Thông tư 03/2004/TT-NHNN

CIRCULAR

PROVIDING GUIDANCE ON FOREIGN EXCHANGE CONTROL TO THE CAPITAL CONTRIBUTION, SHARE PURCHASE BY FOREIGN INVESTORS IN VIETNAMESE ENTERPRISES

According to Article 2 of the Decision No. 36/2003/QD-TTg dated 11 March, 2003 of the Prime Minister on the issuance of the Regulation on capital contribution, share purchase by foreign investors in Vietnamese enterprises, the State Bank provides specific guidance on the foreign exchange control over the capital contribution, share purchase by foreign investors in Vietnamese enterprises as follows:

Chapter I

GENERAL PROVISION

1. Governing scope:

1.1. This Circular shall govern foreign exchange transactions relating to the activity of capital contribution, share purchase in Vietnamese enterprises by foreign investors, including the capital transfer into Vietnam for the capital contribution, share purchase, the opening and use of account "VND" to make capital contribution, share purchase, the conversion of VND into foreign currency and foreign currency repatriation.

1.2. Foreign exchange transactions relating to the activity of securities purchase, sale at Vietnam Securities Exchange shall be performed in accordance with separate guidance by the State Bank.

1.3. Foreign exchange transactions of foreign investors relating to the direct investment activity in Vietnam in accordance with the Law on foreign investment shall not be governed by this Circular.

2. Interpretation

Terms used in this Circular shall be construed as follows:

2.1. Foreign investor includes:

- Nonresidents being foreign financial, economic organizations, which are set up in accordance with applicable laws of Vietnam

- Nonresidents being foreigners, who do not permanently reside in Vietnam, or Vietnamese, who permanently reside in foreign country.

- Residents being foreigners, who permanently reside in Vietnam

2.2. Authorized banks shall be banks, which are operating in Vietnam and authorized by the State Bank to engage in foreign exchange activities.

2.3. Vietnamese enterprises, which accept capital contribution, sell shares to foreign investors, shall include: the state-owned enterprises which are equitized, joint stock companies (including listed companies in securities market), limited liability companies, partnership companies, co-operatives unions, co-operatives engaging in business lines, which are decided upon by the Prime Minister or announced by the Minister of Planning and Investment, from time to time, under the authorization of the Prime Minister.

3. Currency used for the capital contribution, share purchase in Vietnamese enterprises

The capital contribution, share purchase by foreign investors in Vietnamese enterprises within the territory of Vietnam shall be made in VND.

4. Funds sources used for the capital contribution, share purchase in Vietnamese enterprises:

Foreign investors shall be entitled to use following sources of foreign currency and VND to make capital contribution and share purchase:

4.1. Foreign currency which is transferred into Vietnam in accordance with current provisions on foreign exchange control;

4.2. Foreign currency and VND in the accounts, which are opened at commercial banks, of the foreign investors who are subjects mentioned in Point 2.1, Chapter I of this Circular;

4.3. VND in the account "securities transactions in VND" of those foreign investors in accordance with provisions of applicable laws on foreign exchange control.

4.4. The distributed profit from the direct investment activity in Vietnam of foreign investors.

4.5. Earnings of foreign investors from the assignment, liquidation, dissolution of their direct investment activity in Vietnam in accordance with provisions of applicable laws;

4.6. Salary, bonus and other legal incomes of foreign individuals in Vietnam in accordance with provisions of applicable laws;

4.7. Other sources provided that they are approved by the State Bank

5. Transfer of funds into, out of Vietnam:

5.1. Foreign investors must open the account "foreign currency" at authorized banks in accordance with current provisions on foreign exchange control.

5.2. Foreign investors who possess foreign currency must sell it to authorized banks for VND to make the capital contribution, share purchase.

5.3. Foreign investors shall be entitled to, after completion all their tax obligations in accordance with provisions of Vietnam's laws, purchase foreign currency at authorized banks for repatriation abroad.

Chapter II

MANAGEMENT OF THE CAPITAL CONTRIBUTION, SHARE PURCHASE TRANSACTIONS OF FOREIGN INVESTOR IN VIETNAMESE ENTERPRISES

Section I. OPENING AND USE OF THE ACCOUNT "CAPITAL CONTRIBUTION, SHARE PURCHASE IN VIETNAMESE ENTERPRISES"

6. Opening of the account "capital contribution, share purchase in VND"

In order to make the capital contribution to, the share purchase from Vietnamese enterprises, foreign investors must open an account "capital contribution, share purchase in VND" (hereinafter referred to as the account "capital contribution, share purchase") at a commercial Bank that is operating in Vietnam. All money transfer to perform the capital contribution, share purchase, the assignment of contributed capital, the collection and use of distributed dividends and profits, foreign currency purchase at authorized banks for repatriation abroad and other transactions relating to the activity of the capital contribution, share purchase in Vietnamese enterprises by foreign investors must be performed through this account.

