Definition of a Foreign Investor in Vietnam
Pursuant to Clause 19, Article 3 of the Law on Investment 2020, a foreign investor is defined as an individual holding foreign nationality or an entity established under foreign laws that engages in business investment activities in Vietnam. Accordingly, foreign investment in Vietnam entails the contribution of assets or investment capital by foreign investors, whether individuals or enterprises, through legally recognized investment forms.
Forms of Investment by Foreign Investors in Vietnam
Under Article 21 of the Law on Investment 2020, foreign investors may invest in Vietnam through five primary forms. They may establish a business organization, contribute capital, acquire shares or stakes, execute an investment project, or enter into a business cooperation contract. Additionally, other forms of investment and types of business organizations may be permitted under the regulations issued by the Government.
Regulations on Capital Contribution, Share Acquisition, or Stake Purchase by Foreign Investors
Pursuant to Article 24 of the Law on Investment 2020, foreign investors are allowed to contribute capital, acquire shares, or purchase stakes in business organizations in Vietnam. However, such investments must comply with specific conditions, including market access restrictions applicable to foreign investors under Article 9 of the Law on Investment 2020, national defense and security requirements, and land-related regulations concerning the acquisition of land use rights in islands, border areas, or coastal communes.
As stipulated in Article 25 of the Law on Investment 2020, capital contribution by foreign investors may take the form of purchasing shares in a joint-stock company through an initial public offering or additional issuance, contributing capital to limited liability companies and partnerships, or investing in other business organizations not explicitly covered under these categories. In terms of share or stake acquisition, foreign investors may purchase shares from a joint-stock company or its shareholders, acquire stakes from members of a limited liability company to become a member, purchase stakes from capital-contributing members of a partnership to assume the same status, or invest in other economic entities as prescribed by law.
Procedures for Investment through Capital Contribution, Share Acquisition, or Stake Purchase
According to Article 26 of the Law on Investment 2020, foreign investors acquiring shares, contributing capital, or purchasing stakes must fulfill conditions and follow the procedures for changing shareholders or members in accordance with the regulations applicable to each type of business entity. Registration of capital contribution, share acquisition, or stake purchase must be completed before any change in shareholder or member structure in cases where the investment increases the foreign ownership ratio in a business organization operating in a restricted business sector, results in a foreign investor or a designated foreign-invested entity holding over 50% of the charter capital, or involves a business organization that holds land use rights in areas affecting national defense and security.
Foreign investors who do not fall under the above categories must follow the general procedures for changing members or shareholders as prescribed by law. However, if they choose to register their capital contribution, share acquisition, or stake purchase voluntarily, they must comply with Clause 2, Article 26 of the Law on Investment 2020.
The above information is provided by Mys Law. For any questions regarding the content of this article, please contact 0969.361.319 or email: [email protected] for further clarification. Best regards!
Compiler: Nguyen Anh Quan
