Conversion of a Vietnamese Company into a Foreign-Invested Company

13 February, 2026 24 Views

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Conversion of a Vietnamese Company into a Foreign-Invested Company is a complex process that offers numerous opportunities for market expansion, enhanced competitiveness, and attraction of international investment capital. This procedure not only requires strict compliance with investment and commercial laws but also demands thorough preparation in terms of finance, strategy, and management. This article provides a detailed guide on the basic steps for carrying out the conversion, from enterprise valuation, preparation of legal documents, to the relevant procedures during cooperation with foreign investors.

Why Convert to a Foreign-Invested Company?

Conversion of a Vietnamese Company into a Foreign-Invested Company

Converting to a foreign-invested company brings many benefits, including:

Access to Large Capital Sources: For companies aiming for rapid expansion, accessing capital from foreign investors is a significant advantage. This can improve cash flow, support large projects, and increase market value.
Acquisition of Advanced Technology and Management Skills: Foreign investors not only bring capital but also advanced technology and management expertise.
Increased International Trade Opportunities: Foreign-invested companies often gain advantages in expanding into international markets through the networks of foreign investors.

Conditions for Foreign Investors to Contribute Capital to a Vietnamese Enterprise

Foreign investors wishing to contribute capital to a Vietnamese enterprise must meet specific conditions under the Investment Law and current Vietnamese regulations. The main conditions are as follows:

Permitted Business Sectors

Conditional business sectors: Vietnam has certain sectors requiring conditions for foreign investors, such as finance, banking, telecommunications, real estate, education, and healthcare. In these sectors, foreign investors must comply with specific regulations on maximum capital contribution ratios or special conditions.
Restricted or prohibited sectors: Certain sectors are prohibited or restricted for foreign investors, such as national defense and security, media, and press. Investors must carefully check to avoid violations.

Capital Contribution Ratio

Pursuant to Clause 10, Article 17 of Decree 31/2021/NĐ-CP, restrictions on foreign ownership ratios under international investment treaties are applied as follows:

Where multiple foreign investors contribute capital, purchase shares, or purchase capital contributions in the same economic organization and are subject to one or more international investment treaties: The total ownership ratio of all foreign investors in that economic organization must not exceed the highest ratio prescribed by the treaty for the specific sector;
Where multiple foreign investors from the same country/territory contribute capital, purchase shares, or purchase capital contributions in an economic organization: The total ownership ratio of those investors must not exceed the ratio prescribed in the applicable investment treaty;
For public companies, securities companies, fund management companies, securities investment funds, or securities investment companies: Apply the regulations of securities law (Securities Law 2019 and guiding documents);
Where an economic organization invested in capital operates in multiple business sectors with different foreign ownership ratios under international investment treaties: The foreign ownership ratio in that economic organization must not exceed the lowest foreign ownership restriction for the sector with the strictest limit.

Thus, the foreign ownership ratio depends on the business sector and applicable international investment treaties.

Methods of Capital Contribution

Foreign investors may contribute capital to a Vietnamese enterprise through one of the following methods:

Purchase of initial or additional shares issued by a joint-stock company.
Direct capital contribution to the enterprise through purchase of shares or capital contribution to a limited liability company.
Purchase of capital contributions from members of a limited liability company or from shareholders of a joint-stock company.

Registration and Reporting to Competent Authorities

Capital contribution registration procedure: Foreign investors must register capital contribution with the Department of Planning and Investment or the Management Board of Industrial Zones/Export Processing Zones where necessary.
Investment Registration Certificate: Depending on the capital contribution ratio and business sector, an Investment Registration Certificate may be required. This certificate is mandatory to legalize the foreign investor’s capital contribution activities in Vietnam.
Declaration and financial reporting: Investors must comply with regulations on investment capital declaration and submit periodic financial and tax reports.

Financial Capacity Requirements

Foreign investors must prove financial capacity commensurate with the project’s capital requirements or investment scale. This may include financial statements, proof of lawful capital sources, and bank confirmations.

Steps to Convert a Vietnamese Company into a Foreign-Invested Company

Registration of Capital Contribution, Share Purchase, or Capital Contribution Purchase by Foreign Investors

Preparation of dossier:

Power of attorney from the foreign investor;
Application for registration of capital contribution/share purchase/capital contribution purchase by the foreign investor;
Principle agreement on purchase of capital contribution/shares;
Notarized and certified translated copy of passport of the foreign individual investor;
Notarized and consular legalized/translated copy of business license of the foreign organizational investor;
Power of attorney for the person submitting the dossier to the business registration authority.

