1. Investment capital

“Investment capital” means money and other assets prescribed by the civil law and international treaties to which the Socialist Republic of Vietnam is a signatory for the purpose of carrying out business investment activities. Investment capital can be defined as the total cost that an investor will spend on carrying out investment activities. The total investment capital of a project includes items such as owner’s capital, loans from credit institutions, and other mobilized capital from individuals and organizations. It is the responsibility of investors to ensure that all capital sources are legal and comply with current regulations.

2. Equity ownership ratio

According to the provisions of Law on Investment 2020, foreign investors can own up to 100% of charter capital in industries not included in the list of restricted investment. However, some specific industries (such as banking, telecommunications, transportation) have limits on the capital ownership ratio of foreign investors. Specific regulations on capital contribution ratios are clearly stated in the list of conditional investment industries. Therefore, investors need to carefully check the list of industries and market access conditions for foreign investors to know the maximum ownership ratio allowed when investing in Vietnam.

Some industries limit the equity capital ratio.

3. Legal capital

Law on Investment 2020 and Law on Enterprise 2020 no longer regulate the concept of “legal capital”. Previously, Clause 7, Article 4 of Law on Enterprise 2005 (expired) regulated legal capital as follows: “Legal capital is the minimum capital required by law to establish an enterprise”. This means that legal capital is the minimum capital foreign investors need to invest in a business in Vietnam, especially in conditional industries. The requirement has been relaxed, making it easier for foreign investors to do business in Vietnam.

The legal capital depends on the investment and business sector. Some conditional sectors (like banking, insurance, and securities) have regulations on the minimum capital foreign investors must meet.

4. Opening an investment capital account

Foreign investors must open an investment capital account at a licensed Vietnamese bank. This account is used for capital contributions, transfers, and profits abroad. All transactions related to foreign investment must go through this account. They must follow foreign exchange and State Bank of Vietnam regulations to ensure foreign investment is legal and transparent.

5. Timely Capital Contribution

According to Law on Enterprise 2020, foreign investors must contribute capital in full and on time within 90 days from the date of issuance of the Enterprise Registration Certificate. If not completed on time, investors may have to adjust the Investment Certificate or face handling measures from the management agency.

Legal Basis:

– Law on Investment 2020

– Law on Enterprise 2020

– Circular 06/2019/TT-NHNN on foreign exchange management for foreign direct investment activities in Vietnam

– Ordinance on Foreign Exchange 2005 (amended by Clause 1, Article 1 of the Amending Ordinance on Foreign Exchange 2013)

– Circular 05/2014/TT-NHNN guiding the opening and use of indirectly- invested capital accounts for implementation of foreign indirect investment activities in vietnam

Duong Nguyen