Company Incorporation Services In Vietnam

The Cash Flows under Nominee Company

Last modified: 11/01/2021
In the beginning, the local company is established by the trustee, so in order to have money for the trustee to contribute the capital of the local company, the foreigner will lend the trustee the loan, equivalent to the charter capital of the local company.

Accordingly, please see the process and cash flow as below to make it comply with the laws of Vietnam for your reference


1. For the 1st cash flow at the time of setting up the local company under the name of the trustee
  • Step 1: You lend the trustee the loan, equivalent to the registered charter capital; and
  • Step 2: The trustee uses the loan to be injected into the bank account of the local company controlled by the foreigner so that the trustee fulfills her/his obligation of capital contribution as required by law.

2. For the 2nd cash flow when the foreigner acquires the capital of the local company from the trustee to become its sole owner and convert into the foreign-invested company
  • Step 1: After the foreigner obtains the approval on the capital acquisition of the local company from the trustee, the local company opens its DICA at a licensed bank in Vietnam;
  • Step 2: The foreigner transfers the purchase price of capital acquisition (which is equivalent to the registered charter capital and the loan) into the DICA of the local company opened in Step 1;
  • Step 3: The purchase price of capital acquisition in the DICA of the local company is transferred to the transaction account of the local company so that the local company acts on behalf of the trustee to conduct the tax declaration for capital transfer of the trustee with the tax authority; and
  • Step 4: To repay the loan under the 1st cash flow, the local company delivers the purchase price of capital acquisition in the transaction account of the local company in cash to the foreigner in Vietnam or transfer such amount to a bank account in Vietnam designated by the foreigner.

As you can see the above, there are 02 cash flows: (i) 1st cash flow is under the loan for the trustee to contribute into the bank account of the local company controlled by the foreigner; and (ii) the 2nd cash flow is under the form of the purchase price of capital acquisition via the DICA to comply with the laws of Vietnam and then to repay the foreigner in cash in Vietnam to clear out the loan under the 1st cash flow so that in the later stage, the foreigner can remit the profits/dividends from the Vietnamese company to overseas.
Post Views: 1,328

    *Title.
    *Your Name.
    *Your Email.
    *Your Phone.
    *Your Message.