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New rules on foreign investment in companies
A year after Decree No.88/ 2009/QD-TTg was issued to govern capital contributions and share purchases by foreign investors in Vietnamese enterprises, the Ministry of Finance has finally issued its guiding regulations.
Circular No.131/2010/TT – BTC of September 6, 2010, repeats the list of foreign investors stipulated in Decree 88, which includes: (i) institutions incorporated and operating under foreign law and their branches in or outside of Viet Nam; (ii) enterprises in which a foreign entity holds of over 49 per cent of charter capital; (iii) investment funds with foreign capital of more than 49 per cent; and (iv) individuals who are not Vietnamese by citizenship.
The circular permits these foreign investors to invest or purchase shares or interests in all types of Vietnamese enterprises, including limited liability companies, unlisted joint stock companies, State-owned enterprises, and private enterprises. To do so, foreign investors must maintain bank accounts at licensed commercial banks in Viet Nam, and individual investors must pass a criminal background check.
Any change in the corporate form of the target which results from a capital contribution or share purchase must be registered in accordance with provisions in the Law on Enterprises and Government and Decree No 139/2007/ND-CP of September 2007.
Circular No 131, which takes effect on October 15, also includes specific guidelines for conducting capital contribution and share purchases. Under the circular, foreign investors may conduct transactions themselves or through qualified agents.
Residential real estate transactions regulated
The Ministry of Construction issued Circular No 16/2010/TT-BXD on September 1, providing detailed guidelines for the implementation of Government Decree No 71/2010/ND-CP of June 23, 2010, regarding residential real estate transactions.
Under Article 8 of Circular 16, developers can raise capital from banks, credit institutions, investment funds, corporate bonds, secondary investors and other organisations or individuals. However, each individual or household within a city or province may contribute capital in-kind only once to only a single residence.
Under Article 20 of the circular, enterprises licensed to conduct real estate transactions must meet conditions on business registration, legal capital, and publication of transactions on real estate exchanges, before entering into any transactions.
But the regulation gives individuals and organisations not licensed to conduct real estate transactions more favorable conditions. These investors are not required to meet business registration and legal capital conditions, and their transactions can be certified by the developer of a particular real estate project without any costs and fees.
The circular, which includes related model contracts, takes effect in 45 days from its promulgation.
Lawyers of Bizconsult Law Firm
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