Investors welcome decree guidelines
Investors welcome decree guidelines
The long-awaited governmental decree detailing and guiding the implementation of some clauses in the new Law on Investment was last week issued, containing clear regulations on investment procedures towards foreign investors.
Aside from applying the regulations on business registration procedures and granting investment registration certificates set in the Law on Investment, foreign investors can now handle both of these procedures in one place, according to governmental Decree No.118/2015/ND-CP
According to Quach Ngoc Tuan, deputy head of the Ministry of Planning and Investment’s Legislation Department, this process is clearly regulated in Decree 118 to ensure ease for foreign investors. Investors will submit their investment registration and business registration documents to the investment registration bodies, who will then forward the business registration documents to state business registration agencies within one working day.
Then, within two working days of receiving an investor’s records, business registration agencies will consider the legitimacy of these records and give feedback to the investment registration bodies.
In the case of amendments or revisions to investor records, either on investment registrations or business setup registrations, investment registration bodies will have to inform the investors of all discrepancies. Based on their investor records, the investment and business registration agencies must co-ordinate on processing and delivering the final results to the investors.
“Thus, for the first time, foreign investors doing business in Vietnam will have two options. They can choose to register their investment projects before founding their business here in Vietnam, or handle both procedures simultaneously. As noted in Decree 118, it only takes 15 days for the investors to receive their investment certificates. If the investors satisfy all investment conditions, their projects will not have to be listed amongst those subject to government approval,” Tuan said.
In respect to investment procedures applicable to capital contribution or stake purchase, Decree 118 regulates that when foreigners invest in the form of capital contribution and stake purchase, their capital contribution in business organisations are not subject to investment registration procedures.
This holds true, except in the case where foreign investors contribute capital or purchase a stake in business organisations that carry special conditions applicable to foreign investors, or when their contributed capital and purchased stakes help hike their chartered capital ownership in targeted business organisations to above 51 per cent.
“In these cases, it also takes just 15 days to complete the registration procedures for capital contribution and stake purchases. Notably, already operational local business organisations in which the foreign investors contribute capital or purchase a stake are not subject to an investment certificate revision.” Tuan added.
In terms of investment conditions for foreign investors, Decree 118 consists of separate clauses clearly regulating the necessary requirements.
The following five points must be clearly stated by the foreign investor: conditions on capital holding of foreign investors in business organisations; conditions related to the investment model; conditions on investment scope; conditions on Vietnamese partners joining investment activities; and other conditions regulated in laws, ordinances, decrees, and international conventions on investment.
Foreign investors doing business in diverse fields are obliged to meet all investment conditions of these sectors.
Decree 118 states, for example, that in cases where foreign investors are subject to applying international conventions on investment that feature different regulations, they can choose to apply the investment conditions in one of the conventions. In this case, foreign investors shall exercise their rights and obligations in light of regulations in this chosen convention only.
