Screenshot 2019-09-11 at 10.19.02 AMBy Phuong Phan, bizconsult Law Firm


In mid-2019, the State Bank of Vietnam issued Circular No. 06/2019/TT-NHNN dated June 26, 2019 (Circular 06) to provide guidance on foreign exchange management for foreign direct investment in Vietnam. This Circular shall take effect from September 6, 2019 and replace Circular No. 19/2014/TT-NHNN dated August 11, 2014 (Circular 19).

Direct investment and Capital Account

One of the noteworthy points under Circular 06 is that it clearly determines and construes foreign-invested enterprises, which are required to open the Direct Investment Capital Account (DICA), including (i) enterprises being established in the investment form of economic organisations, in which foreign investors are members or shareholders and must carry out the procedures to obtain Investment Registration Certificate (IRC) in accordance with the investment law, (ii) enterprises not subject to IRC and having 51 percent or more of the charter capital owned by foreign investors, for example enterprises having the foreign investors to contribute capital, purchase shares or portion of capital contribution to such enterprise which result in the foreign investors owning 51 percent or more of the charter capital of such enterprises (in this case the foreign investors obtained the notification on satisfaction of the conditions for capital contribution and share purchase (M&A Approval) and (iii) enterprises established by the foreign investors to implement PPP projects in accordance with the investment law (hereafter referred to DICA Enterprise).

The enterprises under (ii) and (iii) above are required to close DICA in the following cases: (i) after completing the transfer of shares, contribution capital or issuing the additional shares in order to increase the charter capital in such enterprises, the percentage of shares and contribution capital owned by the foreign investors at such enterprises is below 51 percent; or (ii) after such enterprises having become the listed enterprises with their shares listed or registered for trading on the Stock Exchange. In such cases, the non-resident foreign investors who own the shares, capital contribution in such enterprise must open the Indirect Investment Capital Account (IICA) in order to implement their revenue and expenditure transactions.

Screenshot 2019-09-11 at 10.44.31 AM

Capital contributions

One more notable point is that the foreign and domestic investors are allowed to contribute capital in Vietnamese dong or foreign currencies as provided in IRC, the establishment and operation licence under the specialised regulations (for the foreign-invested enterprises established and operated under the specialised regulations), M&A Approval, the PPP Contract signed with the competent state authorities and other evidence. This point will support the remittance banks to clarify the supporting documents provided by the foreign investor in order to allow the fund transfer without IRC requirement as usually did in the past. Thus, it being understood that in case the local enterprise which was incorporated by Vietnamese investors and then acquired by the foreign investors leading to such foreign investors owning 51 percent or more of the charter capital of such enterprise, the foreign investors should firstly obtain M&A Approval and then such enterprise opens DICA. Then the foreign investors implement the fund transfer through DICA and such enterprise will implement the procedures to recognise the foreign investors as the members/shareholders of such enterprise.

Circular 06 regulates more clearly the payment route regarding M&A transactions involving DICA Enterprise as follows: (i) the payment of transfer price between a resident investor and a non-resident investor must be implemented through DICA and in Vietnamese dong; (ii) the payment of transfer price between two non-resident investors is allowed to implement in foreign currency or Vietnamese dong and the payment of transfer price between two resident investors must be in Vietnamese dong, however, they both are not required to implement through DICA. Having said that, it seems to allow foreign investors to implement the offshore payment in foreign currency thanks to Circular 06. Before Circular 06, it is arguable that offshore payment for transfer price in the DICA Enterprises is allowed or it must be implemented through DICA.


In summary, Circular 06 has some significant improvements regarding capital transactions and M&A pertaining to foreign-invested enterprises in Vietnam.



