Capital Increase of Foreign-invested Enterprises

The State Committee for Cooperation and Investment (now the Ministry of Planning and Investment) says in Circular 215UB/LXT dated February 8, 1995 giving guidelines for foreign investment in Vietnam, that foreign-invested enterprises are allowed to increase capital for the following activities:

-To expand production or adjust the business objective in accordance with the Vietnamese government�s policy of encouraging investment.
-To maintain production or business activities in case of natural disasters or other difficulties.
-To cope with market changes.

However, foreign investors are not allowed to increase capital in the following cases:

-To increase the tax-free import of machinery, equipment, raw materials, materials and means of transport, etc. that are not really necessary for the capital construction of foreign-invested enterprises.
-To carry out activities that are not in line with Vietnam�s investment policies.
-To increase capital while there are not sufficient conditions to expand production, such as shortage of land and raw materials, no market for product consumption, and inadequate capacity to ensure hygiene and protect the environment.

The application for capital increase must state the following contents:

-Name, address and scope of business of the foreign-invested enterprise. The investment license issued.
-Implementation progress of the investment project.
-Status of investment capital (or business capital in respect of business cooperation contract) as stipulated in the investment license.
-Reason(s) for increase of capital (fixed or working), amount of increased capital, evidence for capacity to increase capital and conditions to realize the increase.
-Adjustment of legal capital and capital contribution by the parties concerned (if any).
-List of machinery and equipment imported as a result of the capital increase.
-Opinions of the board of directors (for joint venture enterprise), partners (for business cooperation contract) or general director (for 100% foreign-owned enterprise) on the capital increase.