Procedures for establishing a company with foreign investment capital in the form of capital contribution and share purchase

In case an enterprise carries out procedures to establish a company with foreign investment capital in the form of capital contribution or share purchase, there will be 6 steps as follows:

Step 1: Establish a Vietnamese company

Foreign investors are only entitled to invest and buy shares in a Vietnamese enterprise after having an existing enterprise in Vietnam. If the procedures for establishing a business have not been completed, the Vietnamese partner needs to establish a new company with all investment capital from Vietnam.

Step 2: Prepare documents to register to buy capital contributions, shares, and capital contributions from foreign investors

Foreign investors prepare documents as follows:

• The registration dossier for capital contribution or share purchase includes detailed information about the enterprise to which the international investor intends to contribute capital or purchase shares. The dossier must clearly state the foreign investor's equity ratio after making capital contributions or purchasing shares or capital contributions;
• For individual investors, the application requires copies of personal legal documents; For institutional investors, a copy of the business registration certificate or other legal document is required;
• Written agreement on capital contribution/share purchase/capital contribution purchase between the foreign investor and the economic organization receiving capital contribution/share purchase/capital contribution purchase;
• Declaration document (attached with a copy) Certificate of land use rights of the economic organization receiving capital contribution/share purchase/purchase of capital contribution from foreign investors.

Step 3: Submit application

After fully preparing the documents, the foreign investor submits the documents to the Investment Registration Office, Department of Planning and Investment of the province where the enterprise is headquartered. Within 15 working days from receipt of complete and valid documents, the Department of Planning and Investment will issue a Notice confirming the satisfaction of necessary conditions to make capital contributions, purchase shares or capital contribution to the company in Vietnam.

Step 4: Foreign investors purchase shares, contribute capital, and purchase capital contributions from Vietnamese enterprises

If foreign investors contribute more than 51% of charter capital, the Vietnamese company will open a direct investment capital account. After that, the investor will transfer the capital contribution through the direct investment capital account. In addition, members and shareholders who have transferred capital need to declare and pay personal and corporate income tax (if applicable) in accordance with the law.

Step 5: Change the Business Registration Certificate

After the process of capital contribution, share purchase or capital contribution is completed, the company needs to carry out the necessary procedures to change its business registration. This requires updating information related to capital contribution and share purchase by foreign investors in business registration documents at the competent authority. Documents that need to be prepared include:

• Notice of change in business registration content;
• Decision on company changes (if any);
• Minutes of the meeting of the General Meeting of Shareholders or the Limited Liability Company on contents related to changes (if any);
• Transfer contract and documents certifying that the transfer has been completed, certified by the company's legal representative;
• List of capital contributing members/List of foreign shareholders;
• Notarized copy of investor's passport/Business registration certificate.

The process of changing the Business Registration Certificate must be conducted at the Department of Planning and Investment where the company's headquarters is located.

Step 6: Issue Business License or Operating License

Enterprises operating in the field of retailing goods or establishing retail establishments must apply for a Business License. For some conditional occupations, additional licenses are necessary for the business to be allowed to operate.