7. The use of the account "capital contribution, share purchase"

- Foreign investors shall only be authorized to use the account "capital contribution, share purchase" for the capital contribution, share purchase in Vietnamese enterprises:

Receipt:

a. Receipt from the sale of foreign currency to authorized banks

b. Receipt from sources of VND as mentioned in points 4.2, 4.3, 4.4, 4.5 and 4.6, Chapter I of this Circular;

c. Receipt from the transfer from the account "securities transactions in VND" of those foreign investors to make the capital contribution, share purchases;

d. Receipt from the assignment of contributed capital and shares;

dd. Receipt from distributed dividends, profits and other related receipts arising from the capital contribution, share purchase.

Expenditure:

a. Expense for the capital contribution, share purchase and payment of expenses relating to the capital contribution, share purchase transaction;

b. Expense for transfer to the account "securities transactions in VND" of those foreign investors to buy securities at the Securities Exchange;

c. Expense for foreign currency purchase at authorized bank for repatriation abroad.

Section II. MANAGEMENT OF ACCOUNTS "CAPITAL CONTRIBUTION, SHARE PURCHASE"

8. Registration of the account "capital contribution, share purchase"

8.1. A Foreign investor must register his account "capital contribution, share purchase", within 2 working days from the opening of that account at a commercial bank, with the State Bank (Department of Foreign Exchange Control). The file includes:

a. An application for the registration of the account "capital contribution, share purchase" (Form No. 01)

b. Documents proving the legal status of the foreign investor;

c. A confirmation of the commercial bank on the opening of the account "capital contribution, share purchase" by the foreign investor there. The confirmation shall include: name, address, nationality of the account holder; account number, account balance.

8.2. The State Bank shall, within 5 working days from the date of full receipt of valid file, be responsible for confirming the registration of the account "capital contribution, share purchase" (form No. 02), which is opened at the commercial bank and through which the foreign investor can perform the transactions of capital contribution, share purchase in Vietnamese enterprise. In case of non-confirmation, the State Bank must respond in writing and clearly state the reasons thereof.

8.3. Foreign investors shall be only authorized to perform the receipt, expenditure transactions in the account "capital contribution, share purchase" in accordance with the provision in above-mentioned point 2, Section I, Chapter II after the availability of the written confirmation of the account registration by the State Bank.

8.4. Foreign investors must make new registration of the account "capital contribution, share purchase" with the State Bank in following cases:

a. Change in name, contact address;

b. Change in legal status;

c. Change of the commercial bank where they open the account "capital contribution, share purchase".

The file, procedures for the new registration shall be performed in accordance with provisions in points 8.1, 8.2 and 8.3, Section II, Chapter II of this Circular.

8.5. Foreign investors being an organization shall directly submit the application file for registration of the account "capital contribution, share purchase" to the State Bank (Department of Foreign Exchange Control). The State Bank shall directly send the written confirmation of the account registration to the foreign investors.

8.6. For individual foreign investors, their file shall be sent through the commercial bank where they open the account "capital contribution, share purchase". The State Bank shall send the written confirmation of the account registration to the foreign investors through the commercial bank.

9. Closing of the account "capital contribution, share purchase":

Foreign investors must, in following cases, close the account "capital contribution, share purchase" they maintain at the commercial banks and return the written confirmation of the account registration (original copy) to the State Bank (Department of Foreign Exchange Control):

9.1. Repatriation of the total account balance abroad or to the account "Securities transaction";

9.2. Dissolution, bankruptcy and termination of their legal entity (in respect of foreign investor being an organization).

9.3. Other cases under applicable provisions of the State Bank.

Section III. PROVISIONS ON DOCUMENTS VERIFICATION

10. Verification of the written confirmation of the account registration by the State Bank

The commercial bank shall, upon carrying out receipt, expenditure transactions in the account "capital contribution, share purchase" under the foreign investors' requirement, be responsible for verifying the written confirmation by the State Bank of their registration of the account "capital contribution, share purchase". The commercial banks shall only be authorized to perform receipt, expenditure transactions in the account of foreign investors upon receipt of the written confirmation by the State Bank of the registration of the account "capital contribution, share purchase" in accordance with provisions in Section II, Chapter II of this Circular.

