Investment capital accounts

• Directly-invested capital account means foreign currency or Vietnamese dong demand accounts opened by FDI enterprises and foreign investors at authorized banks to perform transactions regarding the foreign direct investment in Vietnam
• Indirectly-invested capital account means a payment account in Vietnam dong opened by a foreign investor at an authorized bank to conduct authorized revenue and expenditure transactions related to foreign indirect investment activitiesis is  in Viet Nam.

Investment capital accounts

Legal basis

• Circular No.06/2019/TT-NHNN dated July 26 2019 guiding the foreign exchange management for the foreign direct investment in Vietnam
• Circular No.05/2014/TT-NHNN dated March 12, 2014, guiding the opening and use of indirectly-invested capital accounts for implementation of foreign indirect investment activities in Vietnam

1. Directly-invested capital account
2. Opening and using direct investment accounts (Article 5 of Circular No.06/2019/TT-NHNN)

• The following entities shall open and use direct investment accounts include:

- Enterprises with foreign direct investment capital as prescribed in clause 2 Article 3 of Circular No.06/2019/TT-NHNN

- Foreign investors participate in BCC or directly implement PPP projects without establishing project enterprises (hereinafter referred to as foreign investors directly implementing PPP projects);

• An investor shall open the direct investment account as follows:

- Open a foreign currency account at one (01) authorized bank in order to receive and make payments in that currency during the process of foreign direct investment in Vietnam;

- Only 01 (one) direct investment account may be opened for a foreign currency at one (01) authorized bank;

- In case of investing in Vietnamese dong, the investor open one (01) direct investment account in Vietnamese dong at the authorized bank where the direct investment account in foreign currency is opened in order to receive and make payment in VND during the process of foreign direct investment in Vietnam;

- In case the foreign investor participates in several BCCs or directly implements several PPP projects, such foreign investor shall open a direct investment account for each BCC or PPP project.

Note: If the currency of an overseas loan is different from the currency of the FDI enterprise’s direct investment account, it may open other direct investment accounts of the loan currency at authorized banks where they have already held direct investment accounts in order to perform their receipt and expenditure transactions regarding foreign loans in accordance with regulations of law on overseas loan receipt and repayment of enterprises.

• In case the authorized bank is changed, the account holder shall:

- Open another direct investment account at another authorized bank;

- Transfer all the balance from old direct investment accounts into the new ones and close the former;

- Direct investment accounts at other authorized banks shall only be used for performing receipts and expenditures transactions prescribed in Article 6,7 of Circular No.06/2019/TT-NHNN after the process prescribed in point a,b of Clause 4 Article 5 of Circular No.06/2019/TT-NHNN is completed.

Note: The enterprises prescribed in point b, c clause 2 Article 3 of Circular No.06/2019/TT-NHNN shall close their direct investment accounts, and their non-resident foreign investors who hold shares/stakes at such enterprises shall open accounts of indirect investment for receipts and expenditures transactions in accordance with regulations on foreign exchange management of foreign indirect investment in Vietnam in the following cases:

- After the transfer of shares, contributed capital or issuance of additional shares in order to raise the charter capital of an FDI enterprise, the rate of owned shares, contributed capital of foreign investors at such enterprise is below 51% ;

- After stocks of the public company with FDI are listed or registered for transactions on securities market.

2. Revenues and expenditures on direct investment accounts in foreign currencies (Article 6 of Circular No.06/2019/TT-NHNN)

• Revenues:

- Direct capital contribution from the transfer of direct contributed capital in foreign currencies of Vietnamese, foreign investors of a FDI enterprise, foreign investors involving in BCC or directly implementing PPP projects;

- Payment for the transfer of investment capital and investment projects in accordance with provisions in Article 10 of  Circular No.06/2019/TT-NHNN;

- Transferred foreign currency purchased from authorized credit institutions to transfer capitals, profits and legal earnings overseas

- Transfer from a foreign currency demand account opened at an authorized bank of the FDI enterprise, foreign investors involving in BCC or directly implementing PPP projects in order to transfer of capital, lawful revenues and profits to foreign countries;

- Revenue from foreign currency exchange for capital contribution in case of the currency used for contribution is different from the currency of the direct investment account;

- Capital surplus from additional shares in order to raise the charter capital of the FDI enterprise;

- Revenues in foreign currency from domestic sale of petroleum products (after fulfilling all financial obligations and subtracting expenses in Vietnam dong) in accordance with law on petroleum and Government Guarantee and Undertaking (if any);

- Transferred revenues relating to foreign loans in foreign currencies of FDI enterprises in according with law on overseas loan receipt and repayment of enterprises, except for cases prescribed in clause 3 Article 5 of this Circular;

- Other lawful revenues in Vietnamese dong relating to foreign direct investment in Vietnam.

