As foreign investment in Vietnam continues to grow, compliance with FDI capital contribution regulations is a crucial requirement for all enterprises. This article provides a detailed guide on the process of handling FDI capital contribution violations, helping businesses understand and comply with legal regulations.

1. Overview of FDI Capital Contribution Violations

FDI capital contribution violations are among the serious issues in foreign investment activities in Vietnam. Failure to comply with capital contribution regulations can lead to significant legal consequences.

1.1. Common Types of Violations

1. Violation of issuance and adjustment of the Investment Registration Certificate (Article 17 of Decree 122/2021):

Failure to carry out procedures to adjust the Investment Registration Certificate when an investment project adjustment changes the contents of the certificate.

2. Violation of investment project implementation in Vietnam (Article 19 of Decree 122/2021):

• Failure to secure investment project implementation in accordance with the required timeline.
• Failure to comply with the contents of the investment policy approval document, the investment policy approval combined with investor approval, investor approval, or the Investment Registration Certificate.

3. Violation of enterprise establishment (Article 46 of Decree 122/2021):

Failure to adjust capital or change founding members or shareholders at the business registration authority when the capital contribution period has ended, and the adjustment period has expired, but the founding members or shareholders have not contributed sufficient capital, and no founding member or shareholder has fulfilled the capital contribution commitment.

2. Violation Handling Process

2.1. Step 1: Detection and Verification of Violation

The state management agency (Department of Planning and Investment or tax authority), through inspection activities or enterprise reports, detects that the enterprise has not fully contributed the charter capital within the prescribed period.

The state management agency will:

• Conduct periodic checks on capital contribution status.
• Verify information related to the violation.
• Collect evidence and record a violation report (Article 58 of the Law on Handling of Administrative Violations 2012; Article 12 of Decree No. 118/2021/ND-CP).

2.2. Step 2: Notification of Violation

After detecting a violation, the competent authority will:

• Send a written notification to the enterprise: The business registration authority will notify the enterprise of the detected violation regarding failure to contribute the required charter capital within the prescribed period.
• Request an explanation regarding the violation: The enterprise is required to provide a written explanation of the reasons for the delay in capital contribution and the corrective measures taken or planned.

2.3. Step 3: Application of Handling Measures

Based on the violation report, the competent authority will issue an administrative penalty decision under Decree 122/2021 and other relevant legal documents:

• Violation of issuance and adjustment of the Investment Registration Certificate (Article 17 of Decree 122/2021): Fine of VND 70,000,000 to VND 100,000,000.
• Violation of investment project implementation in Vietnam (Article 19 of Decree 122/2021): Fine of VND 50,000,000 to VND 100,000,000.
• Violation of enterprise establishment (Article 46 of Decree 122/2021): Fine of VND 30,000,000 to VND 50,000,000.

Application of relevant remedial measures:

• Adjustment of charter capital registration: Within 30 days from the last day of the required capital contribution period, the enterprise must register to adjust the charter capital based on the actual contributed amount (Clause 5, Article 46 of Decree 122/2021).
• Adjustment of the Investment Registration Certificate (IRC): The enterprise must carry out the IRC adjustment procedure to accurately reflect the contributed capital. Under Clause 2, Article 41 of the Investment Law 2020, investors must adjust the IRC when there is a change in project investment capital (Point b, Clause 3, Article 17 of Decree 122/2021).
• Change of members or founding shareholders: If a member or shareholder fails to contribute sufficient capital, the enterprise must carry out the procedure to change members or founding shareholders according to regulations (Clause 5, Article 46 of Decree 122/2021).

3. Capital Adjustment Procedures

3.1. Required Documents (Clause 1, Article 77, 79 of Decree 31/2021/ND-CP, Article 63 of the Investment Law 2020)

• Application for adjustment of the Investment Registration Certificate.
• Documents proving the legal status of the investor.
• Report on the operational status of the investment project up to the time of submission of the adjustment application.
• Decision on adjustment of overseas investment activities.
• Copy of the overseas investment registration certificate.
• Document from the tax authority confirming the investor’s fulfillment of tax obligations in case of an increase in overseas investment capital. The confirmation date from the tax authority must not exceed 03 months from the date of submission.
• Documents related to the adjustment content.
• Other relevant documents.

3.2. Submission and Processing Procedure (Article 77, 79 of Decree 31/2021/ND-CP)

Steps to be taken:

• Submission of application: The investor must declare information and submit the application to the Ministry of Planning and Investment (MPI) within 15 days.
• Assessment and consultation: In both procedures, the MPI assesses the application and seeks opinions from relevant authorities within the prescribed timeframe.
• Adjustment of the certificate: After completing the assessment process and receiving feedback, the MPI adjusts the Investment Registration Certificate and notifies relevant authorities.

For more details on the capital contribution extension procedure, please refer to the article: Legal Consequences of Failing to Contribute Full FDI Capital: Detailed Guide 2025.

4. Violation Report

1. Detailed information on the violation: A specific description of the capital contribution delay, including:

• Committed capital amount and actual contributed capital.
• Capital contribution deadline and actual contribution date.
• Outstanding capital and delay period.

2. Causes of the violation: Analysis of reasons for the capital contribution delay, which may include:

• Financial difficulties or market fluctuations.
• Legal issues or complex administrative procedures.
• Objective factors such as natural disasters, pandemics, or policy changes.

3. Specific corrective plan: Proposed measures to fulfill the capital contribution obligation, such as:

• A specific schedule for contributing the remaining capital.
• Financial solutions such as loans, additional investor mobilization, or asset restructuring.
• Commitment to compliance with legal regulations in the future and preventive measures to avoid recurrence of violations.

5. Preventive Measures for Violations

To avoid violations, businesses should:

1. Develop a detailed capital contribution plan

• Clearly define deadlines and contribution methods (Clause 2, Article 47; Clause 2, Article 75; Clause 1, Article 113 of the Enterprise Law): Members of a limited liability company with two or more members must fully contribute the committed assets within 90 days from the issuance date of the business registration certificate.
• Allocate financial resources appropriately: Ensure that the business has sufficient resources to fulfill capital contribution commitments as planned.

2. Regularly monitor capital contribution progress

• Establish an internal monitoring system: Track capital contributions from members to ensure compliance with deadlines and committed asset types.
• Periodic reporting: Require members to provide reports on their capital contribution status to promptly detect and address arising issues.

3. Consult legal experts when necessary

• Legal support: Seek advice from lawyers or legal experts to ensure compliance with capital contribution regulations and minimize legal risks.
• Update new regulations: Regularly update new legal provisions related to capital contribution to adjust the business’s plans and activities accordingly.

Conclusion

Compliance with FDI capital contribution regulations is crucial for maintaining effective investment operations in Vietnam. Businesses should understand the violation handling process and proactively implement preventive measures to avoid undesirable legal consequences.

Important Note: This article is for reference purposes only. Businesses should consult legal experts for specific advice on their cases.

Need detailed legal assistance? Contact Harley Miller Law Firm for specific guidance tailored to your business situation.

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