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THE
PRIME MINISTER OF GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
36/2003/QD-TTg
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Hanoi,
March 11, 2003
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DECISION
PROMULGATING THE REGULATION ON CONTRIBUTION OF CAPITAL TO,
AND PURCHASE OF EQUITIES FROM, VIETNAMESE ENTERPRISES BY FOREIGN INVESTORS
THE PRIME MINISTER
Pursuant to the Law on Organization of the
Government of December 25, 2001;
Pursuant to the (amended) Law on Domestic Investment Promotion of May 20, 1998;
the (amended) Law on Foreign Investment in Vietnam of June 3, 2000; the Law on
Enterprises and the Law on Cooperatives;
Pursuant to the Government’s Decree No. 51/1999/ND-CP of July 8, 1999 detailing
the implementation of the (amended) Law on Domestic Investment Promotion; and
Decree No. 64/2002/ND-CP of June 19, 2002 on the transformation of State
enterprises into joint-stock companies;
At the proposal of the Finance Minister,
DECIDES:
Article 1.- To
promulgate together with this Decision the Regulation on contribution of
capital to, and purchase of equities from, Vietnamese enterprises by foreign
investors.
Article 2.- The Minister
of Finance, the Minister of Planning and Investment, the Governor of the State
Bank of Vietnam and the concerned ministries and branches shall guide the
implementation of this Decision.
Article 3.- This
Decision replaces the Prime Minister’s Decision No. 145/1999/QD-TTg of June 28,
1999 and takes effect 15 days after its publication on the Official Gazette.
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FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER
Nguyen Tan Dung
REGULATION
ON CONTRIBUTION OF CAPITAL TO, AND PURCHASE OF EQUITIES FROM,
VIETNAMESE ENTERPRISES BY FOREIGN INVESTORS
(Promulgated
together with the Prime Minister’s Decision No. 36/2003/QD-TTg of March 11,
2003)
I. GENERAL PROVISIONS
Article 1.- Objectives
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Article 2.-
"Foreign investors" that contribute capital to, and/or purchase
equities from, Vietnamese enterprises under the provisions of this Regulation
include:
1. "Foreign economic and financial
organizations," which are economic and/or financial organizations established
under foreign laws and conducting business activities in foreign countries or
Vietnam.
2. "Foreigners not permanently residing in
Vietnam," who are foreign nationals residing in foreign countries.
3. "Foreigners permanently residing in
Vietnam," who are foreign nationals and persons not bearing Vietnamese
nationality but permanently residing and earning their living in Vietnam.
4. "Overseas Vietnamese," who are
persons bearing Vietnamese nationality and those of the Vietnamese origin, and
permanently residing and earning their living in foreign countries.
Article 3.-
"Vietnamese enterprises" which receive contributed capital or sell
their equities to foreign investors include: equitized State enterprises,
joint-stock companies, limited liability companies, partnerships, unions of
cooperatives and cooperatives doing business in domains, lines and trades
decided by the Prime Minister or announced in each period by the Minister of
Planning and Investment under the Prime Minister’s authorization.
Article 4.- Level of
capital contribution or equity purchase
The maximum level of capital contributed to and
equities purchased from Vietnamese enterprises by foreign investors according
to Article 3 of this Regulation shall be equal to 30% of the charter capital of
such Vietnamese enterprises.
Article 5.- Forms of
capital contribution and equity purchase by foreign investors
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a/ Purchase of equities issued for the first
time by equitized State enterprises.
b/ Purchase of stocks additionally issued by
joint-stock companies, re-purchase of stocks from stockholders in joint-stock
companies.
2. Capital contribution forms:
a/ Re-purchase of contributed capital
proportions of members of limited liability companies; contribution of capital
to limited liability companies to become new members thereof.
b/ Contribution of capital to partnerships;
re-purchase of contributed capital proportions of partners to partnerships to
become capital-contributing partners thereto.
c/ Contribution of capital to unions of
cooperatives or cooperatives to become members thereof.
Article 6.- The
competence to decide on reception of capital contributions from, or sale of
equities to, foreign investors
1. For equitized State enterprises: The
authorities competent to approve plans on the equitization of such State
enterprises shall have such competence.
2. For operating joint-stock companies:
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b/ Stockholders owning stocks shall decide to
sell their contributed capital proportions to foreign investors according to
the current law provisions and the organization and operation charters of
joint-stock companies.
c/ For joint-stock companies already listed on
the securities market, the current provisions of the securities legislation
shall be complied with.
3. For limited liability companies,
partnerships, unions of cooperatives and cooperatives.
Members’ councils (for limited liability
companies with more than one member), partners (for partnerships), company
owners (for one-member limited liability companies), cooperative members’
congresses (for unions of cooperatives and cooperatives) shall decide on plans
for mobilization of foreign investors’ contributed capital.
