Conditions and Procedures for Transferring Shares Held by Foreign Investors

 Transfer of shares by foreign investors in Vietnam requires strict compliance with legal regulations regarding ownership ratios and administrative procedures. Although this process can be complex and require extensive documentation, it is essential to ensure transparency, fairness, and stability in the investment environment. These requirements protect the rights and interests of relevant parties and maintain market stability; however, they may also create certain barriers for foreign investors in executing and adjusting their investments.

What are the Conditions for Transferring Shares or Capital Contributions to Foreign Investors?

If the enterprise operates in a sector not subject to conditional investment and the transferred capital ratio is below 51%, it is only necessary to carry out the procedure for amending the Enterprise Registration Certificate.
In other cases, when transferring capital or shares to a foreign investor, registration for capital contribution, purchase of shares, or purchase of capital contribution must first be carried out at the Department of Planning and Investment. Subsequently, the procedure to amend the Enterprise Registration Certificate (changing the owner, members, or shareholders) may proceed. For example:

• In the tourism sector: The enterprise must have at least 10% capital contribution from Vietnamese investors.
• In the cargo transportation sector: The maximum capital contribution ratio by foreign investors is 49%.
• Foreign individual investors may own a maximum of 49% of the charter capital of a securities company pursuant to Article 77 of the Securities Law 2019.

Cases Where Foreign Investors Are Permitted to Contribute Capital, Purchase Shares, or Purchase Capital Contributions in Vietnamese Enterprises

Pursuant to Clause 2, Article 26 of the Law on Investment 2020 regarding procedures for investment in the form of capital contribution, share purchase, or purchase of capital contribution:
Accordingly, foreign investors must carry out registration procedures for capital contribution, share purchase, or purchase of capital contribution in economic organizations prior to changing members or shareholders if one of the following cases applies:
– The capital contribution, share purchase, or purchase of capital contribution results in an increase in the ownership ratio of foreign investors in an economic organization engaged in a sector or industry subject to market access conditions for foreign investors;
– The capital contribution, share purchase, or purchase of capital contribution results in a foreign investor or an economic organization specified in Points a, b, and c, Clause 1, Article 23 of this Law holding more than 50% of the charter capital of the economic organization in the following cases: increasing the foreign investor’s charter capital ownership ratio from 50% or below to above 50%; increasing the foreign investor’s charter capital ownership ratio when the foreign investor already holds more than 50% of the charter capital in the economic organization;
– The foreign investor contributes capital, purchases shares, or purchases capital contributions in an economic organization that holds a Land Use Rights Certificate in islands or border communes, wards, townships; coastal communes, wards, townships; or other areas affecting national defense and security.
*Note: – Investors contributing capital, purchasing shares, or purchasing capital contributions in an economic organization must satisfy the conditions and carry out procedures for changing members or shareholders in accordance with the law applicable to the respective type of economic organization.
– Investors not falling under the cases specified in Clause 2, Article 26 of the Law on Investment 2020 shall carry out procedures for changing shareholders or members in accordance with relevant laws when contributing capital, purchasing shares, or purchasing capital contributions in an economic organization.

Dossier and Procedures for Transferring Shares or Capital Contributions

Pursuant to Clause 2, Article 66 of Decree 31/2021/ND-CP:
An economic organization with foreign investment contributing capital, purchasing shares, or purchasing capital contributions in cases specified in Clause 2, Article 26 of the Law on Investment 2020 shall submit one (01) set of dossier for registration of capital contribution, share purchase, or purchase of capital contribution to the investment registration authority where the economic organization has its head office.

