The parties agree, the buyer (Vietnamese shareholder) transfers the payment to buy shares into the direct investment capital account of the company. After that, the payment for share purchase will be transferred to the seller (foreign shareholder). However, it is not clear to foreign shareholders which accounts can be used to receive payments from the company's direct investment capital account. Foreign shareholders (sellers) currently have 3 accounts as follows:

- An indirect investment capital account opened in Vietnam;

- Overseas accounts of foreign shareholders;

- VND account opened in Vietnam for non-residents.

Currently, the seller wishes that the share purchase payment will be transferred from the company's direct investment capital account to the indirect investment capital account opened in Vietnam for future investment.

Ms. My asked, can foreign shareholders use one of the above accounts to receive payment from the company's direct investment capital account? Are foreign shareholders prohibited from using any of the above 3 accounts to receive money from the company's direct investment capital account?

The State Bank of Vietnam responded to this issue as follows:

Regulations on payment of investment capital transfer value

In Clause 1, Article 10 of Circular No. 06/2019/TT-NHNN dated June 26, 2019 of the State Bank guiding foreign exchange management for foreign direct investment activities in Vietnam, it is stipulated:

The payment of transfer value of shares and contributed capital in foreign direct investment enterprises (FDI enterprises) is as follows:

a) Between non-resident investors or between resident investors not through the direct investment capital account;

b) Between a non-resident investor and a resident investor must be done through a direct investment capital account;

Clause 3 (b) Article 10 of Circular No. 06/2019/TT-NHNN stipulating the valuation and payment of the transfer value of investment capital, investment projects between residents and non-residents, between residents’ residence together must be done in Vietnam dong.

Clause 2, Article 9 of Circular No. 06/2019/TT-NHNN stipulating that FDI enterprises must close their direct investment capital accounts due to dissolution, bankruptcy, termination of existence of the enterprise or due to project transfer. If the investment project changes the original registered legal entity of the FDI enterprise, the foreign investor may use the payment account in foreign currency or the payment account in Vietnam dong of that foreign investor opened at Banks are allowed to carry out foreign currency purchases, direct investment capital and legal revenues abroad.

Article 7 of Circular No. 06/2019/TT-NHNN specifically stipulating revenue and expenditure transactions on direct investment capital accounts in Vietnam dong related to foreign direct investment activities in Vietnam which includes revenues and expenditures related to the payment of investment capital transfer value.

Clause 2, Article 12 of Circular No. 06/2019/TT-NHNN stipulating the responsibilities of FDI enterprises and foreign investors in foreign direct investment activities in Vietnam.

Currently, the use of current accounts in Vietnam dong by residents and non-residents is carried out in accordance with the provisions of Circular No. 16/2014/TT-NHNN dated August 1, 2014 of the State Bank of Vietnam to guide the use of foreign currency accounts, Vietnamese dong accounts of residents and non-residents at authorized banks.

Accordingly, Article 7 of Circular No. 16/2014/TT-NHNN specifically stipulates the use of Vietnamese dong accounts at authorized banks by non-residents being individuals; and residents being foreign individuals, in order to carry out authorized revenue and expenditure transactions according to regulations.

Transfer of contributed capital in FDI enterprises

Dang Thi My's question did not specify whether the foreign investor (foreign shareholder) is a resident or a non-resident. The identification of residents and non-residents is stipulated in the Ordinance on Foreign Exchange 2005 and the Ordinance amending and supplementing a number of articles of the Ordinance on Foreign Exchange.

Pursuant to the above provisions, the transfer of contributed capital in an FDI enterprise between a foreign investor and a Vietnamese investor must be made in VND and shall be done as follows:

In case the foreign investor is a resident: The capital transfer between the foreign investor and the Vietnamese investor is not done through the direct investment capital account; Foreign investors are allowed to use Vietnamese dong accounts at authorized banks to conduct authorized revenue and expenditure transactions in accordance with the provisions of Circular No. 16/2014/TT-NHNN.

- In case the foreign investor is a non-resident: The capital transfer between the foreign investor and the Vietnamese investor must be done through the direct investment capital account; Foreign investors are allowed to use Vietnamese dong accounts at authorized banks to conduct authorized revenue and expenditure transactions in accordance with the provisions of Circular No. 16/2014/TT-NHNN.

According to Chinhphu.vn (Government Newspaper)