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Foreigners contribute capital to software companies
Information technology services are an attractive investment field attracting many domestic and foreign investors, especially in the current era of digital development. In particular, the demand for software is increasing due to the convenience and outstanding benefits it brings. Understanding the demand and seeing the development potential of software services, many foreign investors have decided to contribute capital to software companies in Vietnam. In the following article, Siglaw would like to share about the necessary procedures to be carried out when foreigners contribute capital to a software company in Vietnam.
Legal documents for foreigners to contribute capital to software companies
- Enterprise Law 2020;
- Investment Law 2020;
- Law on Information Technology 2006;
- International treaties to which Vietnam is a signatory.
Conditions for foreigners to contribute capital to software companies
Conditions on capital contribution ratio: According to Vietnam’s commitments in the WTO, foreign investors with national nationality who are members of the WTO can participate in investment activities to provide computer-related services including activities such as software production, software development, computer consulting… In particular, the amount of capital contributed by foreign investors is not restricted, which means that foreign investors can contribute from 1% to 100% of the charter capital of the software company. This is also a service sector encouraged by the Vietnamese state to invest along with a number of tax incentives.
Conditions on the form of investment: Foreign investors are allowed to contribute capital to software companies in Vietnam.
Conditions for capital contribution registration: In case a foreign investor makes a capital contribution resulting in the foreign investor’s capital ownership rate in the software company exceeding 50% of the charter capital, it is necessary to carry out procedures for capital contribution registration.
Vietnamese partner: The software company to which the foreign investor contributes capital must be a company that has been granted an Enterprise Registration Certificate.
- The process of contributing capital to a software company of foreigners
Step 1: Prepare capital contribution registration documents
Foreign investors need to fully prepare the following documents to carry out procedures for registration of capital contribution to the software company:
- Written registration of capital contribution to the software company;
- Copies of legal papers of individuals contributing capital to software companies and software companies where foreign investors contribute capital;
- A written agreement in principle on capital contribution between a foreign investor and a software company with foreign investors contributing capital or between a foreign investor and a member of that software company;
- A copy of the land use right certificate of the software company with foreign investor capital contribution, in case the software company has a land use right certificate in islands, communes, wards, border towns and coastal communes, wards and townships; other areas affecting national defense and security;
- Letter of recommendation, power of attorney for submission.
Step 2: Apply
Foreign investors apply at:
- Foreign Economic Department – Department of Planning and Investment of the province/city where the company is located if the software company is located outside industrial parks, export processing zones, high-tech parks, economic zones.
- Management boards of industrial parks, export processing zones, high-tech parks, economic zones if the software company is located in industrial parks, export processing zones, high-tech parks, economic zones.
Within 15 working days from the date of receipt of a valid dossier, the Investment Registration Agency shall issue a Notice of satisfaction of eligibility for capital contribution to the software company.
In particular, in case a foreign investor contributes capital to a software company with a Certificate of land use right in an island, commune, ward, border town and coastal commune, ward or town; 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 software companies with foreign investors contributing capital; exceeding the requested time limit without comments, it is considered that it has agreed to satisfy the conditions for ensuring national defense and security for software 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 to notify the investor. Written notices are sent to foreign investors and software companies with foreign investors contributing capital.
Step 3: Make a capital contribution to the software company
After being approved by the Investment Registration Office for capital contribution, the foreign investor makes a capital contribution to the software company through the establishment of a direct investment capital account of a bank in Vietnam, then transfers the contributed capital through this account.
Capital transfer members shall declare tax when transferring in accordance with the law on personal income tax, 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 software company needs to carry out procedures for changing members and shareholders of the company, In case the capital contribution to the software 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 of Siglaw’s sharing about conditions and procedures for foreign investors to contribute capital to software companies. If you have any questions related to the capital contribution process to the company, please contact Siglaw Law Firm for answers and dedicated advice.
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