Submission method: Investment Department – Department of Planning and Investment of the province/city where the enterprise has its principal office.

Processing time: 15–20 working days from receipt of a complete dossier.

Dossier for Conversion of a Vietnamese Company into a Foreign-Invested Company

Preparation of dossier:

Company charter (if any);
Application for enterprise registration (if any);
List of foreign members/shareholders (if any);
Minutes of meeting on amendment of enterprise registration contents (if any);
Decision on amendment of enterprise registration contents;
Contract for transfer of all or part of capital contribution/shares;
Notice of amendment of enterprise registration contents;
Notice of fulfillment of conditions for capital contribution/share purchase;
Notarized/consular legalized copy of passport/business license of the foreign investor;
Notarized copy of citizen identity card/citizen identity card/passport of Vietnamese individuals (in case of joint capital contribution with Vietnamese persons);
Power of attorney for the person performing the registration procedure (if any).

Submission method: At the Business Registration Office – Department of Planning and Investment of the province/city where the enterprise has its principal office, or online via the National Enterprise Registration Portal.

Processing time: 5 working days from receipt of a complete dossier, the Business Registration Office will issue a new enterprise registration certificate to the enterprise.

Actions Required After Converting a Vietnamese Company into an FDI Company

After converting a Vietnamese company into a foreign-invested company (FDI), the enterprise must carry out several tasks to comply with the law and ensure stable business operations. The key steps are as follows:

Update of Business License and Investment Registration

Amendment of Enterprise Registration Certificate: After conversion, the enterprise must update the Enterprise Registration Certificate to reflect changes in capital structure and foreign ownership.
Investment Registration Certificate: If not yet obtained, the enterprise must register and apply for an Investment Registration Certificate from the Department of Planning and Investment or the Management Board of Industrial Zones (if located in an industrial zone).

Reporting and Registration with Tax Authorities

Update information with tax authorities: Notify changes in capital structure and ownership composition to the local tax authority for updating in the tax system.
Tax code registration for foreign investors (if applicable): In some cases, foreign investors must register a tax code in Vietnam.

Registration of Foreign Direct Investment Capital Account (DICA)

Open a Foreign Direct Investment Capital Account (DICA) at a commercial bank to conduct transactions related to foreign investment capital, including receipt and remittance of funds from abroad, profit distribution, and other investment-related capital flows. This account is mandatory for foreign investment activities.

Periodic Reporting to Investment Management Authorities

FDI enterprises are required to submit periodic reports on investment activities, including financial reports and project implementation reports, to the Department of Planning and Investment or the industrial zone management authority.
Financial reporting: Ensure financial statements are prepared and audited in accordance with Vietnamese accounting standards and submitted on time to competent authorities.

Adjustment of Organizational Structure and Management Operations

Governance and human resources structure: If foreign investors participate in management, the enterprise may need to adjust the organizational structure and management processes to align with the investor’s requirements.
Amendment of internal documents: Update the company charter and internal regulations to reflect the new ownership structure, particularly decision-making and shareholder rights.

Compliance with Regulations on Remittance of Profits Abroad

FDI enterprises are permitted to remit profits abroad after fulfilling financial obligations to the Vietnamese State. To do so, the enterprise must comply with relevant procedures, including submission of audited financial statements and confirmation of completed tax obligations.

Consultation Services for Conversion of a Vietnamese Company into a Foreign-Invested Company at BKC Law

BKC Law provides professional consultation services for converting a Vietnamese company into a foreign-invested company. With an experienced team of lawyers possessing in-depth knowledge, BKC Law will support your enterprise from planning, handling legal procedures, to completing all requirements related to foreign investment. We are committed to delivering comprehensive solutions that ensure full compliance with Vietnamese law and optimize benefits for investors.

To receive free legal consultation at BKC Law, please contact our lawyers using the following information:

Telephone: 0901 3333 41
Email: info@bkclaw.vn
Branch in District 1: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City
Branch in Binh Tan: 41 Ten Lua Street, Binh Tan District, Ho Chi Minh City