Forms of Investment under the 2020 Law on Investment (Updated)

The Law on Investment 2020 introduced several significant amendments to the regulations on investment forms in Vietnam, creating favorable conditions for both domestic and foreign investors. Pursuant to Article 21 of the Law on Investment 2020, there are currently five principal forms of investment available for investors participating in the Vietnamese market. This article provides a detailed overview of the three most common forms: establishment of an economic organization, investment under a Business Cooperation Contract (BCC), and contribution of capital, purchase of shares, or purchase of capital contributions.

Form of Investment: Establishment of an Economic Organization

Establishment of an economic organization is a direct investment form in which the investor establishes an enterprise in Vietnam using its invested capital. This is a common form for investors seeking direct control over business operations in Vietnam.

For domestic investors:

• Compliance with the provisions of the Law on Enterprises and other relevant domestic laws applicable to the specific type of economic organization.

For foreign investors:

• Compliance with market access conditions for foreign investors, including requirements on investment forms, ownership ratios in charter capital, and other conditions related to the investment sector.
• In particular, for sectors included in the restricted list, foreign investors must satisfy strict conditions regarding the scope of operations and ownership ratios.
• The investor must have an investment project and complete the procedures for issuance or adjustment of the Investment Registration Certificate prior to establishing the economic organization.

Note:

• The investor implementing the investment project shall be deemed an economic organization established by a foreign investor from the date of receipt of the Enterprise Registration Certificate.

Form of Investment: Business Cooperation Contract (BCC)

A BCC is a form of cooperation between investors to share profits or products without the need to establish a separate economic organization. This is a suitable option for projects that do not require the formation of a distinct enterprise.

Regulations on BCC:

• BCC between domestic investors: Governed by the provisions of civil law.
• BCC between foreign investors and domestic investors: An Investment Registration Certificate shall be issued if the project is not subject to investment policy approval by state authorities.

Conditions for investment under BCC form:

• The project must not fall within the list of sectors prohibited from investment in Vietnam.
• The project must comply with national planning, provincial planning, and relevant regulations.
• The parties to the BCC must establish a coordinating board to manage and implement the contract.

Form of Investment: Contribution of Capital, Purchase of Shares, or Purchase of Capital Contributions

This investment form allows investors to contribute capital to existing economic organizations or to purchase shares or capital contributions in enterprises in Vietnam. It is a flexible option for investors wishing to participate in established companies without establishing a new enterprise.

Conditions for foreign investors:

• Foreign investors must ensure compliance with national defense and security requirements.
• Compliance with conditions on ownership ratios and sectors in which foreign investors are permitted to participate.
• For economic organizations operating in special sectors (such as land, environment), investors must also satisfy requirements related to land use rights and other relevant conditions.

Forms of capital contribution:

• Contribution of capital to partnerships or limited liability companies.
• Purchase of additional or initial shares issued by joint-stock companies.
• Purchase of capital contributions in limited liability companies or partnerships.

BKC Law’s Investment Consulting Services for FDI Enterprises in Vietnam

BKC Law provides comprehensive investment consulting services for Foreign Direct Investment (FDI) enterprises in Vietnam. With a team of experienced lawyers and specialists, we support foreign investors throughout the entire investment process in Vietnam, from selecting the appropriate investment form to completing all relevant legal procedures.

Our consulting services include:

• Advisory on suitable investment forms aligned with the business objectives of FDI enterprises.
• Guidance and support in procedures for obtaining the Investment Registration Certificate and Enterprise Registration Certificate.
• Consultation on conditions and procedures related to mergers, acquisitions, or capital contributions into Vietnamese companies.
• Assistance in resolving legal issues concerning national defense and security, environment, and prohibited investment sectors.
• Provision of legal solutions for issues arising during the operations of FDI enterprises in Vietnam.

With extensive experience and in-depth knowledge of Vietnamese legal regulations, BKC Law is committed to delivering effective consulting services, enabling foreign investors to optimize investment opportunities and minimize legal risks.

Commonly Asked Questions Regarding Investment in Vietnam

How many investment forms are there under the Law on Investment 2020?

• Pursuant to the Law on Investment 2020, there are five investment forms: implementation of investment projects, establishment of economic organizations, investment under BCC contracts, contribution of capital/purchase of shares/purchase of capital contributions, and other new forms as prescribed by the Government.

In what forms may an investor contribute capital to an economic organization?

• Investors may contribute capital to partnerships or limited liability companies; purchase additional or initial shares of joint-stock companies; or purchase capital contributions in other economic organizations.

What are the market access conditions for foreign investors?

• Foreign investors must satisfy conditions regarding investment forms, scope of operations, ownership ratios, investor capacity, and other conditions related to the investment sector as prescribed by current regulations.

What is the fee for obtaining an Investment Registration Certificate?

• The fee for obtaining an Investment Registration Certificate varies depending on the type of investment and related services. Investors are advised to consult detailed fee schedules and required procedures with legal consulting firms.

Contact us: 

Telephone: 0901 3333 41

Email: info@bkclaw.vn

District 1 Office:  9th Floor, Diamond Plaza Building, 34 Le Duan Street, Ben Nghe Ward, Ho Chi Minh City

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