PRIME MINISTER OF THE GOVERNMENT
SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
No: 88-2009-QD-TTg
Hanoi, 18 June 2009
DECISION
ISSUING
REGULATIONS ON CAPITAL CONTRIBUTION AND PURCHASE OF
SHAREHOLDING BY FOREIGN INVESTORS IN VIETNAMESE ENTERPRISES
Prime Minister of the Government
Pursuant to the Law on Organization of the Government dated 25 December 2001;
Pursuant to the Law on Investment dated 29 November 2005;
Pursuant to the Law on Enterprises dated 29 November 2005;
Pursuant to the Law on Securities dated 29 June 2006;
Pursuant to Decree 108-2006-ND-CP of the Government dated 22 September 2006 providing implementing
regulations for the Law on Investment;
Pursuant to Decree 139-2007-ND-CP of the Government dated 5 September 2007 providing implementing
regulations for the Law on Enterprises;
Pursuant to Decree 160-2006-ND-CP of the Government dated 28 December 2006 implementing the
Ordinance on Foreign Exchange Control;
On the proposal of the Minister of Finance;
Decides
Article 1
To issue with this Decision the Regulations on capital contribution and purchase of shareholding by foreign
investors in Vietnamese enterprises.
Article 2
The Minister of Finance, the Minister of Planning and Investment, the Governor of the State Bank and other
relevant ministries and branches shall provide implementing guidelines for this Decision.
Article 3
This Decision shall be of full force as from 15 August 2009 and shall replace Decision 36-2003-QD-TTg of
the Prime Minister dated 11 March 2003 issuing Regulations on capital contribution and purchase of
shareholding by foreign investors in Vietnamese enterprises.
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Ministers, heads of ministerial equivalent bodies, heads of Government bodies, chairmen of people's
committees of provinces and cities under central authority, boards of management of State Groups and
State companies, and other related organizations and individuals shall be responsible for implementation of
this Decision.
Prime Minister of the Government
NGUYEN TAN DUNG
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REGULATIONS
ON
CAPITAL CONTRIBUTION AND PURCHASE OF SHAREHOLDING
BY FOREIGN INVESTORS IN VIETNAMESE ENTERPRISES
(Issued with Decision 88-2009-QD-TTg of the Prime Minister dated 18 June 2009)
CHAPTER 1
General Provisions
Article 1
Governing scope
1.
These Regulations regulate capital contribution and purchase of shareholding by foreign investors in
Vietnamese enterprises.
2.
Capital contribution and purchase of shareholding by foreign investors in Vietnamese enterprises
conducting business in a number of sectors in which specialized branch laws or commitments in
international treaties of which Vietnam is a member have provisions different from those in these
Regulations shall be implemented in accordance with such specialized branch laws or international
treaties.
3.
Participation by foreign parties in the Vietnamese securities market shall be implemented in
accordance with separate regulations issued by the Prime Minister of the Government.
4.
Investment activities of foreign investors stipulated in clauses 1, 2, 3, 6 and 7 of article 21 of the Law
on Investment shall not fall within the governing scope of these Regulations, comprising
(a)
Establishment of economic organizations with 100% foreign owned capital;
(b)
Capital contribution with domestic investors in order to establish economic organizations in
accordance with the Law on Enterprises;
(c)
Investment in the forms of BCC, BOT, BTO and BT contracts;
(d)
Investment to carry out mergers and acquisitions of enterprises;
(dd)
Other direct investment activities.
Article 2
1.
Applicable entities
Foreign investors prescribed in these Regulations comprise foreign organizations and foreign
individuals, specifically as follows:
(a)
Organizations established and operating pursuant to foreign law and their branches both
overseas and in Vietnam;
(b)
Organizations established and operating in Vietnam with a capital contribution ratio of foreign
parties above forty nine (49) per cent;
(c)
Investment funds and securities investment companies with a capital contribution ratio of
foreign parties above forty nine (49) per cent;
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(d)
2.
Foreign individuals without Vietnamese nationality, residing overseas or in Vietnam.
