Investment activities in our country are quite popular, this activity is regulated by law in many different forms. Capital contribution purchase activities are commonly carried out in large enterprises today. So how is the procedures for registration to buy capital contributions regulated by law? Please refer to the content of the article below by Ke Toan Viet My.

I. Legal basis

– Investment Law No. 61/2020/QH14 passed by the National Assembly of the Socialist Republic of Vietnam on June 17, 2020;

– Decree 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the Investment Law;

– Circular 03/2021/TT-BKHĐT stipulating the forms of documents and reports related to investment activities in Vietnam, investment from Vietnam to foreign countries and investment promotion.

II. Article content

1. What is capital contribution purchase?

Buying a capital contribution is understood as buying a portion of assets to form the charter capital of a company, buying a certain value of assets of a member who has contributed or committed to contribute to the enterprise to own a certain percentage of capital contribution.

When buying a capital contribution, the investor will be named as the owner of a portion of the charter capital of the enterprise and will receive dividends from the percentage of capital contribution held. This is a fairly common form of investment today by individual investors or organizations in large enterprises.

2. Conditions for investors to contribute capital, buy shares, buy capital contributions in Vietnam

According to the provisions of Clause 2, Article 24 of the Investment Law, investors must meet the following conditions:

a) Market access conditions for foreign investors prescribed in Article 9 of the Investment Law;

b) Ensuring national defense and security according to the provisions of this Law;

c) Provisions of the law on land on conditions for receiving land use rights, conditions for land use in islands, border communes, wards, and towns, coastal communes, wards, and towns.

It can be seen that in order for investors to purchase capital contributions, they must also meet certain conditions on market access, not violating national defense, security, and regulations on land, land use rights, and conditions for land use.

3. Forms of capital contribution, share purchase, capital contribution purchase

According to the provisions of Clause 1, Article 25 of the Investment Law 2020, foreign investors may contribute capital in the following forms:

a) Purchase of shares issued for the first time or additional shares issued by a joint stock company;

b) Contribute capital to a limited liability company or partnership;

c) Contribute capital to other economic organizations not falling under the provisions of Point a and Point b of this Clause.

According to the provisions of Clause 2, Article 25 of the Investment Law 2020, investors may purchase shares or capital contributions in the following forms:

a) Purchase of shares of a joint stock company from the company or shareholders;

b) Purchase of capital contributions of members of a limited liability company to become members of the limited liability company;

c) Purchase the capital contribution of a member contributing capital to a partnership to become a member contributing capital to the partnership;

d) Purchase the capital contribution of a member of another economic organization not falling under the provisions of points a, b and c of this clause.

Thus, currently, investors purchase shares in joint stock companies or limited liability companies, partnerships and other economic organizations. The form of purchase of shares will depend on the type of enterprise, which can be transferred or purchased directly from that enterprise.

4. Documents and procedures for capital contribution, share purchase, and capital contribution purchase

Case 1: Investors contribute capital, purchase shares, and capital contribution and own 50% or less of a Vietnamese economic organization

In this case, it is only necessary to carry out procedures for changing business registration at the Department of Planning and Investment where the economic organization is headquartered

Documents for capital contribution, share purchase, and capital contribution purchase procedures:

– Notice of change in business registration content

– Decision to change the capital contributing member of the owner

– Transfer contract and related documents certified by the legal representative of the company

– List of capital contributing members or list of foreign shareholders

– Documents proving the legal status of the investor: Passport for individual investors or Certificate of business registration/ Decision of establishment for institutional investors (Attached with notarized passport of the investor) representative of the capital contribution of foreign investors in Vietnam)

Within 3-5 working days from the date of receipt of complete and valid documents, the business registration authority shall issue a new Business Registration Certificate.

Case 2: Investors contribute capital, purchase shares, purchase capital contributions owning 50% or more, Contribute capital, purchase shares, purchase capital contributions for enterprises operating in conditional business lines.

