In recent years, FDI capital resources into Vietnam have increased rapidly. Attracting foreign investment capital resources has been and is one of the essential policies in economic development. During the implementation of the investment project, there will be many problems that lead to the change of investors such as investors withdrawing capital, transferring capital to others, or the supplement of new investors.
So, how is the procedure for changing investors in the above cases done? What is the order of execution? CIS Law Firm would like to send you the following information.
MỤC LỤC BÀI VIẾT
1. Legal grounds
The regulations related to the procedures and order for implementing the change of investors for foreign-invested companies are specified in the following legal documents:
– Law on Investment No. 61/2020/QH14 promulgated by the National Assembly on June 17, 2020, effective from January 1, 2021;
– Law on Enterprise No. 59/2020/QH14 promulgated by the National Assembly on June 17, 2020, effective from January 1, 2021;
– Decree No. 31/2021/ND-CP issued by the Government on March 26, 2021, guiding the implementation of the Law on Investment;
– Decree No. 01/2021/ND-CP issued by the Government on January 4, 2021, on enterprise registration.
– Circular 03/2021/TT-BKHDT issued by the Ministry of Planning and Investment on April 9, 2021, regulating the form of documents related to investment activities in Vietnam, investment from Vietnam to abroad, and investment promotion.
2. What is an investor?
According to current regulations:
Investors means organizations or individuals conducting business investment activities, including domestic investors, foreign investors, and foreign-invested economic organizations, whereby:
– Foreign investors means individuals with foreign nationality or organizations established under foreign law that conducts business investment activities in Vietnam.
– Domestic investors means individuals with Vietnamese nationality, and economic organizations that do not have foreign investors as members or shareholders.
– Foreign-invested economic organizations means economic organizations with foreign investors as members or shareholders.
Investors in common sense are people who invest capital to carry out investment or business activities to achieve certain goals.
The Law on Investment 2020 classifies Investors into three categories, including Domestic investors; Foreign investors, and foreign-invested economic organizations.
The reason for this classification of investors is that the Law on Investment stipulates different investment procedures for each object. Regardless of regulations applicable to all types of investors, conditions and procedures for carrying out investment procedures for foreign investors and foreign-invested economic organizations are more stricter. This is also a form for state agencies to control foreign investment activities, to take reasonable measures to protect domestic enterprises in several important industries, as well as to enact policies of investment incentives for foreign investors in some industries that need investment and development.
3. Types of change of Investors
Common forms of investor change include:
– Change from one investor to another; or
– Adding new investors through many forms such as transferring capital, donating contributed capital, inheriting contributed capital, receiving capital from new members…
4. Procedures for changing investors due to investment tranfer
a) In case the foreign-invested companies operating under the Investmetn Registration Certificate and the Enterprise Registration Certificate
Procedures for changing investors due to capital transfer are carried out according to the following steps:
Step 1: Register for purchase of shares, contributed capital
Registration for purchase of shares or contributed capital is only applicable to foreign investors in the following cases:
– The purchase of shares, contributed capital increases the foreign investors’ ownership ratio in economic organizations engaged in business lines with conditional market access for foreign investors;
– The purchase of shares or contributed capital leads to the fact that foreign investors and economic organizations specified at Points a, b and c, Clause 1, Article 23 of the Law on Investment hold more than 50% of the charter capital of the economic organizations in the following cases: increasing the rate of ownership of charter capital of foreign investors from less than or equal to 50% to over 50%; increase the rate of ownership of charter capital of foreign investors when foreign investors already own more than 50% of charter capital in economic organizations;
– Foreign investors purchase shares or contributed capital from economic organizations having land use right certificates in islands and border communes, wards, and townships; coastal communes, wards, and towns; other areas affecting national defense and security.
♦ Profile composition:
– Written registration to purchase shares or contributed capital;
– Copy of legal papers of individuals or organizations buying shares or contributed capital and economic organizations with foreign investors buying shares or contributed capital;
– Written agreement in principle on purchase of share or contributed capital between foreign investors and economic organizations in which foreign investors purchase shares or contributed capital or between foreign investors and shareholders or members of the economic organizations;
– Copy of the certificate of land use rights of the economic organizations in which foreign investors contribute capital, purchase shares or contributed capital (if any).
♦ Competent Agencies: Department of Planning and Investment where the company is located.
♦ Processing time: 15 days from the date of receiving valid dossiers; in case the Company has certificate of land use rights in islands, communes, wards, border towns, and coastal communes, wards, and townships; other areas affecting national defense and security, the processing time is 25 days from the date of receipt of valid dossiers.
Step 2: Carry out the purchase of shares, contributed capital
Investors carry out the purchase of shares and contributed capital according to the content favorable in step 1 through an indirect capital investment account opened at a Bank in Vietnam and/or the direct capital investment account of foreign-invested companies.
Step 3: Carry out the procedure to change the business registration
♦ Profile composition:
∗ In case the owner of a one-member limited liability company transfers the entire contributed capital to another individual or organization, the dossier includes:
– Notice of change of company owner;
– Copy of legal papers of individual or organization as the transferee, copy of legal papers of the authorized person and copy of the document appointing the authorized representative in case the transferee is an organization.
For the owner is a foreign organization, the copy of legal papers of the organization must be consular legalized;
– Copy of the amended and supplemented charter of the company;
– Contract for tranfer of contributed capital or documents proving completion of the tranfer of contributed capital;
– A written approval from the Investment Registration Agencies on the purchase of contributed capital of foreign investors or foreign-invested economic organizations in case the procedures for registration of purchase of contributed capital must be carried out according to provisions of the Law on Investment (result of step 1).
