ISSUE 020922 – The procedures of increasing charter capital of a foreign-invested enterprise (not subject to the Investment Guidelines Approval)

Dear Valued Clients,

The practice of working with foreign customers doing business in Vietnam shows that the procedure to increase investment capital for foreign-invested enterprises is one of the issues that many customers are most concerned about.

In the context that the COVID-19 epidemic is cooling down, FDI enterprises urgently need capital to quickly restore business operations.

In this Legal Article, we shall show you the procedures for increasing charter capital of a 100% foreign capital enterprise that are not subject the investment guidelines approval (the “Enterprise”).

1.      Application dossier

1.1.   Application dossier for registration of amendments of Investment Registration Certificate (the “IRC”)

The foreign investors who are implementing investment projects in Vietnam (the “Investor”) will need to prepare 01 set of dossiers including the following documents when they would like to increase investment capital[1]:

(i)     Request for amendments of investment project (Form A.I.11.h in Circular No. 03/2021/TT-BKHDT dated April 09, 2021 on prescribing templates for documents and reports related to investment activities in Vietnam, outward investment activities and investment promotion activities (“Circular 03”));

(ii)     Explanation of Application dossier for amendment of the investment project;

(iii)    Investor’s decision on the amendment of the investment project;

(iv)    01 notarized copy of the IRC (recent revised);

(v)    01 notarized copy of Enterprise Registration Certificate of the economic organization implementing the investment project which is specified in the document (iv);

(vi)   Financial statements of the last 2 years of the Investor (for the investor being a legal entity), or confirmation of the bank account balance of the investor being an individual; or other documents proving the Investor’s financial capacity;

(vii)   Report on investment project’s progress by the time of amendment (Form A.I.12 in Circular 03);

(viii)   Documents proving their fulfillment of the obligation to contribute investment capital as specified in the IRC (recent revised);

(ix)    Receipt of online capital increase application submission on the website of the National information system on investment registration;

(x)    Authorization document of the Investor and legal documents of the person who is authorized to carry out the procedures for amending the Investment Registration Certificate (in case the Investor does not directly apply).

1.2.    Application dossier for registration of the amendments of Enterprise Registration Certificate (the “ERC”)

After being issued with an amended IRC, the Enterprise will need to prepare a set of documents for the amendments of the ERC, including:

(i)    Notice of change of enterprise’s registration information (Annex II-1 of Circular No. 01/2021/TT-BKHDT dated March 16, 2021 guiding enterprise registration (“Circular 01”));

(ii)      01 notarized copy of the IRC (The result of procedure 3.1 is given below);

(iiii)    Depending on the form of the registered company, the Enterprise will have to submit the following additional documents:

           (1)      One-member Limited Liability Company: Decision of the Owner on the amendment of the investment project; or

        (2)       Joint Stock Company: Meeting minutes and decision of the General Meeting of Shareholders regarding amendments of the investment project; List of shareholders who are foreign investors.

         (3)      Multi-member Limited Liability Company: Meeting minutes and decision of the Members’ Council on amendment of the investment project.

2.     The Implementation procedure

2.1.   Procedure for IRC amendment

Step 1: The Investor or the authorized representative of the Investor submits the prepared documents mentioned in Section 1 to the Investment Authority.

Step 2: Within 10 days from the date of receipt of a complete and valid set of the dossier, the Investment Authority will perform one of the following works:

(i)      Issue a new version of the Investment Registration Certificate according to the Investor’s registration contents in the document (i) of Section 1; or

(ii)    Issue a written notice of amendment and supplementation of the document in case the investor’s documents do not fully meet the conditions as prescribed by laws.

In this case, the Investor will have to amend the contents of its dossier at the request of the Investment Authority and re-implement Step 1.

Step 3: The Investor brings all originals of the Investment Registration Certificate (recent adjustment) to submit them to the Investment Authority and receive the new Investment Registration Certificate.

Note that each Investor and economic organization implementing the project recorded in the Investment Registration Certificate will be issued with one original. In case the Investor no longer keeps all the originals of the Investment Registration Certificate (recently revised), the Investor will have to commit to the guidance of the Investment Authority.

2.2.     Procedure for ERC amendment

Step 1: The legal representative of the Enterprise or the person legally authorized to scan the entire document prepared according to Section 1.2 and submit it through the National Portal on Business Registration.

Step 2: Within 03 working days from the date the Business Registration Office where the Enterprise is headquartered (“BRO”) receives a complete and valid dossier, the Enterprise will be issued with an amended ERC.

Note:

(i)      The Enterprises can submit the dossiers at any time of the day, however, if the dossiers are recorded by the system after 17:00, the time limit for processing dossiers will start from the next day;

(ii)     Enterprises will have to arrange for themselves to go to the BRO to receive the amended ERC. For enterprises in Hanoi, customers can register to receive results via the public postal service.

3.     Investment Authority

The authority issued IRC to the Investor will also be the authority responsible for receiving and handling the procedures for amending the IRC.

Normally, the principles of determining a competent Investment Authority are as follows[2]:

(i)     The Management Board of industrial parks, export-processing zones, hi-tech zones, and economic zones have the authority to issue, amend or revoke IRC of such industrial parks, export-processing zones, hi-tech zones and economic zones.

(ii)     The Department of Planning and Investment of each province shall issue, amend and revoke IRC concerning the investment projects outside industrial parks, export-processing zones, hi-tech zones, and economic zones.

              (1)      As an exception, the Investment Authority where the Investor implements the investment project, locates or plans to set up an executive office for the implementation of the investment project, issues, adjusts, and withdraws the investment IRC concerning the project. invest in the following:

              (2)      Investment projects that are executed in at least 02 provinces;

Investment projects that are executed both inside and outside industrial parks, export-processing zones, hi-tech zones and economic zones;

            (3)     Investment projects which are executed inside industrial parks, export- processing zones, hi-tech zones or economic zones where the industrial park, export processing zone, hi-tech zone or economic zone management boards have not yet been established or which are not under the management of the management boards of industrial parks, export-processing zones, hi-tech zones or economic zones.

As always, we hope you find this Legal Article helpful and look forward to working with you shortly.

Kind regards,

ENT Law LLC

The full version of this Legal Article can be found here.

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[1] Article 44 of Decree No. 31/2021/ND-CP dated March 26, 2021 on the elaboration of some articles of the Law on Investment

[2] Article 39 of the Law on Investment No. 61/2020/QH14 dated June 17, 2020.