11. Verification of transaction documents:

The commercial bank shall, upon carrying out receipt, expenditure transactions in the account "capital contribution, share purchase" for foreign investors, be responsible for the verification of following documents:

11.1. In respect of receipt

For cash contributions in VND to the account "capital contribution, share purchase": documents that prove the receipts arising from activities in accordance with provisions in point 7, Section I, Chapter II of this Circular.

11.2 For expenditures relating to the capital contribution, share purchase in Vietnamese enterprises:

Depending on each case of capital contribution, share purchase in different types of Vietnamese enterprises, the commercial bank shall be responsible for the verification of following documents:

a. For the State owned enterprises that are carrying out the equitization:

For the case of the initial issue of shares to foreign investors: The document of the competent authority approving the equitization plan in relation with the sale of shares to foreign investors.

b. In respect of operating joint stock companies, which are not yet listed in the stock market:

- The minutes of shareholders' Meeting or the Board of Directors' Meeting (if any) on the sale of shares to foreign investors.

- The contract or documents relating to the assignment of shares.

c. For limited liability companies, partnership companies, cooperative unions, cooperatives:

The minutes of the members' council, partnership members (for partnership company), cooperative members' Meeting (for cooperative union, cooperatives) that decides on the plan of mobilization of contribution capital from foreign investors.

11.3. In respect of the transfer to the account "Securities transactions":

Commercial banks shall be responsible for the verification of whether the transferred amount is made to the account "Securities transactions", which is opened at the authorized depository member by that foreign investor in accordance with provisions of the State Bank on foreign exchange control for the purchase, sale of securities of foreign investor at the Securities Exchange.

11.4. In respect of VND expense to purchase foreign currency for repatriation abroad

Written confirmation by the competent tax authority of the completion of tax obligations to the State of Vietnam for profits earned from the capital contribution to, share purchase in Vietnamese enterprises.

Chapter III

 INFORMATION, REPORTING AND DEALING WITH VIOLATION

12. Reports of commercial banks:

The commercial banks must submit reports to the State Bank (Foreign Exchange Control Department) on monthly (on the 5th of following month at the latest), 6 month (on the 10th of July annually at the latest) and annual (on the 10th of January of the following year at the latest) basis.

a. Performance of the opening, closing of the account "capital contribution, share purchase" of foreign investors at the commercial banks (Form No. 03);

b. Performance of the operation of the account "capital contribution, share purchase" of foreign investors at the commercial banks (Form No. 04);

c Performance of the purchase, sale of foreign currency for repatriation abroad by foreign investors at commercial banks, which are authorized to engage in foreign exchange activity (Form No. 05);

d. In case of need, commercial banks shall be responsible for provision of information, reports at the request of the State Bank.

13. The reports of foreign investors:

Foreign Investors must submit reports to the State Bank (Department of Foreign Exchange Control) on their share purchase, capital contribution in Vietnamese enterprises (Form No. 06) on the quarterly (on the 5th of the first month of the following quarter) and annual (on the 10th of the first month of the following year) basis.

14. Dealing with violation:

Foreign investors, who commit one of following violation acts, shall be subject to the revocation of the confirmation of the registration of the account "capital contribution, share purchase" by the State Bank:

- Opening more than one account "capital contribution, share purchase in VND" to carry out the capital contribution, share purchase in Vietnamese enterprises;

- Carrying out the receipt, expenditure in the account "capital contribution, share purchase" in contrary to provisions in point 7, section I, Chapter II of this Circular.

- Failing to submit timely and sufficiently reports to the State Bank in accordance with provision in point 13, Section I, Chapter IV of this Circular;

- Violating current provisions on foreign exchange control.

Chapter IV

 IMPLEMENTING PROVISIONS

15. Implementing provisions

15.1 This Circular shall be effective after 15 days from its publication in the Official Gazette.

15.2. Foreign investors who have made the capital contribution, share purchase in Vietnamese enterprises prior to the issuance of this Circular shall be obliged to comply with provisions on the account registration, provisions on the reporting and other provisions mentioned in this Circular.

16. Organization of the implementation

Director of the Foreign Exchange Control Department, Heads of units of the State Bank, General Managers of the State Bank branches in provinces, cities under the central Government's management, Chairperson of the Board of Directors and General Managers (Managers) of commercial banks, foreign investors who contribute capital to, purchase shares from Vietnamese enterprises, shall be responsible for the implementation of this Circular.

