Originally published 20 July 2010

Keywords: foreign investment, Vietnamese companies, foreign investment, capital account

On 8 July 2010, the Ministry of Planning and Investment issued an official letter No. 4646/BKH-DTNN ("Official Letter") providing guidance on foreign investment ("Foreign Indirect Investment") in the form of capital contribution to, or purchase of shares in, local Vietnamese companies ("Target Company").

Key points of the Official Letter are as follows:

Investment Capital Account

A foreign investor ("Investor") must have an investment capital account (in the case of organisations) or an individual capital account (in the case of individuals) opened with a commercial bank in Vietnam in order to carry out the Foreign Indirect Investment. Evidence of the opening of such account must be enclosed with the application for amendment of the business registration certificate of the Target Company ("BRC").

Amendment of the BRC

When the Foreign Indirect Investment takes place, the Target Company must carry out the business registration procedures in accordance with the Law on Enterprises. The licensing authority will take into account any foreign ownership restrictions as applicable to foreign investors, if any, during its consideration of the application.

Target Company

If the Target Company is a single-member limited liability company, it must:

  1. be converted into a multi-member limited liability company, if the Investor purchases only a part of the Target Company's charter capital; or
  2. apply for issuance of a new investment certificate, if the Investor purchases the entire charter capital of the Target Company.

Receipt of Capital/Shares by an Investor as Heir to the Target Company's Member/Shareholder

If such receipt of capital/shares would be inconsistent with the current regulations regarding foreign ownership, the Investor and/or the Target Company must either:

  1. transfer the capital/shares in the Target Company to other local Vietnamese investors; or
  2. delete the business lines which are restricted to foreign investors from the BRC of the Target Company.

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