Are foreign investors required to open direct investment capital accounts?

Article overview

Open direct investment capital accounts are an issue that foreign investors need to understand clearly when investing in Vietnam. This account helps manage investment cash flow, perform payment transactions and ensure compliance with foreign exchange management regulations. At the same time, it helps foreign investors deploy investment activities smoothly. In the article below, Long Phan will provide customers with detailed information as well as procedures for opening a direct investment capital account.

Open a direct investment capital account in Vietnam
Open a direct investment capital account in Vietnam

What is a direct investment capital account?

According to Clause 5, Article 3 of Circular 06/2019/TT-NHNN, direct investment capital account is understood as a payment account in foreign currency or Vietnamese dong issued by an enterprise with foreign direct investment capital. Foreign investors open at licensed banks to carry out transactions related to foreign direct investment activities in Vietnam according to regulations.

Are foreign investors required to open a direct investment capital account?

According to the provisions of Clause 1, Article 5 of Circular 06/2019/TT-NHNN, subjects opening and using direct investment capital accounts include the following cases:

Case 1: Enterprises with foreign direct investment prescribed in Clause 2, Article 3 of Circular 06/2019/TT-NHNN. Specifically, they are:

  1. Enterprises are established in the form of investment to establish economic organizations, in which foreign investors are members or shareholders and must carry out procedures for issuance of Investment Registration Certificates in accordance with the provisions of investment law;
  2. Enterprises that do not fall into the above cases but have foreign investors owning 51% or more of the enterprise’s charter capital, including:
  • Enterprises with foreign investors contributing capital, buying shares, or capital contributions to the enterprise (operating in industries and business investment conditions with or without conditions applicable to foreign investors) leading to foreign investors owning 51% or more of the enterprise’s charter capital;
  • The enterprise is established after a split, merger, or consolidation resulting in foreign investors owning 51% or more of the enterprise’s charter capital;
  • Newly established enterprises according to specialized laws;
  • Project enterprises are established by foreign investors to implement PPP projects in accordance with investment laws.

Case 2: Foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects in the case of not establishing a project enterprise (hereinafter referred to as foreign investors directly implementing PPP projects).

Thus, foreign investors who fall into one of the above cases are required to open a direct investment capital account to serve investment activities in Vietnam. In cases that do not fall into the above cases, foreign investors do not need to open a direct investment capital account.

Foreign investors open direct investment capital
Foreign investors open direct investment capital

Regulations on opening direct investment capital accounts

According to Clause 2, Article 5, Circular 06/2019/TT-NHNN, regulations on opening and using direct investment capital accounts for foreign investors are as follows:

Open a direct investment capital account

Subjects specified in Clause 1, Article 5 of Circular 06/2019/TT-NHNN (enterprises with foreign direct investment and foreign investors participating in BCC contracts or PPP projects) must comply with the regulations. Requirements after opening an account:

  1. Investment capital account in foreign currency:
  • Investors must open a direct investment capital account in foreign currency at a licensed bank in Vietnam to carry out legal revenue and expenditure transactions in foreign currency related to direct investment activities.
  • For each type of foreign currency used for capital contribution, only one direct investment capital account can be opened at a licensed bank.
  1. Investment capital account in Vietnamese Dong:

If investing in Vietnamese Dong, investors are allowed to open a direct investment capital account in Vietnamese Dong at the bank that has opened a direct investment capital account in foreign currency to carry out related legal revenue and expenditure transactions.

  1. In case of many BCC contracts or many PPP projects:

If a foreign investor participates in multiple business cooperation contracts (BCC) or implements multiple PPP projects, a separate direct investment capital account must be opened for each contract or project.

Regulations on foreign loans

In case an enterprise with foreign direct investment borrows in a foreign currency that does not correspond to the foreign currency on its direct investment capital account, the enterprise has the right to:

  • Open additional loan accounts, repay foreign debt in foreign currency borrowed at the bank that opened the direct investment capital account.
  • This account will serve legal revenue and expenditure transactions related to loans according to regulations on foreign borrowing and debt repayment of enterprises.

Process when changing banks to open a direct investment capital account

If it is necessary to change banks, investors should take the following steps:

  • Open a new account at another authorized bank.
  • Transfer the entire balance from the old account to the new account, then close the old account.
  • The new account is only allowed to be used for legal revenue and expenditure transactions as prescribed in Articles 6 and 7 of the Circular after completing this conversion.

Regulations on closing direct investment capital accounts and opening indirect investment capital accounts

Enterprises specified in Point b and c Clause 2 Article 3 Circular 06/2019/TT-NHNN must close the opened direct investment capital account; Foreign investors who are non-residents own shares or capital contributions in this enterprise shall open an indirect investment capital account to carry out revenue and expenditure transactions according to regulations on foreign exchange management. For foreign indirect investment activities in Vietnam in the following cases:

  • After carrying out the transaction of transferring shares, contributed capital or issuing additional shares to increase charter capital at an enterprise with foreign direct investment, the investor’s share ownership ratio and capital contribution Foreign investment in this enterprise fell below 51%;
  • After that, an enterprise with foreign direct investment is a public company with shares listed or registered for trading on the Stock Exchange.
Regulations on opening direct investment capital accounts
Regulations on opening direct investment capital accounts

Consulting and guiding foreign investors to open direct investment capital accounts at Long Phan

To optimally support investors, Long Phan provides in-depth consulting services to bring convenience and speed to customers in the process of opening and using direct investment capital accounts.

Long Phan’s consulting services on opening and managing direct investment capital accounts include:

  • Consulting on the process of opening investment capital accounts.
  • Support the preparation of complete and accurate documents to meet the requirements of banks and authorities.
  • Representing customers in working with banks and state agencies.
  • Consulting on management and use of accounts in accordance with investment purposes and in accordance with regulations, including issues of revenue, expenditure, and valid transfers.
  • Consulting and supporting payment transactions related to direct investment, from capital contribution, contract payment to profit distribution.
  • Consulting on compliance regulations on direct investment capital account management, protecting investors’ rights.
  • Resolve problems that arise during the process of opening and using an account.

Opening direct investment capital accounts is an important step for foreign investors to carry out financial transactions related to investment activities in Vietnam legally and effectively. Long Phan commits to accompanying customers in the process of opening and using direct investment capital accounts. With a team of experienced experts, we will assist you in completing the procedure quickly and according to regulations. Contact the hotline immediately 0906735386 for detailed advice and the best support for your investment project in Vietnam.