Form No. 01

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
----------------------------

REQUEST FOR THE CONFIRMATION OF THE REGISTRATION OF THE ACCOUNT "CAPITAL CONTRIBUTION, SHARE PURCHASE IN VND", WHICH IS MAINTAINED AT A COMMERCIAL BANK

................., date...................

Name of foreign investor:

Type:    Organization

Individual

Address:

Nationality:

Tel No.:

Fax No.

We would like to request the State Bank of Vietnam to confirm my registration of the account "capital contribution, share purchase in VND" to facilitate the activity of capital contribution, share purchase in Vietnamese enterprises as follows:

Name of the commercial bank where my account is maintained:

Address:

Tel No.

Fax No.:

Account No.:

Account balance:

We undertake to correctly comply with current provisions on foreign exchange control of Vietnam and other provisions of applicable laws relating to the purchase, sale of securities, capital contribution, share purchase in Vietnamese enterprises.

Form No. 02

To:

Upon the request in the application enclosed with the file for registration of the account "capital contribution, share purchase in VND" to facilitate the activity of capital contribution, share purchase in Vietnamese enterprises of the foreign investor................., the State Bank of Vietnam has following opinions:

1. Based on current provisions on foreign exchange control for the capital contribution, share purchase by foreign investor in Vietnamese enterprises, the State Bank would like to confirm the registration of the account "capital contribution, share purchase in VND" by the foreign investor with following contents:

Name of the foreign investor

Type:    Organization

Individual

Address:

Tel No.

Fax No.

Nationality:

Name of the authorized bank where his account is maintained:

Address:

Tel No.

Fax No.

Account No

Account balance

2. While performing the capital contribution, share purchase in Vietnamese enterprises, foreign investor must correctly comply with provisions in the Circular No. ......./TT-NHNN dated............ of the State Bank providing guidance on the foreign exchange control to the capital contribution, share purchase in Vietnamese enterprises and other related provisions of applicable laws.

Form No. 03

Commercial bank:

Address:

Fax:

Tel:

REPORT ON THE OPENING, CLOSING OF THE ACCOUNT "CAPITAL CONTRIBUTION, SHARE PURCHASE IN VND" OF FOREIGN INVESTOR

(Report of the month............./20............, from the date............... to the date........)

(Consolidated 6 month report of the year.............. and annual report of the year.......)

Form No. 04

Commercial bank:

Address:

Fax:

Tel:

REPORT ON THE PERFORMANCE OF THE ACCOUNT "CAPITAL CONTRIBUTION, SHARE PURCHASE IN VND" OF FOREIGN INVESTOR

(Report of the month............./20............, from the date............... to the date........)

(Consolidated 6 month report of the year.............. and annual report of the year.......)

 (Unit: VND)

Note:

- II.1.d: Receipts from the transaction of capital contribution, share purchase including distributed dividends, the sale, assignment of contributed capital, shares in cash

- II.2.b: Expenses for capital contribution, share purchase including the amount for capital contribution, share purchase and payment of other related expenses in cash

Form No. 05

Commercial bank authorized to engage in foreign exchange activity:

Address:

Fax:

Tel:

REPORT ON THE PURCHASE, SALE OF FOREIGN CURRENCY BY FOREIGN INVESTOR AT THE AUTHORIZED BANK

(Report of the month............./20............, from the date............... to the date........)

(Consolidated 6 month report of the year.............. and annual report of the year.......)

Form No. 06

REPORT ON THE CAPITAL CONTRIBUTION, SHARE PURCHASE IN VIETNAMESE ENTERPRISES BY THE FOREIGN INVESTOR

(Report of the quarter ...../200..)

(Consolidated report of the year 200...)

Name of foreign investor:

Type:    Organization

Individual

Address:

Tel:

Fax:

Nationality:

Name of the commercial bank where the account "capital contribution, share purchase in VND" is opened:

Account No.:

The confirmation of the account registration by the State Bank: the Official Dispatch No...............

1. The report of the performance of the account "capital contribution, share purchase":

(Unit: VND)

 Note:

- II.1.c: Receipts from the transaction of capital contribution, share purchase including distributed dividends, the sale, assignment of contributed capital, shares in cash

- II.2.b: Expenses for capital contribution, share purchase including the amount for capital contribution, share purchase and payment of other related expenses in cash

2. The report on the holding of shares and contributed capital:

Note:

- The value of shares, contributed capital shall be equivalent to the number of shares, contributed capital, which is held by the foreign investor, multiplied by the original buying price or market price (if any)