Process and procedures for opening an FDI company in Vietnam

 In recent years, with the increasingly improved business environment and increasingly complete investment support policies, our country has become an attractive destination for foreign investors to open FDI companies in Vietnam . Establishing a joint venture (FDI) company in Vietnam not only requires a deep understanding of legal regulations but also requires an accurate assessment of the opportunities and challenges of the local business environment. As a professional legal advisor, we are committed to providing the most updated information and optimal investment strategies, helping our customers achieve sustainable success in investing and developing in the Vietnamese market.

Overview of FDI companies

According to current law in the Investment Law 2020 , there is no concept of foreign-invested enterprises (FDI), instead there is the concept of foreign-invested economic organizations in Article 3, which stipulates as follows:

“A foreign-invested economic organization is an economic organization with foreign investors as members or shareholders.”

Thus, a foreign-invested enterprise is one of the types of economic organizations with foreign investment capital, regardless of the proportion of capital contributed by foreign parties. Enterprises with foreign direct investment capital include:

– 100% foreign-owned enterprise.

– Enterprises with foreign individuals or organizations established under foreign law investing (contributing capital to establish, purchasing capital contributions).

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Conditions for opening an FDI company in Vietnam

To be able to establish an FDI enterprise, the enterprise needs to ensure that it meets the following conditions:

Conditions for foreign investors contributing capital from the beginning to establish an economic organization

Pursuant to the provisions of Article 22 of the Investment Law 2020:

Foreign investors establishing economic organizations must satisfy the market access conditions for foreign investors as prescribed in Article 9 of this Code.

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 for the establishment of innovative start-up small and medium enterprises and innovative start-up investment funds in accordance with the provisions of law on support for small and medium enterprises.

Conditions for foreign investors to contribute capital, buy shares, buy capital contributions 

Foreign investors contributing capital, purchasing shares, or purchasing capital contributions of economic organizations must satisfy the following regulations and conditions:

• Market access conditions for foreign investors are prescribed in Article 9 of the Law on Investment 2020;
• Ensure national defense and security according to the provisions of the Investment Law 2020;
• Provisions of land law on conditions for receiving land use rights, conditions for land use in islands, border communes, wards and towns, coastal communes, wards and towns.

In addition, in Decree 31/2024/ND-CP , the state also stipulates a number of industries, occupations and market access conditions for foreign investors.

Conditions on subjects and nationality of foreign investors

Foreign investors can be individuals over 18 years old, organizations, or enterprises with the nationality of a WTO member or have signed a bilateral treaty related to investment with Vietnam. However, in some industries, only foreign investors who are legal entities are allowed to invest in Vietnam. Individual investors holding passports with the “cow tongue line” content will not be able to contribute capital to invest in Vietnam or take on the role of representative to manage investment capital for organizations or companies established in Vietnam according to the provisions of law.

There are no specific regulations on the nationality of foreign investors. Foreign investors from any country can invest in Vietnam, as long as they comply with the laws and international agreements that Vietnam has signed.

Specific provisions on the subject and nationality of foreign investors can be found in laws such as the Enterprise Law, Investment Law and other legal documents related to foreign investment in Vietnam.

Conditions on financial capacity of foreign investors

Foreign investors must have sufficient financial capacity to invest and need to prove their financial capacity to invest in Vietnam depending on the chosen industry.

Conditions on the company’s headquarters intended for registration and project implementation location

Foreign investors need to have a location to carry out investment projects in Vietnam through a location lease contract, house lease contract, land lease contract, and legal real estate documents of the lessor to serve as the company headquarters and project implementation location.

For investment projects in the manufacturing sector, investors must demonstrate eligibility for factory lease and have a factory lease contract in industrial clusters and zones.

Conditions on capacity and experience and specific conditions according to investment fields

Foreign investors wishing to open FDI companies in Vietnam need to meet specific conditions for business lines with conditions for foreign investors.

