FOREIGN INVESTORS CONTRIBUTE CAPITAL TO TRANSPORT COMPANIES
Transportation services are a business line that receives a lot of attention from foreign investors when investing in Vietnam. Investors can choose many forms of investment in the transportation industry such as capital contribution, company establishment, business cooperation contracts, etc. In particular, the form of capital contribution to transport companies is of interest to many foreign investors due to the simplicity and speed of this type of investment. In the article below, Siglaw would like to share about the conditions and procedures for foreign investors to contribute capital to transport companies in Vietnam.
LEGAL BASIS FOR FOREIGN INVESTORS TO CONTRIBUTE CAPITAL TO TRANSPORT COMPANIES
Law on Enterprises in 2020;
Law on Investment 2020;
Legal documents related to the field of transport (waterways, railways, roads, airways);
Vietnam’s commitments in the WTO.
Conditions on investment form: Foreign investors are allowed to contribute capital to transport companies in Vietnam.
Conditions on the ratio of capital contribution:
- Sea transportation: For merchandise and passenger transport services: a joint venture must be established with Vietnam and the foreign capital contribution rate must not exceed 49%; For services related to international transportation: It is allowed to establish a 100% foreign-owned company from January 11, 2012;
- Inland ports transport: must be a joint venture with a Vietnamese partner, foreign capital must not exceed 49%;
- Railway transport: must be a joint venture with a Vietnamese partner, foreign capital must not exceed 49%
- Road transport: must be a joint venture with a Vietnamese partner, foreign capital must not exceed 51%.
- Aviation transport: Passenger or cargo transportation services will comply with the provisions of Vietnamese law, the capital contribution rate of foreign investors shall not exceed 30%; Aircraft repair and maintenance services: There is no limit on the proportion of capital contributed by foreign investors.
- Other transport support services: Container handling services (except for services provided at airports) must establish joint ventures, the capital contribution rate of the foreign party must not exceed 50%; Warehousing services and freight forwarding agents: no limit on capital contributions of foreign investors… See more: Establishment of foreign-invested enterprises providing air transport support services
Conditions for 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 the legal status of individuals and legal persons, ensure investment capacity, financial capacity, etc.
Conditions of Vietnamese partners: Vietnam’s transport companies must be granted an enterprise registration certificate in accordance with the law.
PROCEDURES FOR CAPITAL CONTRIBUTION TO TRANSPORT COMPANIES OF FOREIGN INVESTORS
Step 1: Prepare the dossier
- Foreign investors need to prepare all the following documents to carry out the procedures for registering capital contribution to transport companies: The 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 charter capital intended to be contributed; the rate of ownership of capital contribution of foreign investors before and after capital contribution; list of owners and members who are foreign investors…
- Consular legalized notarized copies of legal papers of individuals and organizations contributing capital to transport companies and transport companies where foreign investors contribute capital
- Letter of introduction, power of attorney for application
- A copy of the land use right certificate of the transport company to which foreign investors contribute capital, in case the transport company has a land use right certificate in islands, communes, wards or border towns and coastal communes, wards or townships; other areas affecting national defense and security
- A written agreement about principle on capital contribution between a foreign investor and a transport company to which a foreign investor contributes capital or between a foreign investor and a member of the transport company.
Step 2: Submit the application
Foreign investors submit their applications at:
- Management boards of industrial parks, export processing zones, hi-tech parks and economic zones if the transport company is headquartered in an industrial park, export processing zone, hi-tech park or economic zone.
- Department of External Economics – Department of Planning and Investment of the province/city where the company is headquartered if the transport company is located outside the industrial park, export processing zone, hi-tech park, 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 receipt of a valid dossier.
In case foreign investors contribute capital to transport companies that have certificates of land use rights in islands, communes, wards or border towns and coastal communes, wards or townships; 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 consult the Ministry of National Defense and the Ministry of Public Security on the satisfaction of conditions for ensuring national defense and security and land use conditions;
- Within 07 working days from the date of receipt of the written request from the investment registration agency, the Ministry of National Defense and the Ministry of Public Security shall give opinions on the validation of conditions for ensuring national defense and security for transport companies with foreign investors contributing capital; past the time limit for request, without giving an opinion, it shall be deemed to have agreed to the satisfaction of 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 the satisfaction of capital contribution conditions and base on the opinions of the Ministry of National Defense and the Ministry of Public Security to notify the investor. Written notices shall be sent to foreign investors and transport companies with foreign investors contributing capital
Step 3: Make capital contribution to the transport company
Foreign investors shall open direct investment capital accounts and contribute and transfer capital through such accounts.
Capital transferor members shall declare tax upon transfer in accordance with the law on personal income tax and corporate income tax (if any).
Step 4: Carry out procedures for changing the type of company, members, shareholders of the company
After receiving the capital contribution of foreign investors, the transport company needs to carry out procedures for changing its members and shareholders. 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 as prescribed.
Above are a few shares of Siglaw law firm about the conditions and procedures for foreign investors to contribute capital to the transport company. If you have any questions related to the process of contributing capital to the company, please contact Siglaw for answers and dedicated advice.
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