Doing Business In Viet Nam
Holding Company Stakes
Foreigners irrespective of individual or institutional ones, may hold or acquire, in theory, up to 100% stake in all types of local companies, except for some special cases where the investment is made in specific business sectors (e.g. banking) or in listed companies (e.g. up to 49%). The current laws recognize and treat the companies with foreign stakes of less than 49% of the charter capital similar to entirely Vietnamese-invested companies.
The Law on Enterprises and the Law on Investment, both dated 29 November 2005 and effective from 1 July 2006, constitute the principal legal base for foreigners to buy stakes or shares of local companies. This right is further detailed in a number of implementing regulations, including Decree No.102/2010/ND-CP, dated 1 October 2010, providing guidelines for the implementation of a number of articles of the Law on Enterprises (which replaced Decree No.139/2007/ND-CP, dated 5 September 2007). Covering all service sectors and as a supplementation to the national laws and regulations as mentioned above, is the commitments of Vietnam when accession to the WTO, which is particularly reflected in the specific service commitments, which was effective from 11 January 2007.
At present, and in general, all types of companies in Vietnam, including SOEs, join stock companies, limited liability companies, are entitled to offer stakes to foreign investors, who can buy, in theory, up to 100% of the charter capital of the company, thanks to the fact that the maximal or ceiling rate of 30% applicable to services sector has been removed from 1 January 2008. However, in particular, the maximal or ceiling rates of less than 100% are still in existence and applicable, from time to time, to a number of specific cases, e.g. banking sector in which foreign investment is now permitted to have maximally 20%, or in all listed companies where foreign stakes can not exceed 49%.
According to the prevailing regulations, foreigners can purchase stakes and remit abroad dividends and principals, directly or indirectly through local and foreign banks licensed and operating in Vietnam. To facilitate these transactions, foreign stake holders are entitled to open local bank accounts in Vietnam.
The laws confirm that the legal rights and benefits of foreign stake holders in Vietnam are protected by the laws and the State of Vietnam.
Being stake holders, foreigners can:
Much simpler than it was in the past when any buying/ selling capital by local companies to foreign investors was subject to the decision by the Prime Minister, the recent regulations allows the owners or top management of the local companies or cooperatives to have the right to decide in accordance with the company charters or regulations. With respect to the equitized SOEs having the demand of selling capital to foreign investors, the State agencies who decide the equitization shall be the decision makers.
No further withholding tax shall be applicable to any abroad remittance of legal income by foreign investors in Vietnam, provided that all tax and financial obligations related thereto have been cleared off by foreign investors, in accordance with the laws of Vietnam. For other taxes, please refer to the Section 16 hereunder.
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