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FOREIGN INVESTORS CONTRIBUTE CAPITAL TO THE SECURITIES TRADING COMPANY
To achieve the position of listing on the stock exchange, companies must not only have sufficient economic potential but also have sufficient expertise and undergo strict conditions. Therefore, their reputation is quite high, so foreign investors who contribute capital to securities trading companies have been attracting a lot of FDI from individuals to foreign organizations.
This helps open up a stock trading industry, where securities experts will invest for users. Thereby minimizing the possibility of capital losses for non-professional customers who still want to invest in securities. So what are the things to know before foreign investors contribute capital to a securities trading company? Let’s find out in the article below
What is a capital contribution to a securities trading company?
First, it should be understood that “capital contribution to the company” is when an individual or organization uses assets (money or assets of similar value) to contribute to the charter capital of the company.
Therefore, capital contribution to a securities trading company is an activity of an individual or organization that uses money or assets of equivalent value to contribute to a securities trading company. The capital can be contributed to the charter capital before establishing the company or adding to the charter capital after the company is established. Providing capital to a securities trading company, the foreigner who has provided the capital will not receive the money, but will receive from the company a value equal to the invested capital.
Conditions for foreign investors to contribute capital to securities trading companies
About foreign entities contributing capital to securities trading companies
If foreign investors wish to contribute assets to securities trading companies, their capital contribution rights must first be determined. According to the provisions of Vietnamese law and international treaties of Vietnam, according to Article 17, Enterprise Law 2020, Vietnamese law only prohibits the following individuals and organizations from financing securities companies:
- State agencies (such as the Government, the National Assembly, the President, etc.), or the people’s armed forces use state assets to provide capital into enterprises for personal aims for the organizations they are working for.
- Other subjects for which the Law of Public Employees; Law on Cadres and Civil Servants; and Law on Anti-Corruption do not allow contribution capital to establish securities trading companies (if regulated)
Therefore, if it is not the above-prohibited case, the foreign investor is entitled to contribute capital to the securities trading company completely.
Charter capital for foreign investment in securities trading companies
According to Article 175, Decree 155/2020/ND-CP, a securities consulting service provider in Vietnam must have a charter capital of at least VND 10 billion or more to establish a company. This is the total amount of charter capital of foreign and domestic investors. Foreign investors can provide capital to establish securities companies in Vietnam. However, if the capital ratio of foreign investors exceeds 51%, investment registration procedures must be carried out.
The forms of capital used by foreign investors are very diverse and abundant, creating flexibility for investors and thereby encouraging more investment in securities trading companies in Vietnam. Specifically, foreign investors can contribute capital in three forms:
- Gold, cash (USD, VND, Euro,…).
- Land use rights and assets attached to land (houses, architectural works, production forests, construction works…), intellectual property rights (copyright, patent rights, copyright-related rights,…)
- Technology and technical know-how. For example, the formula for the production of electric scooter Dat Bike
Types of securities trading companies that can contribute capital to
Contribute capital to a one-member limited liability company, a limited liability company with two or more members and a partnership if contributing capital to establish the company from the beginning. Contribute capital by buying shares in a joint-stock company, contributing capital to a 1-member limited liability company, a 2-member limited liability company and a partnership if contributing additional capital after the company has been established.
Other Major Requirements
International documents to which Vietnam is a contracting party allow foreign investors to own 100% of the charter capital of securities trading companies. However, Vietnam’s domestic laws, specifically Decree 58/2012/ND-CP (amended by Decree 60/2015/ND-CP) require foreign investors to meet the following additional conditions to own 100% of the charter capital of securities trading companies:
- Belong to the group of enterprises operating in the field of securities, banking, insurance
- Have been operating for at least 02 consecutive years before the year of commencement of capital contribution.
- There are cooperation agreements (bilateral or multilateral) related to cooperation, information sharing and monitoring,.. securities operation and market between foreign regulatory, inspection and supervision agencies and the State Securities Commission of Vietnam.
- Other conditions are specified in Clause 6, Decree 58/2012/ND-CP.
Steps for foreign investors to contribute capital to securities trading companies
Foreign investors contribute capital to operating securities trading companies
| Step one: Prepare sufficiently, correctively and validly dossiers of registration for capital contribution of securities trading companies | Registration certificate of capital contribution; share and capital contribution purchase include the following contents: Information of the company receiving contributed capital (company name, enterprise code,…); Percentage of ownership of charter capital of foreign investors after contribution. | 01 original |
| ID/ passport (if the foreign investor is an individual); or Enterprise Registration Certificate or other equivalent document (if the foreign investor is an organization). | 01 certified copy | |
| Power of attorney (if the investor does not apply himself, but authorizes another person) | 01 original | |
| Step 2: Apply for capital contribution registration of a securities trading company | Place of submission: Business registration office of the province/city where the securities trading company is headquartered. Some typical addresses:
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| Step 3: Get the result | A maximum of 15 days from the date of receipt of valid documents, investors will receive the results. If not, the Investment Registration Office will notify in writing. Once the results of capital contribution to the securities trading company are obtained, investors can contribute capital by setting up an investment account at a commercial bank in Vietnam. | |
Foreign investors contribute capital to establish securities trading companies
Step 1: Application for an Investment Certificate
- 01 Application for implementation of an investment project.
- 01 copy of the lease contract for housing/office to implement the investment project.
- 01 certified copy of Vietnamese ID card/passport (if joint venture with Vietnam);
- 01 certified copy of passport of foreign investor (for foreign individuals)
- Investment project proposal. The contents of the proposal include investor information, objectives, scale, capital sources and capital mobilization plans, locations, project completion deadlines and investment plans, investment incentive proposals, labor needs, impact assessment, etc.
- 01 certified copy of ID card/passport of the investment representative of the foreign investment organization in Vietnam (if it is an organization);
- 01 annual financial statements audited by a foreign agency in the last two years (must be certified by the consular office and valid within 90 days) (if an organization)
- 01 certified copy of the business registration certificate of the foreign organization (if it is an organization);
- 01 Certificate of the account balance of the foreign investor at least equal to the investment amount. If the account is overseas, the documents must be consular authenticated, translated into Vietnamese, and notarized.
Step 2: Apply for an Investment Registration Certificate at the Investment Registration Office – Department of Planning and Investment, where the enterprise is headquartered
Step 3: Establish a foreign direct investment enterprise in securities trading.
Incentives when foreign investors contribute capital to securities trading companies in Vietnam
Policies from the State: opening the market to welcome foreign investors to contribute capital to securities trading companies, allowing investors to contribute up to 100% foreign capital to securities trading companies; brief procedure; diversified forms of investment suitable to many needs of investors; foreign individuals or organizations are entitled to contribute capital, etc.
The policy of Siglaw Law Firm guarantees the following incentives:
- Free consultation, 24/7, for all questions about capital contribution to securities trading companies in Vietnam
- Ensure to complete the work quickly, compactly, 100% on-time agreed
- A team of lawyers and consultants with more than 10 years of experience in consulting and carrying out procedures for applying for capital contribution to securities trading companies
Above is the advice of Siglaw Law Firm on capital contribution to securities trading companies of foreign investors, if you have any questions, please contact us immediately via:
Phone: (+84) 961 366 238
Email:
- vphn@siglaw.com.vn
- vphcm@siglaw.com.vn
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