The forms of investment under the 2020 Law on Investment have been recently updated

The 2020 Law on Investment introduced several significant updates to Vietnam’s legal framework for investment, streamlining the process for both domestic and foreign investors. According to Article 21 of the Law on Investment 2020, there are five main forms of investment available to investors in Vietnam. This article provides an in-depth analysis of the three most common investment methods: establishing an economic organization, entering into a BCC contract (Business Cooperation Contract), and capital contribution or share/purchase of equity.

Establishing an Economic Organization

This is a direct investment method where the investor sets up a business entity in Vietnam using their own capital. It is ideal for investors seeking full control over operations.

For domestic investors:

• Comply with the Law on Enterprises and applicable local regulations based on the selected business structure.

For foreign investors:

• Must meet market access conditions including investment forms, capital ownership ratio, and industry-specific requirements.

• For restricted sectors, investors must fulfill additional conditions on operation scope and equity ownership.

• An investment project must be registered, and the Investment Registration Certificate (IRC) must be issued prior to incorporation.

Note:
If the investor is a foreign-established entity, the economic organization must be incorporated after receiving the Enterprise Registration Certificate.

Investment through Business Cooperation Contracts (BCC)

A BCC allows investors to collaborate and share profits or products without forming a new legal entity. This form is suited for projects that do not require company establishment.

BCC regulations:

• Domestic investor BCCs follow civil law provisions.

• BCCs between foreign and domestic investors require an IRC if the project is not subject to investment policy approval.

Investment conditions for BCC:

• The project must not fall under prohibited business lines.

• Must align with national and provincial planning.

• A coordination committee must be established to manage the contract implementation.

Capital Contribution, Share Purchase, or Equity Acquisition

This method allows investors to inject capital into or acquire ownership in existing businesses in Vietnam, offering a flexible route without starting a new entity.

Conditions for foreign investors:

• Must comply with national defense and security regulations.

• Ownership ratios and sector eligibility must meet regulatory requirements.

• For specific sectors such as land or environment, additional land use and legal conditions apply.

Common forms of capital contribution:

• Contributing capital to partnerships or limited liability companies.

• Purchasing newly issued or existing shares in joint-stock companies.

• Acquiring capital in limited liability or partnership firms.

BKC Law’s Investment Advisory 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 seasoned lawyers and legal experts, we assist foreign investors from planning the optimal investment structure to completing all regulatory procedures.

Our services include:

• Advising on suitable investment types tailored to business goals.

• Assisting in obtaining Investment Registration Certificates and Enterprise Registration Certificates.

• Consulting on mergers, acquisitions, and capital contributions.

• Legal compliance advisory regarding defense, environment, and restricted sectors.

• Providing legal solutions during FDI company operations in Vietnam.

With deep knowledge of Vietnamese laws and industry insight, BKC Law is committed to delivering effective legal support to help investors maximize opportunities and reduce risks.

Frequently Asked Questions about Investing in Vietnam

How many investment methods are recognized under the 2020 Law on Investment?
There are five main forms: implementing investment projects, establishing economic organizations, BCC contracts, capital contribution/share/equity acquisition, and other methods regulated by the government.

What types of capital contribution are available?
Investors may contribute capital to partnerships or LLCs, purchase shares in joint-stock companies, or acquire equity in other economic entities.

What are the market access requirements for foreign investors?
Foreign investors must comply with conditions regarding investment form, scope of business, capital ownership ratio, investor capability, and industry-specific regulations.

What is the cost of obtaining an Investment Registration Certificate?
The cost depends on the investment type and legal services involved. Investors should contact legal consultants for a detailed quotation.

Contact Us:

Phone: 0901 3333 41

Email: info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, Ho Chi Minh City

Binh Tan Office: 41 Tên Lửa, Binh Tan District, Ho Chi Minh City

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