∗ In case the owner of a one-member limited liability company transfers part or all of the contributed capital to another individual or organization:
The company must carry out the procedures to convert the type of enterprise from a one-member limited liability company to a limited liability company with two or more members or a joint-stock company, the dossier includes:
– Application for business registration;
– Company charter.
– List of members for limited liability companies with two or more members or list of founding shareholders.
Copies of the following papers:
+ Legal papers of the individual for the legal representative of the enterprise;
+ Legal papers of individuals or the organizations being members or founding shareholders of the Company; legal papers of the authorized person and copy of the document appointing the authorized representative in case the transferee is an organization.
For members being foreign organizations, copy of legal papers of the organizations must be consular legalized;
– The transfer contract or documents proving the completion of the transfer;
– A written approval from the Investment Registration Agencies on the purchase of contributed capital of foreign investors or foreign-invested economic organizations in case the procedures for registration of purchase of contributed capital must be carried out according to provisions of the Law on Investment (result of step 1).
∗ In case of a change of member in two member limited liability company or more, the dossier includes:
– Notice of change of company members;
– Share transfer contract or documents proving the completion of the transfer;
– Copy of legal papers of individual or organization as the transferee, copy of legal papers of the authorized person and copy of the document appointing the authorized representative in case the transferee is an organization.
– A written approval from the Investment Registration Agencies on the purchase of contributed capital of foreign investors or foreign-invested economic organizations in case the procedures for registration of purchase of contributed capital must be carried out according to provisions of the Law on Investment (result of step 1).
∗ In the case of a joint-stock company: A joint-stock company is not required to carry out the procedures for registration of change of shareholders with the business registration agency. The company manages itself and records the change of shareholders through the company’s shareholder book.
♦ Competent Agencies: Business Registration Office – Department of Planning and Investment where the Company is headquartered.
♦ Processing time: 03 working days from the next day on which the application is submitted.
Step 4: Change investor on Investment Registration Certificate
♦ Profile composition:
– A written request for adjustment of the investment project;
– Report on the implementation of investment projects up to the time of adjustment;
– Investor’s decision on the adjustment of the investment project;
– Proposal of investment project;
– Documentation of the new investor’s legal status;
– Documents proving the new investor’s financial capacity; Documents proving employment that the investor has purchased shares, contributed capital, etc.
♦ Competent Agencies:
– Management Board of industrial parks, export processing zones, hi-tech zones, economic zones if the company is in industrial parks, export processing zones, hi-tech zones, economic zones:
– Department of Planning and Investment where the Company is headquartered of the Company is located outside industrial parks, export processing zones, high-tech zones, economic zones:
♦ Processing time: 10 working days from the date of receiving complete and valid dossiers.
b) In case the foreign-invested company operating with only the Enterprise Registration Certificate
Procedures for changing investors due to capital transfer are carried out according to the following steps:
Step 1: Register to purchase shares and contributed capital (if the investors must register to purchase shares and contributed capital in accordance with the Law on Investment 2020)
Step 2: Carry out the purchase of shares, contributed capital
Step 3: Change the owner/type of business/company members on the Enterprise Registration Certificate corresponding to each case mentioned in Step 3, Section 4.a (except for the case of a company) share).
5. Procedures for additional investors due to additional capital contribution
a) In case the foreign-invested companies operating under the Investmetn Registration Certificate and the Enterprise Registration Certificate
Procedures for changing investors due to the addition of new investors contributing capital are carried out according to the following steps:
Step 1: Register to purchase shares and contributed capital (if the investors must register to purchase shares and contributed capital in accordance with the Law on Investment 2020)
The composition of the application file, the agency for settlement, and the time for settlement are similar to the case of registration to purchase shares or contributed capital in Step 1, Section 4. a.
Step 2: Carry out the capital contribution.
Investors make the capital contribution to the company account according to the content approved in step 1. The foreign investors must transfer capital from abroad into Vietnam through an indirect capital investment account opened at a bank in Vietnam.
Step 3: Carry out the procedure to change the business registration
– For one-member limited liability companies: carry out the procedure to convert the enterprise type from a one-member limited liability company to a two-member limited liability company or joint stock company (Step 3, section 4. a).
– For two-member limited liability companies: carry out the procedures for changing company members (Step 3, Section 4. a).
– For joint-stock companies: do not have to carry out procedures for registration of change of shareholders with the business registration agency. The company manages itself and records the change of shareholders through the company’s shareholder book.
Step 4: Change the investor on the Investment Registration Certificate.
Follow the same procedure as Section 4. Step 4.
b) In case the foreign-invested company operating with only the Enterprise Registration Certificate
The company takes the following steps:
Step 1: Register to purchase shares and contributed capital (if the investors must register to purchase shares and contributed capital in accordance with the Law on Investment 2020)
Step 2: Make the capital contribution.
Step 3: Change the type of business/company members on the Enterprise Registration Certificate corresponding to each case mentioned in step 3, Section 5. (except for the joint stock companies).
6. Service of changing investors Investment certificate of CIS Law firm.
With a wealth of experience in the field of investment consulting, CIS Law Firm has supported many foreign investors from many different countries to invest successfully in Vietnam, as well as support procedures to change the foreign investors of foreign-invested companies.
If you have difficulties in the process of changing the investors of foreign-invested companies or you have unclear content or need legal assistance, please immediately contact a lawyer of CIS Law Firm with the following information:
ENTERPRISE LEGAL DEPARTMENT – CIS LAW FIRM
109 Hoang Sa, Da Kao Ward, District 1, City. Ho Chi Minh
Phone: 028.3911.8581 – 3911.8582 Hotline: 0916.568.101
Email: info@cis.vn
