Legislation

The capital contribution and purchase of shares by foreign investors in Vietnam’s enterprises is regulated not only by the Vietnamese laws such as: Law on enterprises 2005, Law on investment 2005 but also in the Commitment on the Accession of Viet Nam into WTO. Moreover, as Decision 88/2009/QD-TTg, promulgating the regulation on foreign investors’ contribution of capital to, and purchase of shares from, Vietnamese enterprises.

Limitation

There are two types of limitation for the purchase of shares by foreign investors in Vietnam’s enterprises. Those are the limitation of possession percentage and the limitation in business sectors.

Under the Schedule of Specific Commitments in Services Commitment on the Accession of Viet Nam into WTO, the total equity held by foreign investors in each enterprise may not exceed 30% of the enterprise's chartered capital unless otherwise provided by Viet Nam's laws or authorized by Viet Nam's competent authority. One year after accession into WTO (i.e.: 11 Jan 2008), the 30% foreign equity limitation for acquisition of Vietnamese enterprises shall be eliminated, except for capital contribution in the form of buying shares of joint-stock commercial banks, and except for the sectors not committed in this Schedule. For the other sectors and sub-sectors committed in this Schedule, the level of equity held by foreign investors in acquisition of Vietnam’s enterprises shall be corresponding to the limitations on foreign capital participation set forth therein, if any, including the limitations in the form of transitional periods, where applicable. 

Rights of Foreign investors

Foreign investors shall enjoy the following rights:

i. To put their stocks in pledge in credit relations and as security for performance of civil obligations under the Vietnamese law.

ii. To transfer the ownership of stocks or participate in trading in the securities market when joint-stock companies are listed under the Enterprise Law and the securities law.

iii. To transfer their capital holdings or adjust their investment capital amounts in the course of business operation under the Vietnamese law and charters of enterprises.

iv. To convert into foreign currencies Vietnam-dong amounts of recovered investment capital and profits earned from investment in Vietnam for remittance abroad, after fulfilling their financial obligations toward the Vietnamese State and related parties. The purchase of foreign-currency amounts for remittance abroad complies with the regulation on foreign exchange management and the Vietnamese law.

v. To take part in corporate administration under the Enterprise Law and the charters of enterprises to/from which they contribute capital or purchase shares (unless they are capital-contributing partners of partnerships).

vi. To enjoy benefits like domestic investors when investing in joint-stock companies, limited liability companies or partnerships.

vii. To have other rights provided for by the Vietnamese law.

Procedures

Procedures of capital contribution and share purchase as following:

i. For foreign investors who both participate in Vietnam's securities market and contribute capital to. Or purchase shares from, Vietnamese enterprises which are not public companies: the procedures and process for the contribution of capital to. Or purchase of shares from, Vietnamese enterprises (both public and non-public) comply with current regulations on operations of foreign investors in the Vietnam's securities market (the Finance Minister's Decision No. 121/2008/QD-BTC of December 24. 2008) and this Circular.

ii. Foreign investors who do not participate in Vietnam's securities market may make investment in the following forms:

a. Foreign organizations (via authorized representatives) and foreign individuals directly contribute capital to, or purchase shares from Vietnamese enterprises.

b. Foreign organizations and foreign individuals authorize, via authorization documents, transaction representatives in Vietnam

iii. The level of capital contributed or share purchased (including the capital portion acquired from the purchase of the right to additionally contribute capital, share option rights or warrants) by foreign investors to/from Vietnamese enterprises (including those purchased from capital-contributing members or shareholders) must comply with the holding rates prescribed in Article 3 of the Regulation issued together with Decision No. 88/2009/QD-TTg.

Taxation

Foreign investors shall be enjoy withholding tax holiday applicable to their abroad remitted dividends and other earnings upon capital contribution and buying share in Vietnamese Enterprises and others taxes under Vietnamese Laws.