Investment in passenger transportation in Vietnam

Q&A Investment in Vietnam KNOWLEDGE CENTER

Investment in passenger transportation in Vietnam

Mr. X: I am an American and would like to invest into Vietnam. Currently, I know Mr. M is the owner of ABC One Member Limited Company (abbreviated is ABC) which is legally established and operated under the laws of Vietnam, whose main business line is passenger transportation.  The company is headquartered in Ho Chi Minh City.

I would like to buy whole ABC so that I    am in the passenger transportation business. Whether I can buy the whole ABC company. What are the sequence and procedures to do it?

Reply:

In your case, We would like to reply as follows:

1. Legal basis:

– Law on Enterprises 2014

– Law on Investment 2014

– 2006 WTO commitments

– Decree 92/2016 / ND-CP

– Decision 1996 / QD-BKHDT dated December 25, 2015 announcing the List of investment conditions for foreign investors.

2. Legal advice:

  • Investment form:

The form of investment that Mr. X aims for is: Investing in the form of capital contribution in a limited liability company (Articles 24, 25, 26 of the Law on Investment 2014).


Investment in passenger transportation in Vietnam
Investment in passenger transportation in Vietnam
  • Analysis of the ownership ratio of Mr. X’s charter capital:

Mr. X would like to contribute capital to ABC being in the passenger transportation business. Thus, the percentage of Mr. X’s charter capital in company ABC must comply with the provisions of Point c, Clause 3, Article 22 of the Law on Investment 2014 for the charter capital ownership ratio of foreign investors in the Vietnamese Economic Organization. Particularly, the passenger transport service business is in the business sector under the WTO Commitments and in the conditional business line for foreign investors according to Decision 1996/QD-BKHDT dated December 25. 2015. Therefore, the percentage of Mr. X’s charter capital must comply with the above provisions.

Through research, we confirm that Mr. X cant not to buy back all of Mr. M’s contributed capital to become an owner. The Vietnamese law does not allow it. The capital contribution ratio of foreign investors when contributing capital to economic organizations providing passenger transport services is specified as follows:

Services Passenger Transport
International sea Establish joint venture with Vietnamese partners. Ratio of ownership of charter capital <= 49% of legal capital
Domestic waterways Establish joint venture with Vietnamese partners. Ratio of ownership of charter capital <= 49% of legal capital
Railway Not to be allowed
Road Establish joint venture with Vietnamese partners. Ratio of ownership of charter capital <= 51% of legal capital
Airline
The foreign party accounts for <= 30% of the charter capital
The capital contribution ratio of foreign investors when contributing capital to economic organizations providing passenger transport services

Therefore, we hope Mr. X can consider making a suitable business investment decision.

Please do not hesitate to contact us for more information to be supported and consulted:

LUAT SU RIENG (LSR) LAW FIRM

Address: no. 16 Nguyen Quy Canh Street, An Phu Ward, District 2, Ho Chi Minh City

Hotline: 1900252503. Press No. 8

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