Opening of 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” (Clause 5, Article 3 of Circular No.06/2019/TT-NHNN)

- “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 activities is in Viet Nam” (Clause 4, Article 3 of Circular No.05/2014/TT-NHNN)

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

Directly invested capital account (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 the 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 the securities market.

Indirectly-invested capital account

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 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.

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.

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 demanded 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 the 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.

The above is the opening of capital accounts 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!

For more details, please contact Hnlaw & Partners Law Firm

Address: DBS Tower, No.N028, lot 31 Hà Trì residential and commercial service area, Hà Trì ward, Hà Đông district, Ha Noi.

Hotline: 0912.918.296

Email: tuvan.hnlaw@gmail.com

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