How to prepare a financial capacity report of a foreign investor

Why is it necessary for preparing a report on financial capacity?

According to the Law on Investment 2014, foreign investors can invest in Vietnam in one of four forms:

  • Investment by establishing economic organizations (Establishment of enterprises)
  • Investing by contributing capital, buying shares, contributing capital (Investing in business cooperation with established companies in Vietnam)
  • Investment under BCC business cooperation contract. This is a form of investment that does not establish an economic organization and foreign investors can establish an Executive Office in Vietnam to implement this investment project.
  • Investment under PPP contract. These are often cases where foreign investors participate in bidding for projects offered by state agencies

Foreign investors who want to invest in the establishment of an economic organization in Vietnam must apply for an investment registration certificate with the Department of Planning and Investment where they plan to implement the project first. In order to apply for an investment registration certificate, a foreign investor must prepare a set of documents including the following basic documents:

  • Application for investment registration certificate.
  • Copy of passport for individual investors and copy of business registration certificate for investors being organizations
  • Written proposal for investment project to be implemented
  • For investors who are organizations, they must provide financial statements in their last 2 years. As for individual investors, they must provide explanations about their financial capacity. That is why it is necessary to report financial capacity.

Note for preparing financial capacity reports

For the financial statements of the organization and the notes on the financial capacity of the individual, the investor will be independent, self-declared and responsible for the truthfulness and accuracy of the report. If required to prove, the investor is an organization that can provide audited financial statements with focus on revenue, asset value and annual profit.

In case the business is not profitable, it must prove its ability to mobilize capital through policies and confirmation of the bank’s guarantee. For newly established businesses or individual investors, there is evidence by bank confirmation documents on account balances and savings books.

How to prepare a financial capacity report

For the financial capacity report of the organization, it must show the following basic information:

  • Information about businesses including name, business registration certificate number, address and investment capital of the project.
  • Information about the legal representative of the enterprise including name, position, Passport number.
  • The amount of money in the company’s account at the present time
  • How much is the company’s after-tax profit in the last 2 years?
  • Total loan amount (if any): Which expresses medium and long-term loans or short-term loans: Loan amount, interest rate, loan term and source of debt repayment

For individuals, it is possible to present the amount of money in the bank account at the present time, including account number and location of the bank. In case of depositing savings account, you can provide the corresponding savings account number with the amount of money. In order to mobilize capital to implement the project, investment capital is to implement projects with loans or mobilized capital from other individual organizations or not.

The above are some notes when drafting financial capacity reports or notes on financial capacity for foreign investors. If you are having difficulty in drafting the financial capacity report, please contact HNLAW & PARTNERS for assistance. We provide services for foreign investors to apply for investment registration certificates. Please contact:

Hotline: 0912918296

Email: dinhhoangnhung@hnlaw.vn

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