Screen Shot 2019-03-12 at 5.41.37 PM


T: (84) 0) 24 3933 2129
F: (84) 0) 24 3933 2130

Ho Chi Minh:
T: (84) 0 28 3910 6559
F: (84) 0 28 3910 6560

M: (84) 933 306 336

Related Articles by Firm
Breakthroughs in Vietnam’s securities market
Since the first promulgation of the law on securities in 2006, Vietnam’s securities market has experienced dramatical growth (roughly twentyfold in market capitalisation) ...
Vietnam: Remarkable changes in the new Law on Enterprises
On June 17, 2020, the National Assembly officially passed a new Law on Enterprises to replace the current Law on Enterprises ...
Tightening regulations on corporate bonds issuance in Vietnam
Decree 81 is said to be an attempt to tighten and control corporate bonds issuance in Vietnam in the wake of a worrisome proliferation ...
The Law on Investment 2020
The current economic situation in Vietnam has revealed various disadvantages and loopholes in the legal framework, especially under the backbone law on investment.
Vietnam: Release of long-awaited guidance on Competition Law
The long-waited guidance on the Competition Law — the Decree 35/2020/ND-CP (Decree 35) — was issued on March 24, 2020 with effect from May 15, 2020, and casts light on certain prominent provisions of the Competition Law, such as economic concentration ...
Vietnam: Liability exemption due to the Covid-19?
On April 1, 2020, the Vietnamese prime minister issued Decision No. 447/QD-TTg to officially declare Covid-19 a nationwide epidemic. The Covid-19 pandemic, along with the application of certain preventive measures of the Vietnamese competent authorities have greatly affected most Vietnamese-based enterprises ...
Changes to investor selection for land-using projects under Vietnam’s Law on Bid
Significant amendments to the scope and process of for selection of investors of PPP projects and land-using projects.
Vietnam: New regulations on automobile transport business
After a long time in the drafting stage, the Government issued Decree No. 10/2020/ND-CP (Decree 10) on January 17, 2020, regulating automobile transport business and conditions for conducting automobile transport business ...
Vietnam: Sweeping reform to securities market
The New Law is said to be a radical improvement to securities market regulations in Vietnam and is expected to overcome those shortcomings observed for the past 10 years ...
Vietnam: New Labour Code taking effect on January 1, 2021
The participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) poses numerous requirements on the reform of laws, including labour laws ...
Legal issues on peer-to-peer lending business in Vietnam
Peer-to-peer (P2P) lending has been growing rapidly in Vietnam, along with the development of financial technology ...
Use of public property as payment in Vietnamese build-transfer projects
Under this new and favourable regulation, projects will attract more investor interest from across the region.
Vietnam: Tightened policy on import of used machineries, equipment and technological lines
From 2015, the import of used machineries and technological lines is subject to the Circular 23/2015/TT-BKHCN, which contains some inadequate points causing difficulties in import of used machineries, technological lines, especially those of more than 10 years old in fact ...
New law on competition takes effect
Vietnam’s National Assembly passed the new Law on Competition (New Competition Law) on June 12, 2018 and it will be taking effect on July 1, 2019, 14 years after the implementation of the Law on Competition 2004 ...
Encouraging foreign direct investment in Vietnam's education sector
One of the noteworthy points under Decree 86 is educational association, which is defined as twinning between Vietnamese private kindergartens ...
New electricity pricing and new sample of PPA of rooftop solar power projects
The number of solar power projects (SPP) in Vietnam has grown quickly in recent years, especially after the Prime Minister promulgated Decision ...
Reform of regulations on private issuance of corporate bonds in Vietnam
One of the most notable points under Decree 163 is that the requisite conditions for issuing corporate bonds have been significantly liberalised ...
Reform of regulations on private issuance of corporate bonds in Vietnam
The conditions for issuing corporate bonds have been significantly liberalised ...
Related Articles
Related Articles by Jurisdiction
Vietnam: Remarkable changes in the new Law on Enterprises
On June 17, 2020, the National Assembly officially passed a new Law on Enterprises to replace the current Law on Enterprises ...
In the strictest confidence: privileged communications in Vietnam
Here, Sesto E Vecchi, Managing Partner of Russin & Vecchi takes us through the finer points of legal professional privilege under Vietnamese law. Turning the lens on in-house counsel, we learn a great deal about how and when ...
Latest Articles