• Expenditures:

- Amounts transferred to foreign currency accounts opened at authorized banks of FDI enterprises, foreign investors involving in BCC or directly implementing PPP projects, project managers of petroleum projects according to laws on petroleum for foreign direct investment in Vietnam;

- Sale of foreign currency to authorized credit institutions which is then transferred into Vietnamese dong demand accounts opened at authorized banks of FDI enterprises, foreign investors involving in BCC or directly implementing PPP projects;

- Payments for transfer of investment capital, investment projects to overseas transferors or sale of foreign currencies for such transactions to transferors in Vietnam in Vietnamese dong in accordance with provisions prescribed in Article 10 of Circular No.06/2019/TT-NHNN;

- Overseas transfer of profits and legal revenues in foreign currency from foreign investors’ foreign direct investment in Vietnam;

- Overseas transfer of  investment capital in foreign currencies by foreign investors in case of capital reduction, finish, termination of investment projects, BCC, PPP contracts in accordance with law on investment;

- Payment for currency exchange to transfer overseas the capital, profits and legal revenues to  in case of the currency used for transferring such items is different from the currency used to open the direct investment account;

- Transfers relating to foreign loans in foreign currencies of FDI enterprises in according with law on overseas loan receipt and repayment of enterprises, except for cases prescribed in clause 3 Article 5 of Circular No.06/2019/TT-NHNN;

- Other lawful expenditures in Vietnamese dong relating to foreign direct investment in Vietnam.

3. Revenues and expenditures transactions on direct investment accounts in Vietnamese dong (Article 7 of Circular No.06/2019/TT-NHNN)

• Revenues:

- Capital contribution in Vietnamese dong of Vietnamese, foreign investors of a FDI enterprise, foreign investors involving in BCC or directly implementing PPP projects;

- Payment for the ownership transfer of investment capital and investment projects in accordance with provisions in Article 10 of Circular No.06/2019/TT-NHNN;

- Distributable profits in Vietnamese dong of Vietnamese, foreign investors of a FDI enterprise, foreign investors involving in BCC or directly implementing PPP projects, project managers of petroleum projects in order to increase capital and expand investment activities in Vietnam;

- Revenues from Vietnamese dong demand accounts opened at authorized banks of FDI enterprises, foreign investors involving in BCC or directly implementing PPP projects in order to transfer of invested capital, profits and legal receipts to foreign countries;

- Capital surplus from issuance of additional shares in order to raise the charter capital of FDI enterprises;

- Other revenues relating to foreign loans in Vietnamese dong of FDI enterprises which are eligible to be granted overseas loans in Vietnamese dong according to current laws on overseas loan receipt and repayment of enterprises;

- Other lawful revenues in Vietnamese dong relating to foreign direct investment in Vietnam.

• Expenditures:

- Amounts transferred to Vietnamese dong demand accounts opened at authorized banks of the same FDI enterprise, the foreign investors involving in BCC or directly implementing PPP projects, project managers of petroleum projects according to laws on petroleum for foreign direct investment in Vietnam;

- Payments for transfer of stakes and investment projects to transferors in Vietnam or payments for the purchase of foreign currencies for such transactions to overseas transferors in accordance with provisions prescribed in Article 10 of Circular No.06/2019/TT-NHNN;

- Payments for purchasing foreign currency at authorized credit institutions to transfer their capitals, profits and legal earnings overseas;

- Transfer of direct investment in Vietnamese dong to Vietnamese investors or payments for purchasing foreign currencies to be transferred as direct investment to  foreign investors in case of capital reduction, finish, termination of investment projects, BCC, PPP contracts in accordance with law on investment 2020;

- Payments relating to foreign loans in Vietnamese dong of FDI enterprises which are eligible to be granted overseas loans in Vietnamese dong according to current laws on taking and repaying overseas loans;

- Other lawful expenditures in Vietnamese dong relating to foreign direct investment in Vietnam.

1. Indirectly-invested capital account
2. General principles (Article 4 of Circular No. 05/2014/TT-NHNN)

- All indirect investment activities of foreign investors in Vietnam must be conducted in Vietnam Dong. Transactions relating to foreign indirect investment activities in Vietnam of foreign investors must be conducted through 01 (one) indirectly-invested capital account opened at 01 (one) licensed bank.

