Forms Of Investment in Vietnam

I. Direct investment:

The foreign entity may establish its presence in Viet Nam with the forms as follows:

I.1. Establishment of a new legal entity:

- A limited liability company with one or more members;

- A Joint-stock company;

Feature	A limited-liability company (LLC)	Joint stock company (JSC)
Required number of members/ shareholders	One (for single member LLC); Two or more members, but not exceeding fifty members (for multimember LLC)	At least three shareholders; no restriction on the maximum number of shareholders
Liability of members/ shareholders	Limited to the extent of the registered capital contributions to the company	Limited to the extent of the registered capital contributions to the company
Issuing bonds	Allowed	Allowed
Issuing shares	Not allowed	Allowed
Listing on a stock exchange	Not allowed	Allowed

 

I.2. Capital contribution in existing legal entities:

According to Article 24 of the Law of Investment, Investors are entitled to contribute capital, purchase shares, or purchase stakes in business organizations.

Foreign investors investing by contributing capital, purchasing shares, and purchasing stakes in business organizations must:

a) satisfy market access conditions applied to foreign investors as prescribed in Article 9 of LOI;

b) ensure national defense and security in accordance with LOI;

c) comply with regulations of the law on land and conditions for receipt of land use rights and conditions for use of land on islands or border or coastal communes.

Forms of capital contribution or purchase of shares or stakes:

1. A foreign investor may contribute capital to a business organization in the following forms:

a) Purchase of shares of joint-stock companies through the initial public or additional issuance;

b) Contribution of capital to limited liability companies and partnerships;

c) Contribution of capital to other business organizations not mentioned in Point a and Point b of this Clause.

2. A foreign investor may purchase shares or stakes of a business organization in the following forms:

a) Purchase of shares in a joint-stock company from such company or its shareholders;

b) Purchase of stakes of members of a limited liability company to become a member of such limited liability company;

c) Purchase of stakes of a capital contributing member of a partnership to become a capital contributing member of such partnership;

d) Purchase of stakes of members of other economic entities not mentioned in Points a, b and c of this Clause.

I.3. Business Cooperation Contracts (BBC).

Business cooperation contracts signed between domestic investors shall be executed in accordance with the civil law.

Procedures for issuance of investment registration certificates in Article 38 of this Law shall apply to business cooperation contracts signed between domestic and foreign investors or foreign investors.

Parties to a business cooperation contract shall establish a coordinating board to execute the BBC. The parties shall agree upon the coordinating board's functions, tasks, and powers.

II. Indirect investment:

Foreign investors can invest indirectly in Viet Nam with ways as follows:

- Purchasing the bonds, shares, and other valuable papers traded on the stock exchanges;

- Investment through the financial institutions.

III. Other forms of investment:

III.1. Representative Office:

Foreign traders shall be granted Licenses for Establishment of representative offices if they satisfy the following requirements:

1. The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;

2. The foreign trader has come into operation for at least 01 year from the date of establishment or registration;

3. The Certificate of Business Registration or the equivalent document is valid for at least 01 more year from the date of submission of the application;

4. The scope of operation of the representative office is consistent with that in Vietnam’s Commitments to treaties to which Vietnam is a signatory;

5. Where the scope of operation of the representative office is inconsistent with Vietnam’s Commitments or the foreign trader is not located in the country or territory being party to treaties to which Vietnam is a signatory, the representative office can be established only if relevant Ministers, Heads of ministerial agencies  have given approval for establishment of the representative office.

III.2 Branch:

Foreign businesses shall be granted Licenses for Establishment of branches if they satisfy the following requirements:

1. The foreign trader is incorporated and registers for doing business in accordance with provisions of laws of countries or territories being parties to treaties to which Vietnam is a signatory or is recognized by the aforesaid countries or territories;

2. The foreign trader has come into operation for at least 05 year from the date of establishment or registration;

3. The Certificate of Business registration or equivalent document is valid for at least 01 more year from the date of submission of the application;

4. The scope of operation of the branch is conformable with Vietnam’s Commitments to market access stipulated in treaties to which Vietnam is a signatory shall be consistent with lines of business of the foreign trader;

5. Where the businesses of the representative office is inconsistent with Vietnam’s Commitments or the foreign trader is not located in one of countries or territories being parties to treaties to which Vietnam is a signatory, the representative office can be established only if they obtain a prior consent of the relevant Minister for establishment of the representative office.

Conclusion

Viet Nam will continue to be the ideal place for attractive foreign investment. Before investing in Vietnam, the foreign investor should choose the forms of investment suitable to their circumstance to avoid time-wasting because it takes time to adjust the project.

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