Buying shares in foreign enterprises is an increasingly popular form of investment abroad. Investors can participate in owning and managing businesses in the international market through purchasing shares. This method provides opportunities to access technology, expand markets and increase profits. Follow Long Phan’s article to analyze forms, processes and notes when investing in buying shares in foreign enterprises.

Forms of investment abroad

Pursuant to Clause 1, Article 52 of the Law on Investment 2020 regulates forms of investment abroad for Vietnamese investors. Specifically, there are 5 main forms as follows:

• Establish an economic organization according to the laws of the investment receiving country;
• Investing in the form of contracts abroad;
• Contribute capital, buy shares, purchase capital contributions from economic organizations abroad to participate in the management of that economic organization;
• Buy and sell securities and other valuable papers or invest through securities investment funds and other intermediary financial institutions abroad;
• Other forms of investment according to the laws of the receiving country.

Based on the above regulations, investors can contribute capital, buy shares, buy capital contributions of foreign economic organizations to participate in the management of that economic organization or buy and sell securities through investment funds. securities investors and other intermediary financial institutions abroad.

How to buy shares in foreign enterprises to make investments

There are two main methods to buy shares in foreign enterprises: direct investment and indirect investment. Each method has its own process and characteristics suitable for different types of investors.

• Direct investment is the purchase of shares directly from a company or existing shareholders. Investors need to identify target businesses, conduct due diligence, negotiate and sign share purchase contracts. This method allows you to own a large percentage of shares and deeply participate in business management.
• Invest indirectly through buying stocks on international stock exchanges such as NYSE, SSE, LSE. Investors need to open a trading account, research the market and make transactions through the exchange. This method is simpler but usually only requires a small percentage of ownership and little management involvement.

The direct share purchase process includes: identifying the target business, appraisal, negotiation, signing a contract and completing the transaction. For trading on the exchange, the process includes: opening an account, depositing money, placing buy orders and managing investment portfolio.

Issues to keep in mind when buying shares in foreign enterprises for investment

When buying shares in foreign enterprises, investors need to pay attention to many legal, financial and administrative issues. These factors directly affect the effectiveness and risk of the investment. Specifically, as follows:

• In terms of legality, it is necessary to carefully study the foreign investment laws of the host country. Many countries have limits on foreign ownership in certain industries. Regulations on investment licensing and business registration also vary between countries.
• Regarding finance, it is necessary to analyze financial statements, evaluate businesses and evaluate business prospects. Exchange rate differences can affect investment value. The mechanism for repatriating profits is also an important issue to consider.
• Regarding governance, it is necessary to clearly understand the rights and obligations of shareholders, especially minority shareholders. Cultural differences can cause management and decision-making difficulties. Future divestment strategies also need to be considered from the beginning.

In addition, political risks and macroeconomic fluctuations of the host country also need to be carefully evaluated. Complying with tax reporting and declaration regulations in both Vietnam and abroad is also very important to avoid violating the law.

Consulting services for buying shares in foreign enterprises

Consulting services for buying shares in foreign enterprises support investors throughout the entire investment process. Customers can choose a consulting provider to receive support in completing transactions and complying with regulations of both Vietnam and the host country. With his experience, Long Phan can effectively support you in the process of buying shares in foreign enterprises. Long Phan’s services include:

• Consulting on regulations related to foreign investment in the country where the target business is located, including regulations on mergers and acquisitions, foreign capital control, taxes, and industry-specific regulations .
• Support completing necessary registration and licensing procedures to complete the transaction.
• Consulting on comprehensive assessment of the financial situation and business operations of the target enterprise, determining growth potential and potential risks.
• Consulting on assessing the fair value of shares, ensuring customers do not overbuy.
• Consulting on the corporate culture of the country and the target business, helping customers adapt and integrate.

Buying shares in foreign enterprises is an effective form of investment, bringing many benefits to investors. Customers need to carefully consider human, cultural, financial and administrative factors before deciding. If you still have related questions, please contact Long Phan via hotline 0906735386 for detailed advice on appropriate investment processes, procedures and strategies.