Vietnamese enterprises prescribed in these Regulations mean economic organizations conducting
business in sectors and business lines in which the law does not prohibit investment, comprising:
(a)
Enterprises with 100% State owned capital conducting equitization or converting ownership by
another form;
(b)
Shareholding companies, limited liability companies, partnerships and private enterprises
established and operating pursuant to the Law on Enterprises.
Article 3
[Permissible] levels of capital contribution and purchase of shareholding
1.
Foreign investors shall be permitted to purchase shareholding in public companies at the ratios
stipulated in the law on securities and relevant implementing guidelines.
2.
Foreign investors shall be permitted to contribute capital and purchase shareholding in Vietnamese
enterprises operating in sectors and business lines subject to specialized branch laws at the ratios
stipulated in such specialized branch laws.
3.
The ratios of capital contribution and purchase of shareholding by foreign investors in Vietnamese
enterprises conducting business in commercial services shall comply with international treaties of
which Vietnam is a member.
4.
In the case of a Vietnamese enterprise with a multi-sector and/or multi-business line operation
including several trades and/or sectors for which the stipulated participation ratios of foreign investors
are different, foreign investors shall be permitted to contribute capital and purchase shareholding not
in excess of the lowest participation ratio of foreign investors stipulated for such trades and/or
sectors.
5.
In the case of an enterprise with 100% State owned capital converting its form of ownership, foreign
investors shall be permitted to contribute capital and purchase shareholding at the ratio stipulated in
the plan approved by the authorized body, but not in excess of the stipulated [applicable] ratio if the
enterprise had converted its operation in the sectors mentioned in clauses 2, 3 and 4 of this article.
6.
Apart from the above-mentioned cases, foreign investors shall be permitted to contribute capital and
purchase shareholding in Vietnamese enterprises at unrestricted levels.
Article 4
1.
Capital contribution
(a)
1
Forms of capital contribution and purchase of shareholding
A foreign investor may acquire1 the capital contribution portion of a member of a limited liability
company [and/or] contribute capital to a limited liability company in order to become a new
member of a multi-member limited liability company or may acquire the entire charter capital of
the owner of a single member limited liability company in order to become the new owner of
the single member limited liability company.
Allens Arthur Robinson footnote: The literal translation here is "acquire" and not "purchase".
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(b)
A foreign investor may acquire the capital contribution portion of a capital contributing member
of a partnership or may contribute capital to a partnership in order to become a new capital
contributing member.
A foreign investor being an individual may acquire the capital contribution portion of a partner
in a partnership or may contribute capital to a partnership in order to become a new partner,
after receiving consent from the remaining partners.
(c)
2.
Subscription for shares
(a)
Foreign investors shall be permitted to subscribe for2 initially issued shares of shareholding
companies in accordance with the Law on Enterprises;
(b)
Foreign investors shall be permitted to subscribe for initially issued shares of enterprises with
100% State owned capital conducting equitization;
(c)
Foreign investors shall be permitted to subscribe for shares from the quantity of shares eligible
to be offered for sale [and/or] additionally issued shares of shareholding companies;
(d)
Foreign investors shall be permitted to acquire shares from shareholders of shareholding
companies including both unlisted public companies and public companies listed on the Stock
Exchange.
Article 5
1.
A foreign investor may acquire a part of the capital of the owner of a private enterprise or may
contribute capital with the owner of a private enterprise in order to convert the private
enterprise into a multi-member limited liability company and become a member of [such]
multi-member limited liability company.
Form of payment for capital contribution and purchase of shareholding
Foreign investors shall contribute capital and purchase shareholding [by making payment] in
Vietnamese Dong, freely convertible foreign currencies and other lawful assets as stipulated in article
2.1 of Decree 108:
(a)
If capital is contributed or if shares are purchased in foreign currency, then the foreign
currency must be converted into Vietnamese dong at the purchase exchange rate of a
commercial bank licensed to conduct foreign exchange business as at the date of the capital
contribution or share purchase, after the authorized representative of the enterprise has
consented, and [the foreign currency shall be converted] in accordance with the current law on
foreign exchange control.
