Required Documents and Procedures for Capital Contribution to Foreign-Invested Companies

Contributing capital to a foreign-invested company in Vietnam is a key activity amid increasing international economic integration. This process not only enables foreign investors to expand their business operations but also benefits the Vietnamese economy through the influx of capital, technology, and management expertise. However, to ensure compliance with Vietnamese laws, both investors and enterprises must understand the relevant dossiers, procedures, and legal requirements.

Legal Framework Governing Capital Contribution to Foreign-Invested Companies

The process of capital contribution to a foreign-invested company in Vietnam is regulated by the following key legal documents:

• Law on Investment 2020 (Law No. 61/2020/QH14): Regulates investment forms, rights and obligations of foreign investors, procedures for obtaining investment registration certificates, and conditions for engaging in specific business sectors.

• Law on Enterprises 2020 (Law No. 59/2020/QH14): Provides rules on the organization, operation, and management of enterprises, including those with foreign capital.

• Decree No. 31/2021/ND-CP: Offers detailed guidance on implementing the Law on Investment, including investment registration and project management.

• Decree No. 01/2021/ND-CP: Outlines procedures for enterprise registration, including foreign-invested companies.

Forms of Capital Contribution to Foreign-Invested Companies

Foreign investors can contribute capital to a company in Vietnam through various forms, depending on their objectives and needs. Common methods include:

• Contribution to a newly established company: Foreign investors contribute capital to set up a new company in Vietnam. This form requires a complete investment dossier and compliance with procedures to obtain an investment registration certificate.

• Contribution to an existing company: Foreign investors purchase shares or equity in an already-operating Vietnamese company. Proper legal and financial due diligence is essential in this case to avoid unforeseen risks.

• Joint venture with a Vietnamese partner: Foreign investors may establish a joint venture company with a domestic partner, based on an agreed capital contribution ratio.

Investment Conditions and Capital Contribution Procedures

Conditions:

• The foreign investor contributes capital or purchases shares/equity in a business sector subject to investment conditions applicable to foreign investors;

• The capital contribution or purchase increases foreign ownership from less than 51% to 51% or more;

• The foreign ownership increases from 51% or more to a higher level as specified in Article 23, Clause 1 of the Law on Investment.

Procedures:

Step 1: Register the capital contribution or share/equity purchase

• The foreign investor submits the required application to the Department of Planning and Investment (DPI)where the target company’s head office is located.

• The DPI reviews the investment conditions and notifies the investor. If the conditions are met, the investor proceeds to change the shareholder/member information according to regulations. If not, the DPI issues a written refusal with explanation.

Step 2: Register changes with the business registration authority

• The company receiving foreign capital must update its shareholder/member list with the business registration office. There is no need to adjust the investment registration certificate or investment policy decision for projects already implemented prior to the foreign capital contribution.

Rights and Obligations of Foreign Investors in Capital Contribution

Foreign investors contributing capital to a foreign-invested company should pay attention to the following:

• Ownership ratios: Investors must comply with restrictions on foreign ownership in specific sectors, especially regulated fields such as telecommunications, finance, banking, and insurance.

• Investor rights: Investors have rights to participate in major corporate decisions, including changes to company charters, appointment of key management, and profit distribution—subject to ownership percentage and mutual agreements.

• Financial obligations: Investors must contribute capital fully and on time, and comply with all financial obligations under Vietnamese law. Failure to do so may lead to administrative penalties or revocation of the investment license.

Legal Risks and Considerations in Capital Contribution

Although investing in a foreign-invested company in Vietnam offers many opportunities, investors should be aware of potential legal and financial risks, including:

• Ownership and control risks: Particularly in existing companies, investors may face control issues if they hold a minority stake or lack alignment with other shareholders.

• Tax and financial reporting risks: Issues in taxation or profit distribution may arise, especially if financial reports are unclear or non-compliant.

• Policy change risks: Vietnam’s investment policies may evolve, and such changes can directly impact the rights and expectations of foreign investors.

Legal Consultation for Foreign Investment by BKC Law

For free legal consultation on foreign investment and establishing FDI enterprises in Vietnam, please contact our lawyers via:

Phone: 0901 3333 41

Email: info@bkclaw.vn

Head Office (District 1): 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, HCMC

Branch Office (Bình Tân): 41 Tên Lửa, Bình Tân District, HCMC

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