After the business establishment process is completed, foreign investors need to liaise with the Bank to open 02 bank accounts, including a payment account and a direct investment capital account. These two types of accounts will exist during the process of foreign enterprises operating in Vietnam, and every kind of account regulates to separate use. In this article, we would like to share with investors some notes about direct investment capital accounts to help investors avoid errors in the process of money transfer to a direct investment capital account. 

1. When does an investor open a direct investment capital account?

As the name of the bank account is “direct investment capital account” the subjects required to open and conduct the transactions concerning capital through this account are enterprises with foreign direct investment capital, specifically:

• Enterprises established in the form of established business entities, in which foreign investors are members or shareholders, and must carry out procedures for issuance of an Investment Registration Certificate under the provisions of investment regulations;
• Enterprises are not subject to this clause that have foreign investors owning 51% or more of the enterprise’s charter capital, including:
• Enterprises have foreign investors contribute capital, purchase shares, or contribute capital (operating in conditional business lines and investment lines or without conditions applicable to foreign investors), resulting in foreign investors owning 51% or more of the enterprise’s charter capital;
• Enterprises established after separation, merger, or consolidation caused by foreign investors owning at least 51% of the enterprise’s charter capital;
• Newly enterprises established under specialized laws;
• Project enterprises established by foreign investors to implement PPP projects under the law on investment.
• Enterprises with foreign direct investment capital specified in Clause 2, Article 3 of this Circular;
• Foreign investors participating in BCC contracts, foreign investors directly implementing PPP projects in case of not established project enterprises (hereinafter referred to as foreign investors directly implementing PPP projects).

The enterprise will open a direct investment capital account in foreign currency at 01 Bank of Vietnam. The Investor is only open to each corresponding foreign currency implementing direct investment at 01 (one) authorized Bank. If the Investor wishes to change the Bank where direct investment capital account was opened, the Investor needs to open another direct investment capital account at another authorized bank. Next, the Investor can transfer the entire balance on the previously opened direct investment capital account to the new direct investment capital account and then close the previously opened direct investment capital account;

2. The transactions are allowed on the direct investment capital account 

As mentioned above, with the characteristics of foreign investment activities, the money transfer and receiving information through direct investment capital accounts is permitted for some instances. Thus, the enterprise just allowed using the direct investment capital account for receiving money in the following cases:

• Receiving direct investment capital by the foreign currency of foreign investors, Vietnamese investors in enterprises with foreign direct investment capital, foreign investors participating in BCC contracts, and foreign investors directly implementing PPP projects;
• Receiving payment for the transfer value of investment capital and investment projects according to regulations;
• Receiving foreign currency purchased from authorized credit institutions to transfer capital, profits, and lawful revenue abroad according to regulations;
• Receiving money transfer from a payment account in foreign currency opened at an authorized bank of the enterprise with foreign direct investment capital, foreign investors participating in BCC contracts, and foreign investors directly implementing PPP projects to transfer capital, profits, and lawful income abroad to foreign investors;
• Receiving conversed foreign currency to make investment capital contribution in case the currency of capital contribution is different from the currency of the opened direct investment capital account;
• Receiving share capital surplus from the issuance of new shares to increase charter capital in enterprises with foreign direct investment capital;
• Receiving foreign currency earned from sales of domestic petroleum products (after fulfilling compliance of financial obligations and deducting expenses in Vietnam dong) under the law on petroleum and the Agreement on guarantees and commitments of Government (if any);
• Receiving money transfers related to foreign loans of enterprises with foreign direct investment capital under the law on foreign loans and repayment of enterprises, except for some exceptional cases with separate regulations;
• Receiving other lawful revenues in foreign currency related to foreign direct investment activities in Vietnam.

Foreign enterprises in Vietnam may use direct investment capital accounts to transfer money in the following cases:

• Transferring to the payment account in foreign currency opened at an authorized bank of the enterprise with foreign direct investment capital, foreign investors participating in BCC contracts, and foreign investors directly implementing PPP projects, the operator of the petroleum project under the law on petroleum to carry out foreign direct investment activities in Vietnam;
• Selling foreign currency to an authorized credit institution to transfer to the payment account in Vietnam dongs of the enterprise with foreign direct investment capital, foreign investors participating in BCC contracts, and foreign investors directly implementing PPP projects;
• Paying the transfer value of investment capital or investment projects to the overseas transferor or selling foreign currency to pay the transfer value of investment capital or investment projects to the transferor in Vietnam by Vietnam Dong according to the provisions of law;
• Transferring to overseas remittance profits and lawful foreign currency revenues from foreign direct investment activities in Vietnam by foreign investors;
• Transferring to overseas direct investment capital by the foreign currency of foreign investors in case of reduction of investment capital, termination, liquidation, termination of operation of investment projects, BCC contracts, PPP contracts under the law on investment;
• Transferring to overseas the exchanged currency for the capital, profits, and lawful revenues in case of the currency used for transferring such items is different from the currency used to open the direct investment account;
• Paying foreign loans in foreign currency of enterprises with foreign direct investment capital under the law on foreign loans and repayment of enterprises, unless otherwise prescribed by law.
• Other lawful payments in foreign currency related to foreign direct investment activities in Vietnam.

The competent state agencies as well as banks manage quite closely the opening and use of investment capital accounts of enterprises. In some cases, enterprises could be applied administrative fines and the risk of being unable to repay due to illegal account use.

Time of writing: 21/02/2023

The article contains general information that is of a reference value. If you want to receive legal opinions on the issues you need clarification on, please get in touch with our lawyer at info@cdlaf.vn