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14 October, 2019
Question: F&S Production and Trade limited company was founded as a 100% domestic company and hoped to sell shares to foreign investors.
A foreigner from the Republic of Korea is working in Viet Nam and earned monthly income which is paid to an account of Vietcombank. The foreigner wanted to buy shares of the company.
However, the commercial bank branch where the company opened capital account denied to receive money from the Vietcombank account. The branch demanded the Korean investor to return the RoK to open an account, then transfer the money to the capital account. However, the RoK side did not allow the Korean citizen to open any account as he no longer lives in the country.
What are the regulations for foreign investors to buy shares in Vietnamese companies?
Answer: According to the State Bank of Viet Nam, regulations on foreign exchange control are stipulated in the Ordinance on Foreign Exchange, dated December 13, 2005, the amended Ordinance on Foreign Exchange, dated March 13, 2013; Decree 70/2014/ND-CP, dated July 17, 2014 on specific implementation of several articles of the Ordinance on Foreign Exchange and the amended Ordinance on Foreign Exchange; Circular 19/2014/TT-NHNN, dated August 11, 2014 and Circular 05/2014/TT-NHNN, dated March 12, 2014 of the State Bank of Viet Nam.
Under Point 1, Article 6 of Circular 19/2014/TT-HNHH, foreign investors and Vietnamese investors in foreign-invested enterprises may make foreign-currency or Viet Nam-dong investment capital contributions at levels stated in investment certificates.
Point 1, Article 3 of Circular 05/2014/TT-NHNN regulated that “foreign investors” include subjects who are non-resident foreign organizations and individuals conducting indirect investment activities in Viet Nam.
Point 2, Article 3 of Circular 05/2014/TT-HHNN stipulated that the Circular does not govern foreign investors being residents who are foreign organizations and individuals. These subjects conduct indirect investment activities in Viet Nam according to prevailing legal provisions on securities and other relevant normative legal documents.
Under Circular 16/2014/TT-NHNN, dated August 1, 2014, the residents as individuals are entitled to use foreign currency account at the authorized banks to transact their receipts and expenditures as follows:Receipts of foreign currency from legal sources in the country, including: (1) residents as foreign individuals are entitled to earn wage, bonus, allowance and purchase foreign currency from the legal sources in Vietnamese dong; (2) other legal receipts under regulations of law on foreign exchange management.
According to Point h, clause 2, article 4 of the Ordinance on the Administration of Foreign Exchange No. 28/2005/PL-UBTVQH11 of the Standing Committee of the National Assembly, foreigners are permitted to stay in Viet Nam in a duration from 12 months above.
For further information, please contact:
Dang The Duc, Partner, Indochine Counsel
duc.dang@indochinecounsel.com
