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Official Gazette

Monday, January 27, 2020

Draft circular paves way for venture capital flows

Updated: 09:00’ - 19/04/2016
The Ministry of Planning and Investment is drafting a circular to guide the establishment, management and operation of venture investment funds for creative startups, which is expected to legalize and unblock capital flows into Vietnamese startups.

The draft defines venture investment fund as a fund formed with capital contributed by members to make venture investment for creative startups. This fund will not be governed by regulations on investment activities of securities investment funds.
Draft circular is expected to legalize and unblock capital flows into Vietnamese startups__Photo: Internet

The draft says investors would reach agreement by themselves and take responsibility before law for financial sources, operation and management of the fund. Meanwhile, state management agencies would be responsible for certifying the establishment of the fund and agreements between investors as a legal basis for dealing with possibly arising disputes.

Investment in this fund would be appropriate only for individual or institutional investors ready to accept high risks, and require investors to make careful considerations before deciding to invest in the fund.

Capital for the fund may be raised from domestic and foreign investors and foreign-invested economic institutions and added by existing or new members.

After a venture investment fund is set up, its members will elect one among them be the fund’s director. Profit sharing would be based on the capital amount contributed by each member.

It would take only three days to set up a venture investment fund in Vietnam with the fee of VND 200,000 for grant of a fund registration certificate. Particularly, the fund’s name must be written in Vietnamese.

Such regulations would create favorable conditions for not only startup businesses to seek capital but also investors or idle capital holders wishing to invest in a field considered risky and adventurous.

“It is time for a new creative outbreak in business,” said Nguyen Quoc Toan, Deputy Chief of the Office of the Party Central Committee’s Economic Commission, proposing the establishment of investment funds for startup businesses in the form of public-private partnership and venture investment funds to attract capital for potential creative startup projects.- (VLLF)

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