In addition, foreign investors must also meet a number of conditions regarding business lines and occupations that are not prohibited: To be eligible to establish an FDI enterprise, the established enterprise must not engage in prohibited business lines according to Article 6 of the Investment Law 2020, including:

• Trading in prohibited substances such as drugs in Appendix I of this Law
• Chemical business in Appendix II of this Law
• Trading in specimens of wild plants and animals of natural origin as prescribed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of endangered, precious and rare Group I forest plants, forest animals and aquatic products of natural origin as prescribed in Appendix III of this Law
• Prostitution
• Buying and selling people, tissues, corpses, human body parts, human fetuses
• Business related to human cloning
• Fireworks business
• Debt collection service business

Form of opening FDI company in Vietnam

In Vietnam, foreign investors can register to establish FDI enterprises in two forms: Direct Investment and Indirect Investment, with the following conditions for implementation, specifically:

-For direct investment, foreign investors establishing a company with foreign capital or establishing a company with 100% foreign capital must satisfy the conditions in Article 22 of the Investment Law 2020.

– For indirect investment , investors contribute capital, buy shares, and contribute capital to a Vietnamese company (simply put, it means establishing a 100% Vietnamese-owned company and then transferring capital to a foreign investor. The conditions for foreign investors to establish a business in this form are stipulated in Clause 2, Article 24 of the 2020 Investment Law.

Procedures for opening FDI company in Vietnam

Procedures for establishing a foreign-invested company with 1% to 100% capital contributed by foreign investors immediately upon establishment

Step 1: Prepare documents for Investment Registration Certificate

To obtain an Investment Registration Certificate, foreign investors need to prepare the following documents:

• Document requesting to implement investment project;
• Documents proving legal status:

Depending on the type of organization, investors need to prepare the following specific documents:

• For institutional investors: request to provide a copy of the Certificate of Incorporation or other equivalent legal document to verify legal status.
•  For individual investors: a copy of ID card/Citizen ID card or Passport is required.

• The investment project proposal includes the following contents: project investor, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment progress, labor demand, proposal for investment incentives, assessment of the project’s socio-economic impact and efficiency.
• Documents proving the financial capacity of the investor:

• For institutional investors: financial reports of the last 2 years or financial support commitment from the parent company or financial institution or guarantee of the investor’s financial capacity.
• For individual investors: Confirm account balance, savings book…

• Documents related to the legal right to use the project implementation address such as: Lease contract, Land use right certificate, Construction permit, Decision approving construction planning, Decision on land allocation and lease, etc.
• Proposal for land use requirements for project implementation
• Explanation of technology use for investment projects, including detailed information on technology name, technology origin, technology process diagram, main technical parameters and usage status of machinery, equipment and main technology lines.

Step 2: Submit application for Investment Registration Certificate

For projects that do not require a decision on investment policy from foreign investors, the application for an Investment Registration Certificate will be made according to the following process: Declare project information on the National Information System on Foreign Investment:

• Investors declare project information online on the National Information System on Foreign Investment before submitting the application for an Investment Registration Certificate. The application for an Investment Registration Certificate is then submitted to the Investment Registration Authority within 15 working days from the date of online declaration.
• After the Investment Registration Authority receives the application, the investor is given an account to access the National Information System on Foreign Investment to monitor the application processing. The Investment Registration Authority will use this system to receive, process and issue codes for investment projects.

Step 3: Issuance of Investment Registration Certificate

Within 15 working days from the date of receipt of complete documents, the investment registration authority will issue the Investment Registration Certificate. If the application is rejected, the authority will notify the investor in writing and clearly provide the reason for rejection.

Step 4: Prepare documents and submit application for Business Registration Certificate to open FDI company in Vietnam

After receiving the investment registration certificate, the investor must carry out the procedure for granting a business registration certificate similar to the procedure for establishing a Vietnamese capital company.

Application for a Certificate of Business Registration includes:

• Business registration application;
• Company charter;
• List of members or shareholders;
• Copies of documents: ID card/CCCD/Passport or other legal personal identification documents for individuals;
• Decision on establishment, Certificate of business registration or other equivalent documents of the organization and authorization document; Copy of legal personal identification documents of the representative in case of organization;
• For members who are foreign organizations, a copy of the Business Registration Certificate or equivalent document must be consularized;
• Certificate of investment registration for foreign investors has been issued.

