Minimum Capital Requirement for Foreign-Invested Companies in Vietnam

The minimum capital requirement for establishing a foreign-invested company in Vietnam is a crucial aspect for investors to consider when planning their investments. Current regulations stipulate minimum capital levels based on the type of foreign company being established. Meeting these capital requirements is essential for obtaining a business license and demonstrates the financial stability and sustainability of the business. The following details provide clarification on these requirements.

Defining Minimum Capital in Vietnam

The minimum capital for establishing a foreign direct investment (FDI) company—and businesses in general—is the minimum amount an individual or organization must allocate to legally set up and operate a company in a specific industry.

Typically, direct investment capital is used for activities related to setting up the business, including renting office space, purchasing equipment, paying for business setup services, and other related expenses. When applying for an investment registration certificate, the anticipated capital level should be sufficient to cover these essential startup costs, which the investor must justify to the registration agency.

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Minimum Capital Levels for Establishing a Company in Vietnam

According to the Enterprise Law 2020, there are generally no fixed regulations on minimum capital for business establishments. The required capital amount depends on the economic capacity and objectives of the business and should align with the following criteria:

Factors Determining Minimum Capital in Vietnam

Vietnamese law specifies minimum capital levels only for certain conditional business sectors. For other sectors, the required capital amount may vary according to the regulations and policies of each province. For instance, in Hanoi in 2024, under Official Dispatch No. 599/UBND-KH&ĐT, the scale of investment capital for foreign-invested projects is closely monitored. This ensures selective attraction of direct investment to prioritize national security and prevent potential issues related to investment origin. As a result, investment capital requirements in Hanoi may be higher than in other regions without this policy.

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Types of Capital in Vietnam Company Establishment

Investment Capital

Vietnam’s international commitments impose minimum investment capital requirements for certain industries to allow foreign investors access to the local market. For example, the capital requirements for establishing a medical service company are as follows:

- Hospitals: Minimum investment capital of USD 20 million

- Polyclinics: Minimum investment capital of USD 2 million

- Specialized Treatment Facilities: Minimum investment capital of USD 200,000

Investment capital requirements are typically specified in USD or VND, depending on the applicable regulations.

Charter Capital

Per Clause 34, Article 4 of the Law on Enterprises 2020, charter capital represents the total value of assets that members or owners contribute or commit to upon establishing a limited liability company or partnership. This capital is equal to the total par value of shares sold or committed to purchase upon business establishment. While charter capital can be equal to legal or investment capital, these types of capital have distinct purposes.

Legal Capital

Legal capital is the minimum amount required by law for establishing a company in certain industries, such as securities, insurance, banking, and real estate. This regulation aims to mitigate operational risks, requiring that business capital meet or exceed the legal minimum for that industry. For example:

- Securities Sector:

• Securities brokerage: VND 25 billion
• Self-trading of securities: VND 50 billion
• Securities issuance guarantee: VND 165 billion
• Securities investment consulting: VND 10 billion

- Insurance Sector:

• Life insurance and health insurance business (excluding unit-linked or pension insurance): VND 750 billion
• Insurance business including unit-linked or pension insurance: VND 1,000 billion
• Full insurance package (life, unit-linked, and pension insurance): VND 1,300 billion
• Postal Sector: VND 5 billion

- Real Estate:

• Projects with land use under 20 hectares: Minimum 20% of total investment capital
• Projects with land use over 20 hectares: Minimum 15% of total investment capital

Deposit Capital

Deposit capital is the amount placed in demand or term deposits at a bank according to legal requirements, primarily as a financial guarantee in transactions with banks or related parties. This is common in sectors like international tourism, which requires the following deposits for a business license:

• Inbound Tourism: VND 250 million
• Outbound Tourism: VND 500 million

Capital Contribution Timeline for Investors

After obtaining an investment license, investors must demonstrate their financial capability to meet the committed capital requirements. Following the issuance of an Enterprise Registration Certificate, foreign investors must contribute the pledged capital within 90 days, as required by the Enterprise Law 2020. This period excludes the time needed for transporting and importing assets or finalizing administrative procedures to transfer asset ownership.

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Methods of Capital Transfer to Vietnam

For cash contributions, investors must transfer funds into a direct investment account set up at a local Vietnamese bank specifically for the business tied to the registered investment project. This account is typically established following the issuance of an investment registration certificate.

For non-cash contributions, such as loans, mobilized capital, or contributions in the form of assets, investors must adhere to applicable regulations for capital contributions. For more detailed guidance on capital transfer procedures, please consult NVCS Law Firm for professional support and advice.

Lawyer: Mr. Tony

Phone: +84 919 195 939

Email: tuulawyer@nvcs.vn

Website: nvcs.vn