REGULATIONS ON MINIMUM CAPITAL FOR ESTABLISHING A BUSINESS IN VIETNAM

When deciding to invest in Vietnam, many foreign investors ask questions such as "What is the minimum capital required for an enterprise?" or "How much capital is beneficial to the business ?" “What are the legal regulations on capital?” Let's find out this problem with OTIS LAWYERS. 

Capital concepts

Total investment capital: Project investment capital is the whole capital sources contributed to an investment project to implement that project. Investment capital includes investors' contributed capital and mobilized capital.

Contributed capital for project implementation: The amount of capital that an enterprise contributes to a specific investment project. The amount of capital contributed to the implementation of this investment project may be smaller, more significant, or equal to the charter capital of the enterprise.

Charter capital: is the total value of assets contributed or committed to contributing by members when establishing a limited liability company or a partnership; is the total par value of shares sold or registered for purchase upon establishment of a joint-stock company

Legal capital: The minimum amount of money required by law to establish an enterprise.

According to Vietnam's Enterprise Law 2020, Vietnam has no regulations on how much an investor must have when registering a project operation and setting up a business in Vietnam. It is a very open regulation, proving that Vietnam highly encourages foreign investors to invest in Vietnam, a potential market for investors worldwide.

However, when implementing investment projects, investors often contact Law firms to consult on the appropriate level of investment capital.

Determine the appropriate level of investment capital

To determine the appropriate level of investment capital, it bases on the following essential factors:

Firstly, the investor's financial ability and intention on investment capital.

Secondly, the company's business lines in Vietnam. Some conditional business lines require a minimum capital to set up a business, such as Banking, finance, insurance, real estate, air transportation, and audit services.

However, foreign investors note that the capital level to register for investment in Vietnam must be suitable to the nature and scale of the investment project.

Thirdly, project scope and scale: The larger the scope and scale of the project, the higher the investment capital and costs. Although the law does not stipulate the minimum investment level in each locality, following the planning of each locality, many localities encourage projects with appropriate investment capital. This matters, investors who want to invest in Vietnam should find out first and consult a lawyer.

Fourth, estimated costs when the project goes into operation: Including personnel costs, expenses for equipment, machinery, and office supplies; Venue rental costs. These costs depend on the size of the project to determine its appropriateness.

Fifth, how much is the project signed with the partners worth

Sixth, Taxes, fees, and charges: When the Vietnamese state agency licenses an investor's project to operate, that project means that it will have to pay some taxes and fees. Each project, based on the criteria of capital, business lines, business areas, will apply different taxes and fees with varying collection rates.

The time limit for making capital contribution after establishing an enterprise in Vietnam

According to Vietnamese law, the investors must make a total contribution of the committed capital as recorded in the enterprise registration certificate within 90 days from issuing the Certificate of Business Registration. Investment Registration Certificate and Enterprise Registration Certificate. If the investor cannot contribute enough registered capital within this time limit, you need to apply for an extension of the time limit for capital contribution. The application needs to be submitted by the investment registration office. Because if you do not follow this procedure, your business will be sanctioned for administrative violations. This extension needs to be done before the deadline for capital contribution.

The liability corresponding to the value of contributed capital

For limited liability companies, joint-stock companies, members/shareholders have limited liability within the scope of their capital contribution/commitment to the company. In case if the enterprise is dissolved or for any reason has to carry out bankruptcy procedures, the investors are only responsible for the proportion of the capital you contribute or commit to contributing to the company's charter capital.

There are only two types of businesses, a partnership, and a sole proprietorship, that have unlimited liability for the obligations of these two types of companies.

That's why we often advise our customers to choose one of two forms: a limited company or  a joint-stock company.

The above is the content of OTIS LAWYERS's advice related to determining capital when establishing a foreign-invested enterprise in Vietnam. If you have any questions, please email us for advice.

For any questions or comments, please don’t hesitate to contact:

OTIS LAWFIRM & PARTNERS 

Address: K28 Lane 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi

Mobile: 0987.748.111

Email: [email protected]