Article 7.- Value
denomination of capital contribution and equity purchase
1. Foreign investors shall contribute capital
to, and/or purchase equities from, Vietnamese enterprises in Vietnam dong.
a/ If they contribute capital and/or purchase
equities in foreign currencies, such foreign-currency amounts shall be
converted into Vietnam dong at the buying rates of commercial banks licensed to
conduct foreign exchange operations at the time of capital contribution or
equity purchase.
b/ If they contribute capital and/or purchase
equities with assets being machinery, equipment, raw materials, goods,
transferred technologies, intellectual property rights, valuable securities and
other assets, the values thereof shall be determined at the market prices. The
concerned enterprises shall have to set up asset-pricing councils (or hire
consultancy organizations with the pricing function) to determine such assets’
values at the market prices at the time of capital contribution or equity
purchase, with the consents of capital contributors or equity purchasers.
2. Foreign investors that contribute capital and/or
purchase equities with machinery, equipment, raw materials, materials, goods,
transferred technologies and other assets shall have to comply with the
provisions of Vietnamese laws on technology, culture and environment.
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The foreign investors contributing capital to,
and/or purchasing equities from, Vietnamese enterprises shall have their
legitimate rights and interests protected by the State of the Socialist
Republic of Vietnam according to the provisions of the Vietnamese law.
II. SPECIFIC PROVISIONS ON
RECEPTION OF CONTRIBUTED CAPITAL FROM, OR SALE OF EQUITIES TO, FOREIGN INVESTORS
Article 9.- Reception of
contributed capital from, or sale of equities to, foreign investors
1. For Vietnamese enterprises selling their
equities:
a/ Equitized State enterprises which have demand
and capability to mobilize foreign capital, techniques, technologies and
managerial experience shall work out equitization plans, proposing the sale of
their equities to foreign investors, then submit them to the agencies deciding
on the enterprise equitization for approval.
b/ Operating joint-stock companies: Their
Managing Boards or Directors shall work out plans on investment or additional
issuance of shares to mobilize capital, including the sale of stocks to foreign
investors, then submit them to the Stockholders’ General Assembly or Managing
Boards (according to the organization and operation charters of such
joint-stock companies) for decision.
2. For Vietnamese enterprises receiving contributed
capital:
a/ Chairmen of the members’ councils or
directors of limited liability companies, partnerships, the management boards
of unions of cooperatives or cooperatives shall work out investment plans which
include a section on reception of contributed capital of foreign investors,
then submit them to the members’ councils (for limited liability companies and
partnerships), cooperative members’ congresses (for unions of cooperatives and
cooperatives) for decision.
b/ For one-member limited liability companies:
Company Presidents or Managing Boards shall work out investment plans, which
include a section on reception of contributed capital of foreign investors,
then submit them to the owners or organizations authorized to act as owners’
representatives for decision (applicable to cases where one-member limited
liability companies are transformed into limited liability companies with more
than one member or joint-stock companies).
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After obtaining decisions of the competent
persons defined in Article 6 of this Regulation, Vietnamese enterprises shall
announce such decisions on the mass media and publicize principal information
on the Vietnamese enterprises so that foreign investors can inquire into them
before organizing the sale of equities or reception of contributed capital.
Article 11.- Effecting
the capital contribution or equity sale and purchase
1. For foreign investors contributing capital
to, and/or purchasing equities from, Vietnamese enterprises:
a/ When they wish to make investment, foreign
investors shall directly transact with Vietnamese enterprises or intermediary
financial institutions, which undertake the issuance, to contribute capital to,
or purchase equities from, Vietnamese enterprises.
b/ Foreign investors shall open accounts at
Vietnamese or foreign financial institutions or commercial banks operating in
the Vietnamese territory. All activities of purchasing and selling equities,
transferring contributed capital, receiving and using shared dividends and
profits, transferring money abroad and other activities related to the
investment in Vietnamese enterprises must be effected via such accounts.
2. For Vietnamese enterprises selling their
equities:
a/ The sale of first-issued equities of the
equitized State enterprises shall comply with according to the provisions of
the Government’s Decree No. 64/2002/ND-CP of June 19, 2002 on the
transformation of State enterprises into joint-stock companies.
b/ The sale of stocks of joint-stock companies
already listed on the securities market to foreign investors shall comply with
the provisions of the securities legislation.
c/ The sale of stocks of joint-stock companies
not yet listed on the securities market to foreign investors shall be conducted
at such companies or through intermediary financial institutions which
undertake the issuance.
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The capital contribution by foreign investors to
limited liability companies, partnerships, unions of cooperatives and
cooperatives shall be effected at such enterprises on the principle of mutual
agreement between the capital contributors and capital recipients according to
the provisions of this Regulation and other provisions of Vietnamese laws.
4. In cases where many foreign investors
register to contribute capital or purchase equities of a total value exceeding
30% of the charter capital of a Vietnamese enterprise, such enterprise shall
choose by itself or conduct an auction under the provisions of Vietnamese law
to choose foreign investors.