Required Dossier

– Application for registration of capital contribution, share purchase, or purchase of capital contribution, including the following contents:
+ Enterprise registration information of the economic organization in which the foreign investor intends to contribute capital, purchase shares, or purchase capital contribution;
+ Lines of business;
+ List of owners, members, founding shareholders, and list of owners, members, or shareholders who are foreign investors (if any);
+ Ownership ratio of the charter capital by foreign investors before and after the capital contribution, share purchase, or purchase of capital contribution in the economic organization;
+ Expected transaction value of the capital contribution contract, share purchase contract, or capital contribution purchase contract;
+ Information on the investment project of the economic organization (if any);
– Certified copies of legal documents of the individual or organization contributing capital, purchasing shares, or purchasing capital contribution, and of the economic organization receiving foreign investment through capital contribution, share purchase, or purchase of capital contribution;
– Principle agreement on capital contribution, share purchase, or purchase of capital contribution between the foreign investor and the economic organization receiving foreign investment, or between the foreign investor and the shareholders or members of that economic organization;
– Certified copy of the Land Use Rights Certificate of the economic organization receiving foreign investment through capital contribution, share purchase, or purchase of capital contribution (in the case specified in Point b, Clause 4, Article 65 of Decree 31/2021/ND-CP).

Procedures for Transferring Shares or Capital Contributions

Step 1. Obtain written confirmation of eligibility for capital contribution, share purchase, or purchase of capital contribution by foreign investors.
Pursuant to Article 66 of Decree 31/2021/ND-CP, the economic organization with foreign investment contributing capital, purchasing shares, or purchasing capital contributions in cases specified in Clause 2, Article 26 of the Law on Investment shall submit one (01) set of dossier for registration of capital contribution, share purchase, or purchase of capital contribution to the investment registration authority where the economic organization has its head office. The dossier includes:

• Application for registration of capital contribution, share purchase, or purchase of capital contribution containing the following information: enterprise registration information of the economic organization in which the foreign investor intends to contribute capital, purchase shares, or purchase capital contribution; lines of business; list of owners, members, founding shareholders, and list of owners, members, or shareholders who are foreign investors (if any); ownership ratio of the charter capital by foreign investors before and after the capital contribution, share purchase, or purchase of capital contribution in the economic organization; expected transaction value of the capital contribution contract, share purchase contract, or capital contribution purchase contract; information on the investment project of the economic organization (if any);
• Certified copies of legal documents of the individual or organization contributing capital, purchasing shares, or purchasing capital contribution, and of the economic organization receiving foreign investment;
• Principle agreement on capital contribution, share purchase, or purchase of capital contribution between the foreign investor and the economic organization receiving foreign investment, or between the foreign investor and the shareholders or members of that economic organization;
• Certified copy of the Land Use Rights Certificate of the economic organization receiving foreign investment through capital contribution, share purchase, or purchase of capital contribution (in the case specified in Point b, Clause 4, Article 65 of this Decree).

After preparing a complete dossier, the enterprise shall submit one (01) hard-copy set directly to the Investment Registration Office – Department of Planning and Investment of the province/city where the enterprise has its head office.
Within 15 days from the date of receipt of a valid dossier, the Investment Registration Office shall review the validity of the dossier and issue a Notice confirming that the conditions for capital contribution, share purchase, or purchase of capital contribution by foreign investors have been met.
Step 2: Carry out procedures to amend the Investment Registration Certificate.

• If the investor registers capital contribution, share purchase, or purchase of capital contribution in a 100% Vietnamese-owned company, the enterprise may skip this step and proceed directly to Step 3.
• After the Department of Planning and Investment issues a notice approving the foreign investor’s capital contribution, share purchase, or purchase of capital contribution in a foreign-invested enterprise, the enterprise shall carry out procedures to amend the Investment Registration Certificate at the Investment Registration Authority.
• If the company has not yet separated the Investment Registration Certificate into the Investment Registration Certificate and Enterprise Registration Certificate, the foreign-invested company must first carry out the separation procedure before amending the Investment Registration Certificate.

