Types of offshore investment capital

Types of offshore investment capital

With the current market integration mechanism, outward investment not only helps to expand markets and trade between countries but also helps improve business opportunities and efficiency. So what are the legal sources of capital for offshore investment? What is the purpose for? And what are the notes when using offshore investment capital? Let’s find out with Siglaw through the article below.

Purpose of using outward investment capital

This capital is used to contribute capital or lend capital to overseas economic organizations, pay for share purchases, contributed capital, fulfill guarantee obligations (if any) to make outward investment in the following forms:

• Establishment of economic organizations in accordance with the law of the host country
• Investment in the form of overseas contracts
• Participate in the management of foreign economic organizations to which they contribute capital, purchase shares, purchase contributed capital

Types of offshore investment capital

Classification of outward investment capital

1. Legitimate sources of investors
2. Equity
3. Loans in Vietnam transferred abroad
4. Profits earned from offshore investment projects shall be retained for further foreign investment
5. Lawful money and assets include:

• Foreign currency on accounts at permitted credit institutions or purchased at such permitted credit institutions in accordance with law
• Vietnamese dong in accordance with the law on foreign exchange management of Vietnam
• Machinery, equipment, supplies, raw materials, fuel, finished goods, semi-finished goods
• Value of intellectual property rights, technologies, trademarks, rights to property
• Shares, capital contributions and projects of investors are swapped at economic organizations in Vietnam and foreign economic organizations

With what sources do foreign-invested economic organizations in Vietnam invest abroad?

Economic organizations with foreign investors holding more than 50% of charter capital, outward investment capital must be equity, excluding contributed capital to carry out investment activities in Vietnam.

If using the increased capital contribution for investment, it must first apply for an Investment Registration Certificate and then carry out procedures to increase capital and fully contribute charter capital in Vietnam.

Note before transferring investment capital abroad

When investors transfer investment capital abroad, it should be noted that the following conditions should be met in accordance with the law:

• Must be granted an offshore investment certificate in advance (unless investors are allowed to transfer foreign currency or foreign goods, machinery and equipment to serve survey, research, market exploration activities and carry out other investment preparation activities according to the Government’s regulations
• The host country has approved or licensed such investment activities. If there are no regulations on the need to license or approve investment from the receiving country, the investor must have documents proving the right to invest in this country.
• Having an offshore investment capital account opened at an authorized credit institution in Vietnam
• Investors must be solely responsible for the transfer of investment capital abroad, ensuring the right purpose, on time and in compliance with the law.
• Registration of foreign exchange transactions related to outward investment activities

Thus, before transferring investment capital abroad, investors must be granted an Investment Registration Certificate; be approved or licensed by the host country; have an investment capital account opened in Vietnam and register foreign exchange transactions for outward investment.

After determining the purpose and source of capital to be taken for foreign investment; If there are sufficient required documents such as the Foreign Investment Registration Certificate, investors can make registration documents to transfer capital, including:

• A copy of the Certificate of offshore investment registration
• The original written confirmation of the permitted credit institution on the opening of the investor’s investment capital account (clearly stating the account number, foreign currency)
• Foreign language copy, Vietnamese translation (certified by the investor on the accuracy of the copy and translation) of the written approval or investment license issued by the competent authority of the host country or documents proving the right to conduct investment activities in the host country in accordance with the provisions of the law of the receiving country invest.
• The original written certification of the permitted credit institution on the amount of money the investor has transferred abroad before being granted the Investment Registration Certificate to meet the expenses for the formation of overseas investment projects
• Written explanation on the need to transfer investment capital abroad in Vietnamese dong

The dossier shall be submitted to the State Bank of the province or city where the investor is an organization with its head office or where the investor is an individual registered for permanent residence.

From the date of receipt of a complete and valid dossier, the State Bank shall confirm or refuse to confirm the registration of foreign exchange transactions related to foreign investment activities within 10 working days.

Within 5 working days, if the dossier is insufficient, the State Bank shall request the investor in writing to supplement the dossier.

Above is the basic information related to “OFFSHORE INVESTMENT CAPITAL” that Siglaw Law Firm provides to you. If you have any questions with the above content or for a comprehensive free consultation, please contact:

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

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

Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.

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