Foreign Investors can transfer their contributed capital in the company to other individuals / organizations without affecting the investment incentives of the Company. The following article provides some information about the conditions and procedures for a Foreign Investor to transfer capital contribution in a limited liability company.
For more advice, please contact us here.
Transfer of stakes in a sole limited company
In a one-member limited liability company, the foreign investor acts as the owner of the company. Under the provisions of the Enterprise Law, the company owner has the right to decide to transfer part or all of the charter capital of the company to other individuals or organizations.
1. Where the foreign investor is the company owner transfers the entire charter capital.
The capital transfer must be made in writing (the capital transfer contract) or there must be documents proving the completion of the transfer. The content of the transfer must be clearly and fully shown (the information of the transferor and the transferee; the amount of the assignment; the time of receipt of the assignment; the rights and other obligations ...). If a foreign investor transfers capital to a Vietnamese person or a Vietnamese enterprise, the transferee can immediately carry out the procedures for changing the owner for the company.
Documents to be prepared for the owner change procedure include:
- Notice of changes to the enterprise registration contents signed by the old owner or the legal representative of the old owner and the new owner or the legal representative of the new owner;
- Valid copies of personal identification papers in case the transferee is an individual or a valid copy of the Business Registration Certificate or other equivalent document in case the transferee is an organization;
- Copy of the revised company charter;
- Capital transfer contract or documents proving completion of the capital transfer;
- A letter of attorney in case the legal representative of the company does not directly perform the procedure.
The above documents are submitted at the Business Registration Office of the province/ city where the company is located. After reviewing the validity of the application, the Business Registration Office will issue a new Business Registration Certificate to the company.
However, if the owner transfers the entire capital to a foreign person or organization, the transferee must first go through the registration procedure to purchase the stake.
An application for registration of capital contribution purchase is required:
- Registration document for capital contribution includes the following contents: information about economic organizations to which foreign investors are expected to contribute capital; ratio of foreign investors' ownership in charter capital after their capital contribution to economic organizations;
- Copy of ID card or passport for individual investors; a copy of the Certificate of Establishment or another equivalent document certifying the legal status of the institutional investor;
- In case a foreign investor authorizes another person to perform, a power of attorney or authorization through a service contract is required.
Applications are submitted at the Business Registration Office of the province/ city where the company is headquartered. Within 15 days after receiving a valid dossier, the Business Registration Office will consider and issue a written approval if the purchase of the capital contribution is eligible by law. In case the capital contribution is not eligible, the Business Registration Office will issue a written statement stating the reason.
After obtaining approval from the business registration office, the foreigner receiving the assignment will submit a dossier to change the owner of a one-member limited liability company. The composition and procedures are the same as above, but the foreigner's dossier must include the notice of approval of capital contribution from the Business Registration Office.
2. Where the foreign investor is the owner transfers a part of the charter capital
The owner transfers a part of capital, which results in the company having many members owning the charter capital, so the company must carry out the procedure to convert the company type to a two-member limited liability company or a joint stock company (depending on the legal regulations and members' needs). For the transferee being a foreigner owning more than 51% of the charter capital or a company operating in conditional business lines, the transferee must follow the procedures for registration to purchase the capital contribution, the same documents and procedures as mentioned above.
An application for membership conversion includes:
- Application form for enterprise registration;
- List of founding members/ shareholders, accompanied by authentic papers;
- Amended company charter;
- An assignment contract or a document indicating completion of the assignment;
- Approving to purchase the capital contribution (for transferees who are foreigners holding more than 51% of the charter capital or companies operating in conditional industries or trades);
- Power of attorney (if any).
Applications are submitted at the Business Registration Office. Within 03-05 working days after receiving a valid application, the Business Registration Office will issue a business registration certificate for the new company.
Transfer of stakes in a limited liability company with two or more members
Unless the Company does not repurchase capital contribution in accordance with the above provisions, the member has the right to freely transfer the contributed capital amount, the order for the transfer of the contributed capital amount shall be as follows:
- Must offer to sell such capital to the remaining members in proportion to their contributed capital in the company under the same conditions;
- Transfer to non-members only if the remaining members of the company do not buy or do not buy all within 30 days from the date of offer.
Procedures for changing members of limited liability companies are as follows:
Documents need to prepare:
- Notice of changes in business registration content;
- Minutes of meetings of the Members' Council;
- Decisions of the Members' Council;
- Notice of setting up the membership book;
- Members list;
- Capital assignment contract or a document proving completion of the transfer;
- Personal identification papers in case of the transferee or business registration certificate for the transferee and personal identification papers of the legal representative of such organization;
- Capital contribution decision for the transferee;
- Power of attorney (if any).
After preparing the above documents, the company submits the application at the Business Registration Office of the province /city where the company is located.