Full and timely capital contribution is one of the most important obligations of FDI enterprises in Vietnam. However, in practice, many enterprises still violate this regulation and face severe penalties.
I. Overview of FDI Capital Contribution Issues
Foreign investors contribute FDI capital to Vietnam through cash, assets, equipment, or intellectual property, following legal regulations on time frames and methods. In 2024, registered FDI reached $38.23 billion (down 3% from 2023), while implemented capital hit a record $25.35 billion (up 9.4%). Foreign investors made 3,502 capital contributions and share purchases worth $4.54 billion (down 48.1%), with real estate, manufacturing, and other sectors attracting significant investments. Compliance with legal requirements is mandatory, with penalties for violations.
reference: FDI disbursement in Vietnam in 2024 reaches an all-time high.
II. Current Legal Regulations
1. Legal Framework
- Investment Law 2020, Enterprise Law 2020
- Decree 31/2021/ND-CP, Decree 122/2021/ND-CP
2. Time Frame for Capital Contribution
The Investment Law 2020 does not specify the duration within which the registered investment capital must be fully contributed, nor does it stipulate a maximum time frame for capital contribution. Depending on each form of investment, the time frame for full capital contribution is regulated as follows:
- For capital contribution to establish a company: 90 days from the date of issuance of the Enterprise Registration Certificate (Clause 2, Article 47; Clause 2, Article 75; Clause 1, Article 113 of the Enterprise Law).
- For investment under contracts: The time frame is mutually agreed upon by the parties.
- For capital contribution, share purchases: The time of capital contribution or receipt of capital transfer is simultaneously the time of capital contribution.
In cases where capital has not been contributed or not fully contributed, investors must carry out procedures to extend the capital contribution time frame before the registered time frame expires.
The total investment capital on the Investment Registration Certificate must be transferred from abroad into the investment capital account within the capital contribution time frame recorded in the Investment Certificate.
If the time frame recorded on the Investment Registration Certificate is exceeded, the bank where the investment capital account is opened will refuse to accept capital transferred into the account. At this point, to transfer capital into the investment account, investors need to carry out procedures to adjust the Investment Certificate to extend the capital contribution time frame.
III. Main Forms of Penalties
1. Administrative Penalties (Articles 17, 19, 46 of Decree 122/2021)
Some violations related to investment activities in Vietnam:
- Violations regarding the issuance and adjustment of the Investment Registration Certificate, the Certificate of Operation Registration of the foreign investor’s executive office in a business cooperation contract (BCC), investment policy approval, investment policy approval concurrently with investor approval, investor approval: Fines ranging from 50,000,000 to 100,000,000 VND.
- Violations in implementing investment projects in Vietnam: Fines ranging from 50,000,000 to 200,000,000 VND.
- Violations in establishing enterprises: Fines ranging from 30,000,000 to 50,000,000 VND.
Additionally, depending on the type of violation, investors may be subject to remedial measures as prescribed by law.
- Compulsory procedures to adjust the Investment Registration Certificate.
- Compulsory continuation of the investment project according to the progress stipulated in the Investment Registration Certificate, the investment policy approval document, the investment policy approval document concurrently with investor approval, or termination of the investment project’s operation.
- Compulsory procedures to adjust capital or change members, founding shareholders.
2. Termination of Project Operation (Clause 1, Article 47; Point c, Clause 2, Article 48 of the Investment Law)
- In cases where investors cannot continue implementing the project: they voluntarily suspend the project’s operation to address issues, gaining more time to prepare operations according to the committed progress.
- Suspension period: 12 months.
- The investment registration authority terminates the operation of the investment project when: after 12 months, the investment registration authority cannot contact the investor.
IV. Violation Handling Process
Step 1: Competent authorities detect the violation
State management agencies (Department of Planning and Investment or tax authorities), through inspection activities or from enterprise reports, discover that the enterprise has not contributed sufficient charter capital within the prescribed time limit.
Step 2: Prepare an administrative violation record (Article 58 of the Law on Handling Administrative Violations 2012; Article 12 of Decree No. 118/2021/ND-CP)
After identifying the violation, the competent authority will prepare an administrative violation record, specifically noting the act of not contributing sufficient charter capital as committed.
The administrative violation record must be made in at least 02 copies and must be signed by the person making the record and the violator or the representative of the violating organization.
Time limit: 02 working days from the date of detecting the administrative violation.
Step 3: Issue a sanctioning decision
Based on the violation record, the competent authority will issue an administrative sanctioning decision according to Decree 122/2021 and other related documents.
Step 4: Implement remedial measures
The authorities require the enterprise to implement remedial measures, such as:
- Registering changes to charter capital: Within 30 days from the last day of the capital contribution period, the enterprise must register to adjust the charter capital according to the actual contributed capital. (Clause 5, Article 46 of Decree 122/2021)
- Adjusting the Investment Registration Certificate (IRC): The enterprise must follow procedures to adjust the IRC to reflect the contributed capital accurately. According to Clause 2, Article 41 of the Investment Law 2020, investors must carry out procedures to adjust the IRC when there is a change in the investment capital of the project (Point b, Clause 3, Article 17 of Decree 122/2021).
- Changing members or founding shareholders: If there are members or shareholders who have not contributed sufficient capital, the enterprise must carry out procedures to change members or founding shareholders according to regulations. (Clause 5, Article 46 of Decree 122/2021)
For more information on procedures to remedy violations, please refer to the article: Legal Consequences of Failing to Contribute Full FDI Capital: A Detailed Guide 2025
V. Preventive and Remedial Measures
1. Developing a Detailed Capital Contribution Plan
- Establishing a reasonable capital contribution schedule: Divide specific capital contribution stages suitable to the project’s implementation progress and the enterprise’s financial capacity.
- Preparing contingency funds: Allocate additional capital sources to respond to unforeseen fluctuations during project implementation.
- Regular monitoring and reporting: Set up a system to monitor and report on the capital contribution progress, ensuring implementation according to the plan and timely adjustments when necessary.
2. Professional Legal Consultation
- Consulting legal experts: Collaborate with lawyers or legal consulting firms experienced in the FDI field to ensure compliance with current legal regulations.
- Establishing compliance procedures: Set up internal procedures to ensure capital contribution and project implementation fully comply with legal requirements.
- Regularly updating new regulations: Continuously monitor and update changes in policies and legal regulations related to FDI to adjust strategies promptly.
VI. Conclusion
Complying with capital contribution regulations not only helps FDI enterprises avoid penalties but also ensures stable and sustainable business operations in Vietnam. Enterprises should focus on developing detailed capital contribution plans and fulfilling commitments to avoid undesirable legal consequences.
Need detailed legal assistance? Contact Harley Miller Law Firm for specific guidance tailored to your business situation.
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