(b)
If capital is contributed or if shares are purchased in the form of other lawful assets (not being
Vietnamese dong or a freely convertible foreign currency) then the assets must be valued by
either of the following methods:
-
2
Valuation by an independent valuation organization as agreed by founding members
and shareholders of the enterprise to which capital is being contributed, and by the
capital contributor;
Allens Arthur Robinson footnote: An alternative translation of "subscribe for" whenever it appears in this translation is
"purchase".
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-
By the enterprise establishing a council for valuation of assets and reaching agreement
with the capital contributor on the price [or value].
2.
Any foreign investor contributing investment capital to a Vietnamese enterprise in the form of
machinery, equipment, raw materials, goods, technology transfer and other assets must comply with
the law of Vietnam on technology, culture and environment, intellectual property, import and export
and so forth.
3.
The purchase and sale of securities on the Stock Exchange shall be implemented in Vietnamese
dong in accordance with the law on securities.
Article 6
1.
Conditions in order for foreign investors to contribute capital and purchase shareholding
Applicable to a foreign investor being an organization:
(a)
It has an investment capital account opened with a commercial bank in Vietnam. Every
activity of purchase and sale of shares, assignment of capital contribution, receipt and use of
dividends, profit distribution, remittance of monies overseas and every other activity related to
investment in the Vietnamese enterprise must be conducted via this account;
(b)
It has a copy business registration certificate or other equivalent data proving its legal status,
certified by the competent authority of the country in which it is registered;
Foreign investors shall be liable for the validity of data which they provide;
(d)
2.
3.
Other conditions stipulated in the charter of the enterprise to which the foreign investor
contributes capital [and/or] in which it purchases [or subscribes for] shareholding, ensuring
such provisions are not contrary to law.
Applicable to a foreign investor being an individual:
(a)
He or she has an individual account opened at a commercial bank in Vietnam. Every activity of
purchase and sale of shares, assignment of capital contribution, receipt and use of dividends,
profit distribution, remittance of monies overseas and every other activity related to investment
in the Vietnamese enterprise must be conducted via this account;
(b)
Copy valid passport;
(c)
Other conditions stipulated in the charter of the enterprise to which the foreign investor
contributes capital [and/or] in which he or she purchases shareholding, ensuring such
provisions are not contrary to law.
Foreign organizations and foreign individuals investing in the securities market must comply with the
law on securities.
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CHAPTER 2
Specific Provisions
Article 7
Capital contribution to limited liability companies and partnerships
1.
Foreign investors shall be permitted to contribute capital to limited liability companies and to
partnerships in accordance with the provisions of the Law on Investment and the Law on Enterprises,
and the company charter.
2.
In the case of multi-member limited liability companies and partnerships, the chairman of the
members' council or the General Director (Director) of the company (depending on and in
accordance with the company charter) shall formulate a plan to raise capital including capital
contribution portions to be received from foreign investors, and submit the plan to the members'
council to make a decision on raising capital contributions and on the capital contribution ratio of
foreign investors.
3.
Members of a multi-member limited liability company or [partners] in a partnership shall be permitted
to assign their capital contribution portions to foreign investors in accordance with law and the
company charter.
4.
A single member limited liability company shall be permitted to assign a portion of its charter capital
or raise additional capital contributions from other people including foreign investors in accordance
with article 19 of Decree 139-2007-ND-CP of the Government dated 5 September 2007 providing
implementing regulations for the Law on Enterprises ["Decree 139"].
A single member limited liability company owned by the State must formulate a plan for conversion
from a single member limited liability company to a multi-member limited liability company and submit
the plan to the competent authority for approval.
5.
If a number of investors register to contribute capital at a total value exceeding the amount of capital
contribution stipulated in the approved plan to raise capital, then the enterprise may reach agreement
[on selection of the eligible investor/s] or conduct an auction in order to select the [eligible] investor/s.
In the case of a single member limited liability company owned by the State, the assignment of
capital contribution portions to foreign investors shall be implemented in accordance with the law on
financial management of State companies and on State capital portions invested in other enterprises.
Article 8
Acquisition of a capital portion from, or capital contribution with the owner of a private
enterprise
1.
The owner of a private enterprise may make a decision to sell a capital portion to, or to raise capital
contributions from foreign investors in order to convert the private enterprise into a multi-member
limited liability company.
2.
