Consulting on choosing industries and investment forms

Consulting on choosing industries and investment forms helps individuals and businesses make the right decisions, optimize profits, and minimize risks. Choosing a profession that is consistent with market trends and legal regulations will create a solid foundation for sustainable development. At the same time, determining the right form of investment helps optimize capital resources, benefit from preferential policies and ensure effective business operations.

Prohibited business investment according to current regulations

Clause 1, Article 6 of the Law on Investment 2020 supplemented by Clause 2, Article 2 of the Law amending the Law on Planning, Law on Investment, Law on Public-Private Partnership Investment method and Law on Bidding 2024, the State prohibits the following business investment activities:

• Trading in narcotics specified in Appendix I of the Law on Investment 2020;
• Trading in chemicals and minerals specified in Appendix II of this Law;
• Trading in specimens of wild plants and animals originating from the wild as prescribed in Appendix I of the Convention on International Trade in Endangered Species of Wild Plants and Animals; Specimens of endangered, precious, and rare species of forest plants, animals, and aquatic animals Group I originating from natural exploitation specified in Appendix III of the Law on Investment 2020;
• Prostitution business;
• Buying and selling humans, tissues, corpses, body parts, human fetuses;
• Business activities related to human cloning;
• Trading in firecrackers;
• Debt collection service business.

The production and use of products banned from business investment in analysis, testing, scientific research, medicine, pharmaceutical production, criminal investigation, national defense and security protection are carried out in accordance with the Government’s regulations.

Conditional business investment sectors

Investors have the right to conduct investment and business activities in industries and occupations not prohibited by law. For conditional business investment industries and professions, investors must meet business investment conditions according to the provisions of law.

Conditional investment industries are specified in Article 7 of the Law on Investment 2020 as follows:

• Conditional business investment industries and occupations are industries and occupations in which the implementation of business investment activities in that industry or occupation must meet necessary conditions for reasons of national defense, national security, social order and safety, social ethics, and community health.
• The list of industries and trades subject to conditional business investment is specified in Appendix IV of the Law on Investment 2020;

Business investment conditions for conditional business investment sectors and trades are stipulated in laws and resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a member. Ministries, ministerial-level agencies, People’s Councils, People’s Committees at all levels, other agencies, organizations and individuals are not allowed to issue regulations on business investment conditions.

Business investment conditions must comply with the provisions of law and must ensure publicity, transparency, objectivity, saving time and compliance costs for investors.

Foreign investors are subject to market access conditions as prescribed for domestic investors, except in cases where the investment industry belongs to:

• Industries and professions that have not yet accessed the market;
• Sectors and occupations have conditional market access.

Market access conditions for foreign investors specified in the List of industries and occupations with restricted market access for foreign investors include:

• Charter capital ownership ratio of foreign investors in economic organizations;
• Investment form;
• Scope of investment activities;
• Investor capacity; partners participating in investment activities;
• Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a member.

Pursuant to: Article 7, Article 9 of Law on Investment 2020.

Current forms of investment in Vietnam

Currently, there are 5 forms of investment in Vietnam that foreign investors can choose from, including:

1. Investing in establishing economic organizations.
2. Invest capital, buy shares, buy capital contributions.
3. Implement investment projects.
4. Investment in the form of a BCC contract.
5. New forms of investment and types of economic organizations according to Government regulations.

Specifically, the investment forms are regulated as follows:

Investing in establishing economic organizations

Investors establish economic organizations according to the following regulations:

• Domestic investors establish economic organizations according to the provisions of law on enterprises and laws corresponding to each type of economic organization;
• Foreign investors establishing economic organizations must meet market access conditions for foreign investors;
• Before establishing an economic organization, foreign investors must have an investment project and carry out procedures for granting and adjusting the Investment Registration Certificate, except in the case of establishing innovative small and medium-sized start-up enterprises and creative start-up investment funds according to the provisions of law on supporting small and medium-sized enterprises.

From the date of issuance of the Business Registration Certificate or other documents of equivalent legal value, the economic organization established by the foreign investor is the investor implementing the investment project according to the provisions of the Investment Registration Certificate.

Investment in the form of capital contribution, share purchase, capital contribution purchase

Investors have the right to contribute capital, buy shares, and purchase capital contributions of economic organizations. Foreign investors contributing capital, purchasing shares, or purchasing capital contributions from economic organizations must meet the following regulations and conditions:

• Market access conditions for foreign investors;
• Ensuring national defense and security according to the provisions of the Law on Investment;
• Land law regulations on conditions for receiving land use rights, land use conditions in islands, communes, wards, border towns, coastal communes, wards and towns.

Investors may contribute capital to economic organizations in the following forms:

• Buy shares issued for the first time or additional shares issued by a joint stock company;
• Contribute capital to limited liability companies and partnerships;
• Contributing capital to other economic organizations that do not fall into the above cases.

Investors purchase shares or capital contributions of economic organizations in the following forms:

• Buy shares of a joint stock company from the company or shareholders;
• Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company;
• Buy the capital contribution of a capital contributing member in a partnership company to become a capital contributing member of a partnership company;
• Buying capital contributions of members of other economic organizations that do not fall into the above cases.

Investment procedures in the form of capital contribution, share purchase, and capital contribution purchase are carried out in accordance with the provisions of Article 26 of the Law on Investment 2020 guided by Point 3, Section 1 of Official Dispatch 8909/BKHDT-PC.

Investment in the form of BCC contract

A business cooperation contract (hereinafter referred to as a BCC contract) is a contract signed between investors for business cooperation, profit sharing, and product division according to the provisions of law without establishing an economic organization. Investment in the form of BCC is regulated as follows:

• BCC contracts are signed between domestic investors in accordance with the provisions of civil law.
• BCC contracts are signed between domestic investors and foreign investors or between foreign investors carrying out procedures for issuance of Investment Registration Certificates according to the provisions of Article 38 of the Law on Investment 2020.

The parties participating in the BCC contract establish a coordination committee to implement the BCC contract. The functions, tasks, and powers of the coordination board are agreed upon by the parties.

During the implementation of the BCC contract, the parties to the contract may agree to use assets formed from business cooperation to establish an enterprise according to the provisions of law on enterprises.

The parties to the BCC contract have the right to agree on other contents that are not contrary to the provisions of law.

Implement investment projects

Please refer to the following articles for details:

• Process for implementing investment projects using land: Detailed instructions
• What documents are included in the application for investment policy approval?
• Procedures for approving investment policies according to the Law on Investment 2020.

Consulting on choosing industries and investment forms

Service consulting on choosing industries and investment forms in Long Phan helps investors make the right decisions, optimize profits and ensure legal compliance. Our services include:

• Consulting on choosing business investment fields;
• Consulting on choosing appropriate investment forms;
• Drafting business establishment registration documents, applying for investment policy approval, Investment Registration Certificate and other related documents;
• Customer representatives work with authorities to submit documents and process procedures;
• Support businesses in applying for sub-licenses related to their business lines;
• Guidance on payable taxes and tax incentive policies for each industry and field;
• Consulting on financial obligations when investing in Vietnam;
• Support initial tax declaration and set up an accounting system according to regulations.

Consulting on choosing industries and investment forms helps investors make the right decisions, optimize profits and minimize risks. Long Phan provides in-depth consulting services, support from market analysis to completing legal procedures. Contact the hotline 0906735386 immediately for detailed advice!