Question: I am a Vietnamese, currently living in HCMC and being the owner of a limited liability company in Ho Chi Minh City. Now, I want to transfer 100% shares to a Singaporean enterprise. How will the payment for the transfer be made?
Answer:
1. Opening an Investment Account
According to the current foreign exchange management regulations in Vietnam, foreign investors purchasing capital contributions in a limited liability company must comply with the relevant regulations on investment capital accounts.
There are two main types of investment accounts:
- Direct Investment Capital Account (DICA): Opened and held in the name of the company, applicable to companies that have an Investment Registration Certificate (IRC) or where foreign ownership is 51% or more. The DICA can be used for both foreign currency and VND transactions.
- Indirect Investment Capital Account (IICA): Opened and held in the name of the foreign investor if the company does not have an IRC and the foreign investor holds less than 51% of the charter capital. The IICA can only be used for VND transactions.
2. Capital Transfer Process
According to Article 6 of Circular No. 06/2019/TT-NHNN, the payment for the transfer of investment capital or investment projects must be carried out via a DICA account in accordance with Article 10 of the Circular.
Accordingly, Clause 1, Article 10 of Circular No. 06/2019/TT-NHNN stipulates that, the payment for the transfer of shares or capital contributions in an enterprise with foreign direct investment must comply with the following regulations:
- Transactions between non-resident investors or between resident investors do not need to be conducted through a direct investment capital account.
- Transactions between a non-resident investor and a resident investor must be carried out through a direct investment capital account.
Simultaneously, ordinance No. 28/2005/PL-UBTVQH11 defines "residents" and "non-residents" as follows:
a) Residents:Organizations and individuals that fall under the following categories:
- Economic organizations and credit institutions established and operating in Vietnam.
- Government agencies, political organizations, social funds, charities, and other entities operating in Vietnam.
- Vietnamese citizens residing in the country or living abroad for less than 12 months.
- Foreigners residing in Vietnam for 12 months or more, except for those staying for education, medical treatment, tourism, or working for diplomatic missions.
b) Non-residents: Entities that do not fall into the above categories. Foreign investors typically belong to the non-resident group, and their investment transactions are subject to DICA regulations.
Therefore, in the case where the investor is a foreign company in Singapore purchasing 100% of the contributed capital from you, a Vietnamese citizen residing in Vietnam, the payment for the capital transfer must be made through a DICA account as required by regulations.