* Step 1: Carry out procedures for registering capital contribution, purchase of shares, purchase of capital contributions at the investment registration agency

Documents include:

– Registration document for capital contribution, purchase of shares, purchase of capital contributions (According to the form)

– Copies of legal documents of individuals, organizations contributing capital, purchasing shares, purchasing capital contributions and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions;

– Agreement in principle on capital contribution, purchase of shares, purchase of capital contributions between foreign investors and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions or between foreign investors and shareholders or members of that economic organization;

– Copy of the Land Use Right Certificate of the economic organization with foreign investors contributing capital, purchasing shares, purchasing capital contributions (for cases where the economic organization has a Land Use Right Certificate in islands, communes, wards, border towns and coastal communes, wards, towns; other areas affecting national defense and security);

Implementation procedures:

Investors submit dossiers to the Management Board of Industrial Parks if the enterprise receiving capital contributions is in the Industrial Park, submit to the Department of Planning and Investment if the enterprise receiving capital contributions is outside the Industrial Park

After receiving all valid dossiers, within 15 days, the registration agency will review and, based on the opinions of relevant agencies, issue a notice to the investor.

* Step 2: Carry out procedures to change business registration contents at the business registration agency

Documents for capital contribution, share purchase, capital contribution purchase procedures:

– Notice of change in business registration contents

– Decision to change the capital contributing member of the owner

– Transfer contract and related documents certified by the legal representative of the company

– List of capital contributing members or list of foreign shareholders

– Documents proving the legal status of the investor: Passport for individual investors or Certificate of business registration/ Decision of establishment for institutional investors (Attached with notarized passport of the representative of the capital contribution of foreign investors in Vietnam).

5. Assets contributed as equity capital

There are currently many forms of assets contributed as equity capital, and the enterprise will also have the right to freely and flexibly decide on the investor’s capital contribution through those assets.

Current assets contributed as equity capital:

– One is capital contribution by assets

Individuals and organizations that are owners or have the right to legally use assets can use that account to contribute capital according to the provisions of law. Assets contributed as equity capital include:

• Vietnamese Dong
• Freely convertible foreign currency
• Gold
• Land use rights
• Intellectual property rights
• Technology, technical know-how
• Other intangible or tangible assets that can be valued in Vietnamese Dong.

For example: An individual contributes capital to a company with fixed assets such as a car worth 2 billion VND. Or an individual contributes capital to a business with fixed assets such as a piece of land worth about 1 billion VND.

These assets will be converted into monetary value and the percentage of capital contribution will be divided based on the valuation of that asset at the time of capital contribution. When contributing capital, the enterprise will jointly decide on their value of use.

– Contributing capital with intelligence

Contributing capital with intelligence is a form of capital contribution using the investor’s own ability. These can be abilities related to the human brain such as: Product research ability; market research, manufacturing, creativity, production organization, etc. When contributing capital with intellectual products, it must ensure that one’s knowledge is served in a useful way. And those intellectual contributions must bring benefits to the company. Therefore, the enterprise receiving intellectual capital will often proactively consider evaluating the usefulness of that asset to the enterprise and return the corresponding percentage of shares to the individual based on the agreement of both parties.

For example: An individual contributes capital to a company by creating a product design and operation. This software is used by the business to create attractive products and bring in large profits for the business. At that time, that individual will agree with the business on the percentage of capital contribution based on the value of the intellectual product.

– Contributing capital through other activities or work

Contributing capital through activities or work is a commitment to perform specific actions that can bring value to the business in money or benefits. The contributions that the member brings to the company are difficult to determine in money because they will often bring associated benefits that the business needs. Therefore, the two parties will agree on the value of the work to bring benefits to the company, thereby deciding on the percentage of capital contribution.

Thus, it can be seen that procedures for registration to buy capital contributions, individuals and organizations must comply with the regulations and procedures of the state and rely on the agreement between the buyer and the seller. If you have any questions, you can contact VIET MY LAW AND ACCOUNTING for completely free consultation.