Step 5: Publish business registration information

After receiving the Certificate of Business Registration, it is necessary to publicly announce on the National Business Registration Information Portal and pay the publication fee as prescribed.

The content of the announcement includes: information on the business line, list of founding shareholders and list of shareholders who are foreign investors for joint stock companies (if any).

The request to publish the business registration content and pay the fee for publishing the business registration content is made when the business submits the business registration dossier. In addition, Decree 122/2021/ND-CP stipulates penalties for investors who do not disclose or disclose incorrect information on the national business registration information portal.

Step 6: Engrave the company seal

Seals include seals created at seal engraving establishments or seals in the form of digital signatures according to the provisions of law on electronic transactions.

Decisions on the type, quantity, form and content of seals of enterprises, branches, representative offices and other units of enterprises are made by the enterprise.

The management and storage of seals shall comply with the provisions of the Company Charter or regulations issued by the enterprise. Enterprises shall use seals in transactions in accordance with the provisions of law.

Step 7: Granting of Business License or Certificate of Eligibility to Operate

The issuance of a Business License applies to businesses specializing in the retail sale of goods to consumers or establishing retail establishments. For some industries, after completing the company establishment procedures, foreign investors need to apply for licenses related to operating conditions, such as food safety and hygiene licenses, environmental licenses for the food business sector, training licenses in the education sector, and travel licenses for the tourism sector.

To meet the conditions for granting a Business License in the field of retail goods, foreign investors need to satisfy the following requirements:

• For foreign investors from countries and territories participating in international agreements of which Vietnam is a member, it is necessary to commit to opening the market for the purchase and sale of goods and activities directly related to the purchase and sale of goods.
• Meet market access requirements as prescribed in international agreements to which Vietnam is a party.

· Have a financial plan to carry out business activities;

• Ensure there are no overdue tax debts in case the business has been operating in Vietnam for at least 1 year or more.

In addition, to be granted a Retail Business License, foreign investors need to consider the following factors:

• Comply with the provisions of specialized laws.
• Adapt to the level of competition of domestic enterprises in the same field of operation.
• Ability to create jobs for domestic workers.
• Level of contribution to the state budget.

Specifically, the process of applying for a retail business license for FDI enterprises must follow these steps:

• Application for Business License
• Detailed explanation of the conditions for granting a Business License as prescribed in Article 9 of Decree 09/2018/ND-CP.
• A detailed business plan includes a description of the content and method of business operations, and an assessment of the plan’s socio-economic impact and effectiveness.
• Specific financial plan, including audited business performance report and current financial situation of the enterprise.
• Documents proving no overdue tax debts from the tax authorities.
• Copy of the Certificate of Business Registration and Certificate of Investment Registration for the project of trading in goods and activities directly related to trading in goods (if any).

The process of granting a Retail Business License to a foreign-invested enterprise is carried out by the Department of Industry and Trade where the enterprise is headquartered, with an expected processing time of about 30-45 working days.

Step 8: Open a foreign direct investment capital account

This account is used to transfer capital according to the capital contribution period recorded in the Investment Certificate.

In addition, FDI companies need to open additional transaction accounts to receive money from investment capital accounts, in order to carry out revenue and expenditure transactions in Vietnam.

Procedures for opening an FDI company in Vietnam in the form of capital contribution and share purchase

Step 1: Establish a company with Vietnamese capital

Foreign investors can only participate in investing in buying shares when there is already a Vietnamese enterprise. In addition, if the business opening procedures have not been completed, the Vietnamese partner must establish a company with 100% capital from Vietnam.

