Types of capital to be declared when setting up a foreign invested company in Vietnam
When setting up a foreign invested company in Vietnam (FIC), the foreign investor is required to prepare and declare the following types of capital:
1. Charter Capital (it may call paid-up/authorized capital under the concept of some countries) means the actual amount which will be fully subscribed by the foreign investor within 90 days as from the establishment date of the FIC. To evidence the financial capacity for subscription of the Charter Capital, the foreign investor is required to provide the bank statement of the bank account with the balance equivalent to the registered Charter Capital or more. In case the foreign investor is a foreign company, it may be required to provide the audited financial statements of the latest years.
2. Loan Capital means the loans mobilized from the other individuals, organizations and the credit institutions to fund the FIC based on the financial demand of the FIC from time to time. To prove the mobilized financial capacity for the Loan Capital, one of the following documents is required to be provided:
(i) Commitment of financial institutions to provide financial support;
(ii) Guarantee letter for the financial capacity of the foreign investor; or
(iii) Description of the financial capacity of the foreign investor.
It is noted that the FIC can register no Loan Capital. However, the credit limit for Loan Capital is difference between the Charter Capital and the Investment Capital, so if there is no Loan Capital to be registered, the FIC is not allowed to borrow a loan when needed.
3. Investment Capital means the total capital estimated to be spent for the project in Vietnam, including the Charter Capital and the Loan Capital.
This article was written by Mr. Nguyen Danh Cong – Partner of DIMAC Law Firm
Email: [email protected] Phone: (+84) 985 820 703