, or buying capital contribution to the Company (operating in a conditional investment or business line or without any conditions applicable to Foreign Investor) leads to Foreign Investors owning 51% or more of the Company's charter capital but are not required to carry out the procedures for issuance of an Investment Registration Certificate in accordance with the law on investment;
- Established after splitting, merging, or consolidating, resulting in Foreign Investors owning 51% or more of the charter capital of the Company and not in the case of having to go through the procedure for issuance of the Investment Registration Certificate in accordance with the Law on Investment;
- Newly established under the provisions of specialized law with a Foreign Investor holding 51% or more of the charter capital of the Company which is not required to carry out the procedures for issuance of the Investment Registration Certificate under the regulations of the law on investment.
In the event that the Foreign Company and Foreign Investors fail to comply with the provisions of law relating to capital transactions conducted through the Direct Investment Capital Account, Foreign Investors have profits will be difficult to repatriate and administrative penalties may result.
For Foreign Capital Companies that are not required to open a Direct Investment Capital Account, the foreign investor will open an Indirect Investment Capital Account to perform capital transactions.