FOREIGN INVESTORS CONTRIBUTE CAPITAL TO TRANSPORT COMPANY

FOREIGN INVESTORS CONTRIBUTE CAPITAL TO TRANSPORT COMPANY 

Transportation service is a business line that receives a lot of attention from foreign investors when investing in Vietnam. Investors can choose many forms of investment in this industry such as capital contribution, company establishment, and business cooperation contracts… In particular, the form of capital contribution is interesting to many foreign investors due to the simplicity and quickness of this type of investment. In the following article, Siglaw would like to share the conditions and procedures for investors to refer to when contributing capital to a transport company.

LEGAL BASIS

• Enterprise Law 2020;
• Investment Law 2020;
• Legal documents related to the transport sector (waterways, railways, roads, airways);
• Vietnam’s commitments in the WTO.

CONDITIONS FOR FOREIGN INVESTORS TO CONTRIBUTE CAPITAL TO TRANSPORT COMPANIES

Conditions on the form of investment: Foreign investors can contribute capital to transport companies in Vietnam.

Conditions on the ratio of contributed capital:

• Sea transport: For freight and passenger services: a joint venture with Vietnam must be established and the foreign capital contribution ratio must not exceed 49%; for services related to international transport: allowed to establish a 100% foreign-owned enterprise from January 11, 2012;
• Inland waterway transport: must enter into a joint venture with a Vietnamese partner, foreign capital must not exceed 49%;
• Rail transport: must enter into a joint venture with a Vietnamese partner, foreign capital must not exceed 49%;
• Road transport: must enter into a joint venture with a Vietnamese partner, foreign capital does not exceed 51%;
• Air transport:  Passenger or cargo transportation services will comply with the provisions of Vietnamese law, and the capital contribution ratio of foreign investors does not exceed 30%; aircraft repair and maintenance services: there is no limit to the capital contribution ratio of foreign investors;
• Other transport support services: Container loading and unloading services (except services provided at airports) must establish a joint venture, and the capital contribution ratio of the foreign side does not exceed 50%; Warehousing and freight agency services: unlimited capital contribution of foreign investors…

Conditions of foreign investors: Foreign investors must have the nationality of one of the WTO member countries or have trade links with Vietnam, and at the same time must ensure personal legal status, legal entity, investment ability, and financial capacity… 

Conditions of Vietnamese partners: Vietnamese transport companies must be granted Business Registration Certificates under the law.

PROCEDURES FOR CAPITAL CONTRIBUTION TO TRANSPORT COMPANIES OF FOREIGN INVESTORS

Step 1: Prepare your application

Foreign investors need to fully prepare the following documents to carry out procedures for registration of capital contribution to the transport company:

• Written registration of capital contribution to the transport company. The document must clearly state information about the transport company to which the foreign investor intends to contribute capital; the percentage of capital intended to contribute; the percentage of ownership of contributed capital by foreign investors before and after making capital contribution; the list of owners, members being foreign investors…
• Notarized copies of consular legalized legal papers of individuals and organizations contributing capital to the transport company and of the transport company where the foreign investor contributes capital;
• Referral letter, power of attorney to submit documents;
• A copy of the land use right certificate of the transport company with foreign investor capital contribution, in case the transport company has a land use right certificate in islands, communes, wards, border towns and coastal communes, wards or townships; other areas affecting national defense and security;
• A written agreement in principle on capital contribution between a foreign investor and a transport company in which a foreign investor contributes capital or between a foreign investor and a member of such transport company.

Step 2: Apply documents

Foreign investors apply at:

• Management boards of industrial parks, export processing zones, hi-tech parks, and economic zones if the transport company is located in industrial parks, export processing zones, hi-tech parks, or economic zones. 
• Foreign Economic Department – Department of Planning and Investment of the province/city where the company is located if the transport company is located outside the industrial park, export processing zone, high-tech park, and economic zone.

The investment registration agency shall send a notice of approval or disapproval of the foreign investor’s capital contribution to the transport company within 15 working days from the date of receiving a valid dossier.

In case a foreign investor contributes capital to a transport company with a Certificate of land use right in an island, commune, ward, border town and ward or town in a coastal commune; in other areas affecting national defense and security, the Investment Registration Agency shall carry out the following procedures:

• Within 03 working days from the date of receipt of a valid dossier, the investment registration agency shall collect opinions of the Ministry of National Defense and the Ministry of Public Security on the satisfaction of conditions for ensuring national defense, security and land use conditions;
• Within 07 working days from the date of receipt of the written request of the investment registration agency, the Ministry of National Defense and the Ministry of Public Security shall comment on the satisfaction of conditions for ensuring national defense and security for transport companies with foreign investors contributing capital; After the time limit for requesting without comments, it is considered that it has agreed to satisfy the conditions for ensuring national defense and security for transport companies with foreign investors contributing capital;
• Within 15 days from the date of receipt of a valid dossier, the investment registration agency shall consider meeting the conditions for capital contribution and based on the opinions of the Ministry of National Defense and the Ministry of Public Security notify the investor. A written notice shall be sent to foreign investors and transport companies with foreign investors’ capital contributions.

Step 3: Make a capital contribution to the transport company

Foreign investors shall open direct investment capital accounts, make capital contributions, and transfer capital through such accounts.

Capital transfer members shall declare tax when transferring under the law on personal income tax, and corporate income tax (if any).

Step 4: Carry out procedures to change the type of company, members, company shareholders

After receiving the capital contribution of foreign investors, the transport company needs to carry out procedures for changing members and shareholders of the company, In case the capital contribution to the transport company leads to a change in the type of company, it is necessary to carry out procedures for changing business registration according to regulations.

Above are some shares of Siglaw about conditions and procedures for a capital contribution of foreign investors to transport companies. If you have any questions related to the capital contribution process to the company, please contact Siglaw for answers and dedicated advice.

Siglaw provides consulting services on capital contribution to Vietnamese companies

“Customer satisfaction is the measure of Siglaw’s success. For us, every customer is a brand ambassador!”

Therefore, Siglaw takes care and meticulously of each customer in the most thoughtful way, when using Siglaw’s capital contribution consulting services to Vietnamese companies, customers will be most enthusiastically supported as follows:

1. Guide the preparation of necessary documents and information to prepare dossiers for capital contribution procedures to Vietnamese companies.
2. Answering and consulting legal regulations related to capital contribution to Vietnamese companies.
3. Consulting advantages, legal incentives, the most optimal tax suitable  for each customer.
4. Guidance on consulting all foreign documents and documents.
5. Guide customers to carry out procedures at competent state agencies.
6. Support consulting on tasks and procedures to be done after contributing capital to a Vietnamese company.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

Headquarters: No.44/A32, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi.

Southern branch: No. 99 Cong Hoa, Ward 04, Tan Binh District, Ho Chi Minh City.

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