Conversion of a private enterprise into a multi-member limited liability company must be correctly
implemented in accordance with article 24 of Decree 139.
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Article 9
Subscription of initial shares in an enterprise with 100% State owned capital conducting
equitization
Foreign investors shall be permitted to subscribe for initial shares in enterprises with 100% State capital
undergoing equitization in accordance with the current guidelines on conversion of enterprises with 100%
State owned capital into shareholding companies.
Article 10
Purchase of shareholding in currently operating shareholding companies
1.
Foreign investors shall be permitted to purchase and sell shareholding in public shareholding
companies in accordance with the Law on Investment, the Law on Enterprises, the Law on Securities
and the company charter.
2.
In the case of a currently operating shareholding company still within the period of its first three years'
operation as from the date of issuance of its business registration certificate, a foreign investor shall
be permitted to purchase ordinary shares from founding shareholders with consent of the general
meeting of shareholders, in order to become a founding shareholder of the company.
Foreign investors shall be permitted to purchase dividend preference shares, redeemable preference
shares and other preference shares in a shareholding company when the company charter so
provides or when the general meeting of shareholders makes a decision thereon.
3.
The board of management or the General Director (Director) of the shareholding company shall
formulate a plan on raising capital [and] issuing shares including sale to foreign investors for
submission to the general meeting of shareholders or board of management (depending on and in
accordance with the charter on organization and operation of such shareholding company).
The general meeting of shareholders or board of management shall make a decision on the sale of
shares and the ratio of shares to be sold to foreign investors.
4.
Foreign investors shall be permitted to purchase shares in unlisted public companies and in public
companies listed on the securities market in accordance with the law on securities.
CHAPTER 3
Rights and Interests, and Obligations of Foreign Investors
Article 11
Rights and interests of foreign investors:
1.
To pledge their shares in credit relations and to use their shares as security for the discharge of civil
obligations in accordance with the law of Vietnam.
2.
To transfer ownership of their shares and to trade them on the securities market if the shareholding
company is listed, in accordance with the Law on Enterprises and the law on securities.
3.
To assign their capital contribution portions and to adjust their investment capital during the process
of conducting business in accordance with the law of Vietnam and the enterprise charter.
4.
To convert investment capital recoveries and profit from their investment activities in Vietnam into
foreign currency for remittance overseas after discharge of financial obligations owing to the State of
Vietnam and to related parties. The purchase of foreign currency for remittance overseas must
comply with the regime on foreign exchange control and the law of Vietnam.
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5.
To participate in management of the enterprise to which the foreign investor contributed capital or in
which it purchased shareholding in accordance with the Law on Enterprises and the enterprise
charter (except for the case of a capital contributing member of a partnership).
6.
To be entitled to the same rights and interests as domestic investors investing in shareholding
companies, limited liability companies and partnerships.
7.
To be entitled to other rights and interests stipulated by the law of Vietnam.
Article 12
Obligations of foreign investors:
1.
To correctly comply with conditions and undertakings when purchasing shareholding and contributing
capital.
2.
To fully implement the provisions in these Regulations and in the charter on organization and
operation of the enterprise in which the foreign investor contributes capital and/or purchases
shareholding.
3.
If the assignment of ownership of shares or the assignment of a capital contribution portion
generates profit, then to pay income tax and other taxes as stipulated by law.
4.
To discharge other obligations stipulated by the law of Vietnam.
CHAPTER 4
Organization of Implementation
Article 13
Responsibilities of State administrative bodies
1.
Ministers, heads of ministerial equivalent bodies and heads of Government bodies shall be
responsible to guide and check State owned enterprises for which such minister or head made the
equitization decision and the decision on sale of shareholding to foreign investors.
2.
Chairmen of people's committees of provinces and cities under central authority shall be responsible
to guide and check State owned enterprises for which such chairman made the equitization decision
and also local enterprises operating pursuant to the Law on Enterprises which make a decision on
sale of shareholding to on receipt of capital contributions from foreign investors.
3.
The Ministry of Finance, the Ministry of Planning and Investment, the State Bank and other relevant
ministries and branches shall provide implementing guidelines for these Regulations.
Prime Minister of the Government
NGUYEN TAN DUNG
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