|Foreign capital contribution in companies
Several foreign friends and I plan to establish limited liability companies. Is this allowed by Vietnamese law?
- Nguyen Dinh Phuc, HCM City
Foreign organizations and individuals not residing in Vietnam are not allowed to establish and manage businesses, but can contribute capital to limited liability companies and joint-stock companies as stipulated in the Law on Promotion of Domestic Investment and relevant documents, such as articles 9 and 10 of the Enterprise Law that took effect on January 1, 2000.
Non-State Vietnamese enterprises which operate in trades and industries permitted by the law can sell shares to foreigners, with a value not exceeding 30% of their legal capital, according to Article 3 on the regulation for capital contribution and share purchase in Vietnamese enterprises by foreigners, issued in conjunction with the Prime Minister's Decision 36/2003/QD-TTg dated March 11, 2003, and Decision 260/2002/QD-BKH dated May 10, 2002 by the Ministry of Planning and Investment.
Foreign investors can buy shares issued for the first time by State-owned enterprises going public, additional shares issued by joint-stock companies, or stocks of shareholders in joint-stock companies. They can also buy the stakes of members of limited liability companies, or contribute capital in limited liability companies to become their members, according to Article 5 of Decision 36/2003.
Within 30 days prior to selling shares to or receiving capital from foreign investors, either by auction or non-auction, Vietnamese enterprises must provide the following information: Name and address of the enterprise; amount of shares to be sold or capital to be received; information about the business performance, capital and funds of the enterprise in the current year and two previous years; requirements for participation in a share auction; mode of payment and other relevant issues. The information must be announced in the media (newspapers, radio or television) for three consecutive times, according to Part II.3.1 of Circular 73/2003/TT-BTC dated July 31, 2003 by the Finance Ministry guiding the implementation of the regulation for capital contribution and share purchase in Vietnamese enterprises by foreign investors.
So, your foreign friends can only contribute capital to the planned limited liability company, on condition that its industries and trades must be in the list of industries and trades stipulated in Decision 260/2002 of the Ministry of Planning and Investment.
- Le Thanh Kinh, lawyer
Head of Le Nguyen Law Office