Step 2: Prepare application documents for foreign investors to purchase capital contributions and shares

Documents to be prepared include:

1. The application for capital contribution or purchase of shares or capital contributions includes detailed information about the economic organization to which the international investor proposes to contribute capital or purchase shares or capital contributions. The content must include the foreign investor’s charter capital ownership ratio after making the capital contribution or purchasing shares or capital contributions.
2.  Copy of personal legal documents of individual investors. For institutional investors, a copy of the certificate of incorporation or other equivalent document is required to confirm legal status.
3. Agreement on capital contribution or purchase of shares or capital contributions between foreign investors and economic organizations receiving capital or shares.
4. Declaration document (with copy) of land use right certificate of economic organization receiving capital or shares from foreign investors.

Step 3: Submit application for capital contribution and share purchase by foreign investors

After preparing all documents, foreign investors submit the documents to the Investment Registration Office, Department of Planning and Investment of the province where the enterprise has its headquarters.

Within 15 working days from the date of receipt of complete and valid dossier, the Department of Planning and Investment will issue a Notice confirming the satisfaction of the necessary conditions for capital contribution, purchase of shares or capital contributions to a company in Vietnam.

Step 4: Foreign investors contribute capital and buy shares to open FDI companies in Vietnam.

In case a foreign investor decides to contribute more than 51% of the capital, the Vietnamese company must open a direct investment capital account. The transfer of the investor’s investment package through this account is carried out in accordance with regulations. In addition, members and shareholders who have transferred capital must declare and pay personal and corporate income tax (if applicable) in accordance with the law.

Step 5: Change business registration certificate

After completing the process of capital contribution, share purchase, and capital contribution, the company will carry out the procedures to change the business registration. This includes updating information on capital contribution and share purchase by foreign investors in the business registration dossier at the competent authority. Documents to be prepared include:

• Notice of change of business registration content.
• Decision on company changes (if any).
• Minutes of the General Meeting of Shareholders/LLC related to the content of the change (if any).
• Assignment contract and related documents.
• List of foreign members or shareholders contributing capital.
• Notarized copy of investor’s passport or business registration certificate.

Foreign investors make changes to the business registration certificate at the Department of Planning and Investment where the company has its headquarters.

Step 6: Issuance of Business License and Certificate of Eligibility for Operation

Similar to the form of investors contributing capital from the beginning, enterprises operating in the field of retail goods or establishing retail goods establishments wishing to open FDI companies in Vietnam must apply for a Business License. For some conditional industries, the need for additional licenses is necessary for enterprises to be allowed to carry out operations.

Comparison of direct investment and indirect investment when opening an FDI company in Vietnam

Important notes when opening an FDI company in Vietnam

Important notes when opening an FDI company in Vietnam

Legal and regulatory: Make sure your company fully complies with the legal regulations on opening an FDI company in Vietnam. You need to carefully study the Investment Law and related legal documents, as well as fully carry out the necessary registration procedures.

Registration and licensing: Registering an FDI company in Vietnam includes applying for an Investment Registration Certificate and a Business Registration Certificate. This process must be completed by the required procedures and documents.

Charter capital: Clearly determine the charter capital required to establish the company, and transfer capital from abroad to Vietnam according to the provisions of law.

Tax policy: Understand the tax policies applicable to FDI enterprises in Vietnam, including import tax, value added tax, corporate income tax, and tax incentives that may be applicable to special industries or regions.

Labor and recruitment : Labor regulations, social insurance and labor benefits must be complied with. In addition, you need to plan to recruit and train appropriate human resources for the company’s operations.

Financial and accounting management: Implement financial and accounting management in a strict and transparent manner to ensure compliance with legal regulations and evaluate the company’s business performance.

Environmental protection: Comply with environmental protection regulations and requirements related to natural resource protection during production and business activities.

Local policies and regulations: In addition to national laws, you also need to comply with local policies and regulations where the company is located.

With a team of experienced lawyers, solid legal knowledge and good bilingual consulting ability, BKC LAW is confident to be one of the best legal partners in the market to support consulting services related to the establishment of foreign-invested companies (FDI) in Vietnam.

For legal advice on FDI company opening services in Vietnam, you can contact our Lawyers with the following information:

Phone: 0901 333 341

Email:info@bkclaw.vn

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

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