Investment is an unfamiliar concept in Vietnam. Before carrying out investment activities, investors need to choose the form of investment suitable to their conditions, needs and goals. Being able to choose the right form of investment is very important to bring profit to Investors. Therefore, it is essential to understand the advantages and disadvantages of each form of investment before conducting investment activities. Accordingly, we analyze the advantages and disadvantages of 03 main forms of investment in Vietnam that we have introduced in the article “Introduction to 03 forms of investment in Vietnam”:
1. Establish a business organization;
2. Contribute capital, buy shares, buy capital contribution; and
3. Business Cooperation Contract (BCC Contract).
Thus, depending on the specific case, needs and strategic capabilities, Investors can consider the advantages and disadvantages of the above 03 forms of investment to choose the form of investment that best suits their time and cost conditions
FORM OF INVESTMENT
Establish a business organization
|Reducing the risk of disputes caused by the Investment Project is carried out in the name of the business organization instead of an individual investor (“Investor“), all Investors can access and know the information about the process of implementing the Investment Project.
When there is a profit from business activities, Investors will be divided according to the ratio of investment capital. This ensures fairness and transparency for each investment party.
|It is necessary to carry out many time-consuming procedures such as Issuing Investment Registration Certificate, Certificate of Business Registration , …
Despite establishing a business organization, there may still be a risk that Investors do not contribute charter capital on schedule and within deadline. At that time, Investors will have to carry out procedures to adjust the reduction of charter capital.
The decision on the issues of the Investment Project must depend on the decision of the investment parties and the implementation of procedures for meeting, issuing resolutions, notifications, … in accordance with the law.
Contribute capital, buy shares, buy capital contribution
|Not having to establish a new legal entity, Investors can take advantage of the available resources of the enterprise such as personnel, assets, reputation, brand, …
Procedures for contributing capital, sharing purchase, buying capital contribution are simpler than establishing new legal entities.
Investors are allowed to participate in meetings, voted to decide on a number of investment issues in the enterprise in accordance with the provisions of law and the charter of the enterprise.
To be paid profit according to the ratio of contributing capital, sharing purchase, buying capital contribution, ensured clarity and transparency for Investors.
|Risks can occur when Investors have registered to contribute capital, buy shares, buy capital contributions but fail to comply with the committed deadline, leading to many adjustments to reduce charter capital.
Risks arising from disputes when Investors have contributed capital, bought shares, bought capital contributions but enterprises do not carry out procedures to change members and shareholders in accordance with the provisions of law or do not pay profits to Investors in accordance with the ratio of contributing capital, sharing purchase, buying capital contribution, which affects the legal rights and interests of Investors.
|Save time and costs related to establishing, operating and dissolving the enterprise.
Because there is no need to establish a new business organization, Investors who make decisions about Investment Projects will be more proactive, flexible and less dependent on partners.
Help to limit risks in case the investment parties want to stop investment cooperation and business , because it is only necessary to proceed with the liquidation of the signed BCC Contract.
|The failure to establish a new business organization is not closely bound between the investment parties. This will cause a lot of risks, not transparent because the investment is usually made by one or some representative investors.
Investors who are not directly involved in the investment implementation process have difficulty accessing information and documents related to the Investment Project. This can cause suspicion and conflict among Investors about the unfair distribution of profits.
It is difficult to cooperate with a third party because there is no legal entity status.
Hopefully this article is useful for your work and Investors who need to research and learn.
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Lawyer Nguyen Thanh Ha