Investment forms in Vietnam are becoming increasingly diverse and abundant, understanding and complying with legal regulations play a crucial role. From direct investment to new forms such as investment through contracts. Understanding the regulations for various investment forms is a key issue for all investors, both domestic and foreign. Recognizing this, Long Phan will assist you in understanding more about this issue. Please refer to the following article for more information!

Forms of Investment in Vietnam

Compilation of Investment Forms in Vietnam

Investment in Establishing Economic Organizations

According to the current Investment Law, entities entitled to invest in establishing economic organizations can be domestic investors or foreign investors. However, the establishment of economic organizations must comply with the following regulations:

• For domestic investors, compliance with business laws and corresponding laws for each type of economic organization is required.
• For foreign investors, compliance with market access conditions according to Article 9 of the 2020 Investment Law is necessary.

Contribution, Share Purchase, and Capital Contribution Portion

According to Article 24 of the 2020 Investment Law, investors have the right to contribute capital, purchase shares, or purchase capital contribution portions of economic organizations. However, in cases where foreign investors wish to contribute capital, purchase shares, or purchase capital contribution portions of economic organizations, the investment process must adhere to the following regulations:

• Ensure matters related to security and defense according to legal regulations.
• Meet market access conditions for foreign investors as stipulated by the Investment Law (similar to the establishment of economic organizations).
• Comply with regulations related to land such as land use rights, land use conditions, etc.
• Capital contribution, share purchase, and capital contribution portion must comply with current legal regulations.

Project Implementation

According to current Investment Law regulations, the implementation of investment projects in Vietnam includes the following basic steps:

• Selecting an investor to implement the investment project.
• Submitting application documents, assessment contents requesting approval of the investment policy.
• In case the investment project is approved, foreign investors will be granted an Investment Registration Certificate by the competent authority.
• Proceeding with the implementation of the investment project.

Investment through Contractual Forms

At its core, investment through Business Cooperation Contracts (BCC) involves two or more investors collaborating to implement a specific business project. These investors do not want to establish a new economic organization for various reasons such as the need for immediate project deployment or the complex and costly process of organization establishment. In this case, the parties often sign Business Cooperation Contracts (BCC) to demonstrate their investment cooperation.

Investment through BCC must comply with the following regulations:

• BCCs signed between domestic investors must be executed according to civil law regulations.
• BCCs signed between domestic and foreign investors, or between foreign investors, must undergo the investment registration certificate issuance procedures as stipulated in Article 38 of the 2020 Investment Law.

Investment under BCC Contracts

New Points in Investment Forms

Firstly, Regarding the Conditions for Establishing Economic Organizations in Vietnam by Foreign Investors

Foreign investors establishing economic organizations must meet the market access conditions stipulated in the List of Industries and Occupations restricting market access for foreign investors. Specifically, these conditions include:

• The ownership ratio of charter capital of foreign investors in economic organizations.
• Investment forms.
• Scope of investment activities.
• Investors capacity; partners participating in investment activities.
• Other conditions as prescribed by law.

Moreover, before establishing economic organizations, foreign investors must have investment projects and complete procedures for granting or adjusting Investment Registration Certificates, except for cases of establishing small and medium-sized innovative startups and innovation startup investment funds according to the law on supporting small and medium-sized enterprises.

Secondly, New Points on the Equity Holding Ratio of Foreign Investors in Economic Organizations Conducting Investment Activities

Specifically, according to Article 23 of the 2020 Investment Law, there have been new changes such as: Economic organizations must meet the conditions and follow the investment procedures stipulated for foreign investors when conducting investment activities with other economic organizations if the latter fall into one of the following cases:

• A foreign investor holds over 50% of the charter capital or the majority of members of the partnership are foreign individuals in a partnership company (the current regulation is from 51% of charter capital onwards).
• An economic organization specified in this point holds over 50% of the charter capital (the current regulation is from 51% of charter capital onwards).
• Both a foreign investor and an economic organization with a foreign investor hold over 50% of the charter capital, or the majority of members of the partnership are foreign individuals in a partnership company that holds over 50% of the charter capital (the current regulation is from 51% of charter capital onwards).

Conditions for Foreign Investors Investing in Vietnam 

The conditions for foreign investors wishing to invest in Vietnam are as follows:

• Market access conditions: Foreign investors must meet the market access conditions stipulated in Vietnam’s Investment Law.

• Ensure national defense and security: Foreign investors must comply with Vietnam’s regulations on ensuring national defense and security.
• Regulations on land: Foreign investors must comply with the regulations of Vietnamese law on land, including land use rights, land use conditions, etc.
• Regulations on capital contribution, share holding, and charter capital of foreign investors: Foreign investors contributing capital to Vietnamese companies must comply with regulations on the ownership ratio of charter capital, shares, investment forms, scope of activities, etc.

Additionally, there are specific regulations depending on the specific investment type and business sector in which foreign investors want to participate.

Conditions for Foreign Investors Investing in Vietnam

Considerations When Choosing an Investment Project Form

When selecting an investment project form, it’s important to consider the following points:

• Legal regulations: Determine and understand the legal regulations and conditions related to each type of investment form.
• Certificates and permits: Check and verify the validity of certificates, documents, and legal permits related to the chosen investment form.
• Local regulations: Check specific local regulations and legal provisions related to each type of investment form, as each locality may have its own separate regulations regarding investment forms.
• Legal responsibilities: Evaluate and understand the legal responsibilities of the investor for each investment form.

The current regulations on investment forms have undergone many changes compared to before to keep up with the needs and pace of socio-economic development. However, these changes have made it difficult for investors and the public to grasp these regulations. Therefore, to stay updated with these regulations, clients can seek assistance from reputable consulting firms in this field. If you require in-depth consultation on investment matters, please feel free to contact Long Phan via Hotline: 0906.735.386.