Having successfully established your overseas business in Vietnam, the crucial next stage involves transferring your investment funds into the company. While this procedure may appear straightforward and quick, it necessitates meticulous observation of details and adherence to certain rules. This guide aims to lead you step-by-step through the entire capital investment process, equipping you with the essential knowledge to avoid potential challenges with self-assurance.
Timeline and Procedure for Capital Contribution
Once your business incorporation has been finalized, the Business Registration Certificate (BRC) will specify a date. Following this date, you have a strict 90-day timeframe, as per Vietnamese law, to complete your capital contribution to your company’s specific capital bank account.
For a foreign-owned business operating in Vietnam, a Direct Investment Capital Account (DICA) is obligatory. This account serves exclusively for receiving capital and overseas loans for the business entity within the country. The only way to make capital injections is through this specific account.
Selecting the Appropriate International Bank Account for Capital Infusion
An imperative condition for capital infusion is that it must take place through bank transfers from the bank account of the shareholder(s) located overseas to the enterprise’s capital bank account.
Banks in Vietnam recognize that foreign investments typically originate from abroad. Hence, the transfer needs to be from the bank account of the Vietnamese company’s owner(s).
Therefore, it’s essential that the capital contribution is executed from your personal bank account based in a foreign nation, for which you should be the exclusive owner. Any attempt to infuse capital using mismatching bank accounts will be declined, necessitating a repetition of the process using the appropriate bank account.
Ensuring you transfer the exact Capital amount
An essential element to consider during the capital contribution procedure is to ensure the exact amount stated on your Business Registration Certificate (BRC) is transferred.
Simply put, if you are a sole proprietor of a business with a registered capital of USD 5,000, it is mandatory for you to transfer an exact amount of USD 5,000 to the capital account.
In situations where there are several shareholders, each individual is required to contribute their specified proportion. As an example, if your firm has a starting capital of USD 10,000 and is co-owned by two shareholders contributing 50% each, both shareholders are required to transfer an exact amount of USD 5,000 from their respective accounts.
It is important to note that the amount received will always be less than the transferred amount due to the fees charged by the intermediary banks. Further details regarding this matter will be discussed below.
Estimating Bank Fees and Intermediary Banks
When you’re executing an international money transfer from your bank to one in Vietnam, it’s important to note that the foreign bank is not a part of the Vietnamese banking network. As such, these transfers have to be facilitated through middleman banks that have working relationships with Vietnamese banks to deliver the money to your capital bank account.
Due to different bank charges, the final value deposited in your capital bank account will be less than the amount you initially transferred because the middleman bank takes out its service fee from the same.
Despite the requirement to send the exact registered amount, both Vietnamese banks and authorities comprehend that the final amount received could be slightly less due to the bank fees deducted. This small inconsistency is generally accepted and won’t disrupt your capital contribution process.
We have come across instances where investors added extra funds to their transfer to ensure the exact capital amount reaches the company, thereby covering the bank’s charges. However, given the frequent changes in bank fees, this practice has led to surplus amounts in the capital bank accounts. Vietnamese banks have been known to reject such transfers due to the excess money. Therefore, we advise transferring exactly the amount mentioned on the business certificate to prevent any complications.
How can Iris International support you in capital input and business formation?
At Iris International, we provide all-inclusive bank account setup as part of our business incorporation packages. Once your enterprise is established, we promptly launch your corporate capital bank account and operating bank accounts, ensuring you ample time to meet your capital input obligations.
Furthermore, we assist you in executing the initial transfer from the capital bank account to your operating account post the capital contribution completion. If there’s a need for Internet Banking, we handle that too, also providing guidance on account activation and helping streamline your online transactions.
Beyond our business formation services, we deliver a broad spectrum of secretarial services, from accounting and bookkeeping to compliance reporting, recruitment, and more. We are committed to facilitating efficient and effective business operations in Vietnam.
Poised to venture into the Vietnam business landscape? Engage our seasoned consultants today and embark on your journey with confidence. Your business merits the finest start, and we’re here to guide you at every stride.
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