Currently, all types of businesses in Vietnam including joint stock companies, limited liability companies, partnerships or state-owned enterprises can sell/transfer part or all of their shares and capital contributions. for foreign investors, except for businesses conducting business lines that limit the capital ownership ratio of foreign investors (For example: Foreign investors who are individuals can only own a maximum of 49% of charter capital of securities company according to Article 77 of the Law Securities 2019). 

Payment for capital transfer between foreign investors and Vietnamese individuals and organizations is a common activity in investment transactions in Vietnam. However, because it involves factors such as foreign exchange management, taxes, legality, and investment registration, this process needs to be carried out in accordance with legal regulations to ensure transparency and legality. and avoid risks. The payment procedure for transferring shares and capital contributions to foreign investors is not difficult, but many businesses are still confused when implementing it, especially the stage of payment for the value of capital transfer between investors. Therefore, the article below will clearly explain the regulations related to capital transfer payments between foreign investors and Vietnamese individuals and organizations.

1. Cases of contributing capital, purchasing shares, purchasing capital contributions to Vietnamese companies

According to the provisions of Clause 2, Article 26 of the Investment Law, foreign investors must carry out procedures to register capital contribution, purchase shares, and purchase capital contributions in Vietnamese companies in the following cases:

• Case 1: contributing capital, purchasing shares, purchasing capital contributions increases the ownership ratio of foreign investors in companies in Vietnam that are doing business in industries with conditional market access for investors. foreign.
• Case 2: capital contribution, share purchase, purchase of capital contribution leads to foreign investors holding over 50% of the charter capital of a Vietnamese company in the following cases: Increasing the investor’s charter capital ownership ratio foreign investment increased to over 50%; Increase the charter capital ownership ratio of foreign investors when foreign investors already own 50% or more of the charter capital of a Vietnamese company.
• Case 3: foreign investors contribute capital, buy shares, buy capital contributions of Vietnamese companies with land use rights certificates on islands and border communes, wards and towns; coastal communes, wards and towns; other areas that affect national defense and security.

2. Payment method for transfer price of shares/capital contribution of foreign investors to Vietnamese individuals and organizations

Capital transfer payments between foreign investors and Vietnamese individuals and organizations are activities permitted by Vietnamese law, but must comply with regulations related to foreign exchange, investment, taxes and regulations. other legal. Depending on each specific case, the transfer of shares/capital contributions between foreign investors and Vietnamese individuals and organizations needs to clearly determine which method and account will be used for payment. Pay or receive payment for the transfer price of shares/capital contribution.

a) Payment method

Job Payment of Share Transfer Price/capital contribution in Foreign Direct Investment Company is implemented as follows: 

(i) Between Non-Resident Investors or between Resident Investors are not made through the Direct Investment Capital Account; 

(ii) Between Non-Resident Investor and Resident Investor right made through the Direct Investment Capital Account. 

Thus, determining the payment method for capital transfer in a company with foreign direct investment will be based on the factor of residence or non-resident. 

Payment through direct investment capital account (DICA) is carried out in accordance with the provisions of Circular 06/2019/TT-NHNN dated June 26, 2019 guiding on foreign exchange management for investment activities. foreign direct entry into Vietnam. Accordingly, DICA will be the intermediary account to receive Transfer Price payment from the Buyer and transfer this amount to the Seller. 

b) Payment currency

Currency for valuation and payment of transfer value of investment capital and investment projects in foreign direct investment activities in Vietnam: 

 (i) Valuation and payment of the transfer value of investment capital or investment projects between two non-residents is allowed to be carried out by foreign currency; 

 (ii) Valuation and payment of the transfer value of investment capital and investment projects between residents and non-residents, and between residents must be done in writing. Vietnamese Dong. 

Thus, the transfer price of shares/capital contributions of foreign investors to Vietnamese individuals and organizations needs to be clearly understood so that investors can comply with the law. And to better understand this payment process, you should refer to the bank where the company opens the DICA or IICA account to understand the payment method and documents that need to be prepared to complete the procedure.

3. Conclude

Capital transfer payment between foreign investors and Vietnamese individuals/organizations is a complex process, requiring strict compliance with legal regulations on investment and foreign exchange. To ensure transactions are carried out legally and quickly, parties should work with licensed banks and consult with legal counsel before proceeding with the procedure. 

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