Foreign investors that have no conditions to
directly participate in the auction shall agree with the sellers on purchasing
prices and selling prices of equities, which must not be lower than the selling
prices applicable to domestic investors and have to satisfy the conditions
prescribed in Article 4 and Point b, Clause 1, Article 11 of this Regulation.
Article 12.- Selling
prices of equities and prices of contributed capital
1. The selling prices of stocks of joint-stock
companies already listed on the securities market shall comply with the
provisions of the securities legislation.
2. The selling prices of first issued equities
of equitized State enterprises shall be determined according to the provisions
of the Government’s Decree No. 64/2002/ND-CP of June 19, 2002 on the
transformation of State enterprises into joint-stock companies.
3. The selling prices of additionally issued
stocks of joint-stock companies not yet listed on the securities market shall
be the prices agreed upon between Vietnamese enterprises and foreign investors.
4. The re-selling prices of stocks owned by
stockholders shall be the prices agreed upon between stockholders and foreign
investors.
5. The prices of capital contributed by foreign
investors to partnerships, limited liability companies, unions of cooperatives
or cooperatives in order to become new members thereof shall be decided by the
members’ councils (for limited liability companies with more than members),
owners (for one-member limited liability companies), partners or
capital-contributing members (partnerships), cooperative members’ congresses
(for unions of cooperatives and cooperatives).
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Either of the following two forms of
certification of foreign investors’ capital contribution to, or equity purchase
from, Vietnamese enterprises shall be effected:
a/ Certificates being registered or bearer
shares.
b/ Accounting-book entries.
The issuance and management of shares and
accounting-book entries shall comply with the provisions of Vietnamese laws.
Article 14.-
Announcement of results of contributed capital reception or equity sale
Fifteen days after the completion of the
reception of contributed capital or purchase of equities by foreign investors,
enterprises shall send reports on the results thereof according to the
following provision:
1. Equitized State enterprises shall send to the
competent authorities decisions on equitization of State enterprises.
2. Joint-stock companies, limited liability
companies, partnerships, unions of cooperatives and cooperatives shall send
reports to the agencies granting business registration certificates.
III. RIGHTS AND OBLIGATIONS
OF FOREIGN INVESTORS
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1. To pledge shares in credit transactions and
as security for the performance of civil obligations according to the
provisions of Vietnamese law.
2. To transfer the ownership over shares,
participate in transactions on the securities market when joint-stock companies
are listed according to the provisions of the Enterprise Law and the provisions
of the securities legislation.
3. To assign contributed capital proportions in
limited liability companies, partnerships, unions of cooperatives or
cooperatives according to the provisions of Vietnamese law and such
enterprises’ organization and operation charters.
4. To convert into foreign currencies the
investment capital (both principal and interest) and proceeds from the sale of
equities, assignment of contributed capital and other lawful incomes generated
in Vietnam for transfer abroad, after fulfilling the financial obligations and
observing the foreign exchange regime prescribed by the Vietnamese law.
5. To enjoy the preferences provided for by the
Domestic Investment Promotion Law or the Law on Foreign Investment in Vietnam
if they use profits earned from the contribution of capital to, and/or purchase
of equities from, Vietnamese enterprises to reinvest in such Vietnamese
enterprises.
6. Investors being individuals shall be exempt
from personal income tax for the income proportion earned from the contribution
of capital to, and/or purchase of equities from, Vietnamese enterprises
according to the provisions of the Government’s Decree No. 51/1999/ND-CP of
July 8, 1999 detailing the implementation of the Domestic Investment Promotion
Law.
7. To enjoy benefits like stockholders or other
members being Vietnamese in joint-stock companies, limited liability companies,
partnerships, unions of cooperatives or cooperatives.
8. To enjoy other legitimate interests
prescribed by the Vietnamese law.
9. Foreigners permanently residing in Vietnam
and overseas Vietnamese who purchase equities from, or contribute capital to,
Vietnamese enterprises operating under the Enterprise Law or the Cooperatives
Law shall be entitled to take part in the management of such enterprises
according to the provisions of the said laws and the enterprises’ organization
and operation charters.
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Foreign investors shall have to fulfill the
obligations prescribed in this Regulation and the organization and operation
charters of enterprises which they contribute capital to, and/or purchase
equities from and other relevant provisions of law.
IV. ORGANIZATION OF
IMPLEMENTATION
Article 17.-
Responsibilities of the State management agencies
1. The ministers, the heads of the
ministerial-level agencies and the heads of the agencies attached to the
Government shall have to guide and inspect State enterprises which are
equitized or sell equities to foreign investors under their own decisions.
2. The presidents of the People’s Committees of
the provinces and centrally-run cities shall have to guide and inspect State
enterprises which are equitized under their own decisions, and enterprises
operating under the Enterprise Law and the Cooperative Law in their respective
localities, which sell their equities to or receive capital contributed by
foreign investors.
3. The Ministry of Finance, the State Bank of
Vietnam and the concerned ministries and branches shall have to guide the
implementation of this Regulation.
FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER
Nguyen Tan Dung
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