Question: Our company is a foreign-invested enterprise in Vietnam. We are planning an ownership restructuring, whereby the foreign investor will transfer their entire capital contribution to Vietnamese shareholders (or reduce their ownership ratio to 50% or below). Under the provisions of Circular No. 38/2026/TT-NHNN, in which cases is an FDI enterprise mandatorily required to close its investment capital account, and upon account closure, how will the capital refunds or other lawful revenues of the foreign investor be handled?
Answer:
This is a crucial legal issue regarding foreign exchange management when an enterprise modifies the capital contribution structure of foreign investors. Taking effect from August 18, 2026, and fully replacing Circular No. 06/2019/TT-NHNN, Circular No. 38/2026/TT-NHNN explicitly stipulates the mandatory cases for closing the investment capital account as well as the cash flow routing upon such closure. Specifically as follows:
1/ Four mandatory cases for closing the investment capital account
The Circular details the cases where closing the investment capital account is mandatory, including:
– There are no foreign investors or member enterprises owning shares or capital contributions in such economic organization;
– The Investment Registration Certificate (IRC) is not issued or adjusted, and the capital contribution amount has been refunded to the foreign investors or member enterprises;
– Dissolution, bankruptcy, or termination of operation in accordance with the law;
– Transfer of the investment project resulting in a change of the originally registered legal entity of such economic organization.
Legal basis: Point a, Clause 5, Article 7 of Circular No. 38/2026/TT-NHNN.
2/ Cases where the foreign investor’s ownership ratio drops to 50% or below
If, upon completion of the transfer of shares or capital contributions, the ownership ratio of foreign investors at the economic organization is equal to or less than 50%, or when the economic organization becomes a public company with shares listed or registered for trading on a Stock Exchange, the enterprise must also close its investment capital account. Subsequently, the foreign investors still owning shares/capital contributions shall conduct related receipt and payment transactions via an indirect investment account.
Legal basis: Point b, Clause 5, Article 7 of Circular No. 38/2026/TT-NHNN.
3/ Routing of capital refunds and revenues upon account closure
Upon closing the investment capital account as prescribed (due to the absence of foreign investors, non-issuance of IRC, dissolution, project transfer, etc.), the capital refunds and other lawful revenues arising from the foreign investors’ investment activities at the very same economic organization shall be transferred to:
– The foreign currency or Vietnamese Dong payment account of the foreign investor opened at a permitted bank, or transferred directly abroad;
– The foreign currency or Vietnamese Dong payment account opened at a permitted bank, or the capital account of the member enterprise opened at a member bank.
Legal basis: Point c, Clause 5, Article 7 of Circular No. 38/2026/TT-NHNN.
4/ Mandatory 12-month transitional period
Subjects falling into the cases of mandatory investment capital account closure due to the absence of owning foreign investors or non-issuance of the IRC prior to the effective date of this Circular must complete the account closure within 12 months from the effective date of this Circular (i.e., prior to August 18, 2027).
Legal basis: Clause 3, Article 19 of Circular No. 38/2026/TT-NHNN.
5/ Our practical recommendation
When an enterprise conducts M&A transactions leading to a change in the foreign investor’s ownership ratio (complete withdrawal or reduction to 50% or below), the enterprise should proactively work with a commercial bank to carry out the procedures for closing the investment capital account within the prescribed time limit. Concurrently, the foreign investor needs to coordinate the opening of a corresponding payment account or indirect investment account to ensure that the flow of refunded capital, profits, or transfer proceeds circulates smoothly and lawfully.
If you require further advice on procedures applicable to FDI enterprises, please contact SB Law for professional and in-depth assistance.
