CORPORATE ARTICLES

To What Extend May A Foreign Investor Participate in Vietnam

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The 30% restrictions on equity holdings by foreign investors have been relaxed due to Vietnam’s commitments under the World Trade Organization (WTO); yet there are exceptional cases.

In accordance with the Law on Investment (2005), foreign investors comprise:

  • Organizations established and operating under foreign laws and their overseas and Vietnam-based subsidiaries.
  • Organizations established and operating in Vietnam with a foreign holding rate of over 49% of charter capital.
  • Investment funds and securities investment companies with a foreign holding rate of over 49% of charter capital.
  • Foreign individuals who do not hold Vietnamese citizenship and reside overseas or in Vietnam.

The Vietnamese Law regulates that foreign investors may contribute capital and purchase shares unlimitedly, except for the following cases:

  • Foreign investors may contribute capital to or purchase shares from Vietnamese enterprises operating in business sectors governed by specialized laws under the ratios regulated by such laws.
  • The level of capital contributed or shares purchased by foreign investors to/from Vietnamese trading or services companies must comply with treaties to which Vietnam is a contracting party.
  • Foreign investors may contribute capital to or purchase shares from Vietnamese enterprises which operate in different sectors, including those with different prescribed foreign holding rates, at a level not exceeding the lowest foreign holding rate prescribed for any of these sectors.
  • Foreign investors may contribute capital to or purchase shares from 100% State-funded enterprises which are undergoing ownership transformation at levels prescribed in plans approved by competent authorities but not exceeding the prescribed level if transformed enterprises operate in sectors regulated by the specialized laws.
  • Foreign investors that purchase securities on the Vietnamese securities market are allowed to hold:
    • For stocks: up to 49% of the total number of stocks of a public joint-stock company. In case it is otherwise provided for by specialized laws, provisions of such laws will be applied. In case the foreign holding rates are classified according to the list of specific business sectors, such classification list will be applied.
    • For public investment fund certificates: up to 49% of the total number of investment fund certificates of a public securities investment fund.
    • For public securities investment companies: up to 49% of charter capital of a public securities investment company.
    • For bonds: Issuing institutions may set holding limits that are applicable to foreign holders of their outstanding bonds.
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