Is it possible to contribute capital by foreign currency?

Legal situation: A foreign investor wants to contribute capital to invest or establish an enterprise in Vietnam, specifically my boss as a Japanese plans to invest to the Vietnamese market. Does the Vietnamese law allow a foreign investor to contribute capital or establish an enterprise by foreign currency such as Japanese yen?

FDVN’s opinion:

Thank you for sending your question to FDVN Law Firm (“FDVN”). Regarding your consulting request, after researching relevant legal provisions, FDVN has the following response:

According to Clause 23, Article 3 of the Law on Investment 2020: “Investment capital means money and other assets prescribed by the civil law and international treaties to which the Socialist Republic of Vietnam is a signatory for the purpose of carrying out business investment activities.”

According to Clause 1 Article 34 of the Law on Enterprise 2020: “Contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND”.

According to Point a, Clause 1, Article 4 of the Ordinance on foreign exchange control No. 28/2008/PL-UBTVQH11, foreign currency means: “Currencies of other nations or the common European currency and other common currencies used in international and regional payments (hereinafter referred to as foreign currency);”

In addition, according to Clause 1, Article 4 of Circular No. 06/2019/TT-NHNN dated June 26^th, 2019 of the State Bank of Vietnam guiding the foreign exchange management for the foreign direct investment in Vietnam, specifically:

“1. Foreign and Vietnamese investors are allowed to contribute capital in foreign currencies and Vietnamese dong according to registered amount in the investment registration certificate, notice of the foreign investor’s eligibility to contribute capital or purchase shares/stakes, license of establishment and operation in accordance with specialized law, signing of PPP contracts with competent authorities and other documents which can prove the compliance with law of capital contribution of foreign investors;"

Therefore, after comparing to the above provision, it can be seen that a foreign investor namely your boss can contribute capital in foreign currency (Japanese yen) or Vietnamese dong, which is according to the capital level contributed by an investor as stated in the Investment Registration Certificate, as well as the Establishment and Operation licenses in accordance with specialized law (applied to enterprises invested directly by foreign investment capital establishing and operating in accordance with specialized law).

The above is FDVN’s legal opinion related to your consulting request based on researching legal provision. We hope FDVN’s opinion will be helpful to you.

According to Nguyễn Vân Anh – FDVN Law Firm

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