Step 3: Carry out procedures for transferring shares or capital contributions to foreign investors
The dossier for transferring shares or capital contributions to foreign investors includes:

• Notice confirming that the conditions for capital contribution, share purchase, or purchase of capital contribution by foreign investors have been met.
• List of contributing members or list of contributing shareholders after the transfer.
• List of shareholders who are foreign investors (for joint-stock companies).
• List of authorized representatives of foreign investors that are organizations.
• Share transfer contract or capital contribution transfer contract.
• Minutes of liquidation of the transfer contract.
• Notarized copies of ID card/Citizen ID/passport of individual investors or notarized copies of Establishment Decision/Enterprise Registration Certificate of organizational foreign investors (which must be consular legalized at the Vietnamese Embassy abroad, then translated and notarized).
• Power of attorney for the person carrying out the procedures at the business registration authority.
• Notarized copies of ID card/Citizen ID/passport of the authorized person.

The foreign investor’s capital contribution, share purchase, or purchase of capital contribution in a Vietnamese company may result in various outcomes, such as change of owner, increase in charter capital, change of members, change of shareholders, conversion of enterprise type, etc. Therefore, the dossier submitted to the Department of Planning and Investment for amending the Enterprise Registration Certificate will vary accordingly.
After preparing a complete dossier, the enterprise shall submit one (01) set directly to the Business Registration Office – Department of Planning and Investment of the province/city where the head office is located, or submit online via the National Enterprise Registration Portal. Within 5-7 working days from the date of submission, the Business Registration Office shall review the validity of the dossier and issue a new Enterprise Registration Certificate to the enterprise.

Important Issues to Note When Transferring Shares by Foreign Investors

1/ Where to Submit the Dossier for Transferring Shares or Capital Contributions to Foreign Investors?

After preparing a complete transfer dossier, submit it to the Business Registration Office of the Department of Planning and Investment. Within 25-30 working days from the date of submission, the Department will notify you of the results.

2/ In What Forms Can Foreign Investors Contribute Capital, Purchase Shares, or Purchase Capital Contributions in Vietnamese Companies?

Pursuant to Article 25 of the Law on Investment 2020, foreign investors may contribute capital, purchase shares, or purchase capital contributions in Vietnamese companies in the following forms:
– Forms of capital contribution by foreign investors in Vietnamese companies:

• Purchasing initial issued shares or additional issued shares of a joint-stock company.
• Contributing capital to a limited liability company or partnership company.
• Contributing capital to other Vietnamese companies not falling under the above two cases.

– Forms of share purchase or capital contribution purchase by foreign investors in Vietnamese companies:

• Purchasing shares of a joint-stock company from the company or shareholders.
• Purchasing capital contributions of members of a limited liability company/partnership company to become members of the limited liability company/partnership company.
• Purchasing capital contributions of members of other Vietnamese companies not falling under the above three cases.

3/ After the Capital Transfer, Does the Investor Need to Declare and Pay Corporate Income Tax?

Within 10 days after signing the transfer contract, the transferor must file a personal income tax declaration (for individual investors) or corporate income tax declaration (if the foreign investor is an organization) as prescribed by law.
For joint-stock companies, the transferor of shares must pay personal income tax at 0.1% (for individual investors) or corporate income tax at 20% (for organizational investors) on the transfer value.

Support Services for Consulting on Share Transfer Procedures for Foreign Investors at BKC Law

At BKC Law, we provide comprehensive advisory services on share transfer procedures for foreign investors. Our team of attorneys and experts will guide you through each step of the process, from preparing and drafting necessary documents to carrying out legal procedures and registration with competent authorities. We commit to full compliance with current legal regulations and to optimizing benefits for you during the transfer process. With extensive experience and in-depth understanding of Vietnam’s legal environment, we are confident in delivering the most effective and professional solutions for foreign investors.
For free legal consultation at BKC Law, you can contact our attorneys via the following information:
Phone: 0901 3333 41
Email: info@bkclaw.vn
Office in District 1:  9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City
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