- When conducting foreign indirect investment activities in Vietnam under forms as prescribed in Article 5 of Circular No. 05/2014/TT-NHNN, foreign investors will have to comply with provisions of Circular No. 05/2014/TT-NHNN, legal provisions on opening and use of payment accounts, provisions of the Law on Securities, documents guiding the Law on Securities, prevailing legal provisions pertaining to activities of capital contribution, purchase of shares in Vietnamese enterprises of foreign investors and activities of foreign investors on the securities market of Vietnam and other relevant legal provisions.

- Balance on indirectly-invested capital accounts of foreign investors are not permitted to transfer to definite-term deposits and saving deposits at credit institutions and branches of foreign banks.

2. Forms of foreign indirect investment in Vietnam (Article 5 of Circular No. 05/2014/TT-NHNN)

- Capital contribution, purchase or sale of shares or stakes of Vietnamese enterprises which are not yet to be listed or registered for transactions on stock exchanges of Vietnam and not in the cases specified in clause 2 Article 3 of Circular No. 06/2019/TT-NHNN dated July 26 2019 guiding the foreign exchange management for the foreign direct investment in Vietnam and other amended documents (if any).

- Capital contribution, purchase or sale of shares or stakes of Vietnamese enterprises which have been listed or registered for transactions on stock exchanges of Vietnam.

- Sales and purchase of bonds and other types of stocks on the securities market of Vietnam.

- Sale and purchase of other valuable papers in Vietnam Dong which are permitted to issue within the territory of Vietnam by organizational residents.

- Investment trust in Vietnam Dong through fund management companies, securities companies and organizations are permitted to conduct the investment trust operation under the legal provisions on securities; investment trust in Vietnam Dong through credit institutions and branches of foreign banks are allowed to conduct the investment trust operation under the provisions of the State Bank.

- Capital contribution, transfer of stakes of foreign investors in securities investment funds and fund management enterprises according to legal provisions on securities

- Other indirect investment forms according to legal provisions.

3. Opening of capital accounts for indirect investment (Article 6 of Circular No.05/2014/TT-NHNN)

- When conducting indirect investment activities in Vietnam, the foreign investor will have to open one (01) capital account of indirect investment at one (01) licensed bank for implementation of receipt-payment transactions permitted under provisions of Article 7 of Circular No.05/2014/TT-NHNN.

- In the case where the foreign investor is having and using a capital account of indirect investment at a licensed bank but has demand to open another indirectly-invested capital account in another licensed bank, such foreign investor is requested to close the existing capital account for direct investment, transfer all the balance in this account to the new account. Procedure on the opening and closing of the capital account for indirect investment will be conducted according to provisions of the licensed bank.

Note: The foreign investor will only be entitled to conduct receipt and expense transactions on the newly-opened capital account of indirect investment as prescribed above after having the previously-opened capital account of indirect investment closed and settled.

4. Use of indirectly-invested capital accounts (Article 7 of Circular No.05/2014/TT-NHNN)

• Revenues:

- Revenues from selling foreign currencies to licensed credit institutions;

- Revenues from transfer of contributed capital, shares, sale of securities and other valuable papers, receipt of dividends and interests from bonds and valuable papers in Vietnam Dong from foreign indirect investment activities in Vietnam;

- Revenues of transfer from payment accounts in Vietnam Dong of foreign investors opened at licensed banks;

- Revenues of transfer from accounts of fund management enterprises, securities companies, credit institutions and branches of foreign banks permitted to conduct investment trust operation for foreign investor (applied in cases that foreign investors conduct indirect investment in Vietnam under the form of investment trust);

- Other legal transactions of receipts in Vietnam Dong of foreign investors relating to foreign indirect investment activities in Vietnam.

• Expenditures:

- Payments for implementation of foreign indirect investment activities in Vietnam under forms prescribed in Article 5 of Circular No.05/2014/TT-NHNN;

- Payments for buying foreign currencies from licensed credit institutions in order to transfer capitals, interests and other lawful incomes to foreign countries;

- Payments for legal expenses incurred in Vietnam;

- Payments for transfer to payment accounts in Vietnam Dong of foreign investors opened at licensed banks;

- Payments for transfer to accounts of fund management enterprises, securities companies, and organizations permitted to conduct investment trust operation for foreign investor (applied in cases that foreign investors conduct indirect investment in Vietnam under the form of investment trust);

- Other transactions for lawful payments relating to foreign indirect investment activities in Vietnam.

The above is the investment capital account in HNLAW & PARTNERS Law Firm. If the business still has problems, unknowns, or needs other legal assistance, please contact the online legal consulting department through the hotline: 0912.918.296 for answers. We hope to receive the cooperation of customers!

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