Establishing an FDI Enterprise in Vietnam

FDI Overview: FDI (Foreign Direct Investment) refers to foreign individuals or organizations investing capital in long-term business activities in Vietnam. An FDI enterprise is a company established and managed by foreign individuals or organizations in Vietnam.

Legal Basis for Establishing an FDI Enterprise:

• Enterprise Law 2020
• Investment Law 2020
• Decree 31/2021/ND-CP, effective from March 26, 2021
• Decree 01/2021/ND-CP on enterprise registration

Conditions for Establishing an FDI Company:

In Vietnam, foreign investors can register to establish an FDI enterprise through two forms: direct investment and indirect investment, each with specific conditions:

A. Direct Investment:

Foreign investors establish a company with foreign capital or a 100% foreign-owned company, meeting the conditions specified in Article 22 of the Investment Law 2020:

“Article 22. Investment to Establish Economic Organizations:

1. Investors establish economic organizations as follows:
a) Domestic investors establish economic organizations according to the law on enterprises and corresponding laws for each type of economic organization;
b) Foreign investors establish economic organizations must meet market access conditions for foreign investors as stipulated in Article 9 of this Law;
c) Before establishing an economic organization, foreign investors must have an investment project, carry out procedures for granting or adjusting the Investment Registration Certificate, except for establishing small and medium-sized innovative start-ups and innovative start-up investment funds under the law on supporting small and medium-sized enterprises.
2. From the date of being granted the Enterprise Registration Certificate or other equivalent legal documents, the economic organization established by foreign investors is the investor implementing the investment project as specified in the Investment Registration Certificate.”

B. Indirect Investment:

Foreign investors invest by contributing capital, purchasing shares, or purchasing capital contributions. The conditions for foreign investors to establish enterprises in this form are specified in Clause 2, Article 24 of the Investment Law 2020:

“Article 24. Investment in the Form of Capital Contribution, Share Purchase, Capital Contribution Purchase:

2. Foreign investors contributing capital, purchasing shares, or purchasing capital contributions of economic organizations must meet the following regulations and conditions:
a) Market access conditions for foreign investors as stipulated in Article 9 of this Law;
b) Ensuring national defense and security according to this Law;
c) Regulations of the law on land regarding conditions for receiving land use rights, conditions for using land on islands, border communes, wards, and towns, and coastal communes, wards, and towns.”

“Market Access Conditions for Foreign Investors (Article 9):

1. Foreign investors are subject to the same market access conditions as domestic investors, except as stipulated in Clause 2 of this Article.

2. Based on laws, resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties to which the Socialist Republic of Vietnam is a member, the Government announces the List of industries and trades with restricted market access for foreign investors, including:
a) Industries and trades not yet accessible to the market;
b) Industries and trades with conditional market access.

3. Market access conditions for foreign investors in the List of industries and trades with restricted market access for foreign investors include:
a) The percentage of charter capital ownership by foreign investors in economic organizations;
b) Forms of investment;
c) Scope of investment activities;
d) Investor capacity; partners participating in investment activities;
đ) Other conditions as stipulated by laws, resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties to which the Socialist Republic of Vietnam is a member.”

Conditions Regarding the Entity Establishing the Enterprise and Nationality of Foreign Investors:

For Individual Foreign Investors:

• Must be at least 18 years old and not fall into cases prohibited from establishing and managing enterprises in Vietnam as stipulated in Article 17 of the Enterprise Law 2020.
• Must have nationality from a WTO member country or a country with a bilateral investment agreement with Vietnam. Currently, some nationalities are not allowed to invest in Vietnam if their passports contain the “nine-dash line,” such as Chinese nationals.

For Foreign Organizations:

• Must be legally established in a WTO member country or a country with a bilateral investment agreement with Vietnam.
• Currently, some business sectors are restricted for foreign individual investors, only allowing foreign organizations (legal entities) to register for operation.

Procedure for Establishing an FDI Company:

Case 1: Establishing an FDI Enterprise through Direct Investment:

• Phase 1: Apply for the Investment Registration Certificate:

Before registering the enterprise at the Business Registration Office, foreign investors must apply for the Investment Registration Certificate as guided in Article 63 of Decree 31/2021/ND-CP.

• Phase 2: Complete the FDI Enterprise Establishment Procedures at the Business Registration Office.

Case 2: Establishing an FDI Enterprise through Indirect Investment:

• Phase 1: Foreign Investors Register to Contribute Capital, Purchase Shares, or Purchase Capital Contributions:

Within 15 days from the date of receiving a valid application, the investment registration authority reviews the conditions for capital contribution, share purchase, or capital contribution purchase and notifies the foreign investor and the economic organization with foreign investors contributing capital, purchasing shares, or purchasing capital contributions.

• Phase 2: Complete the Procedures for Capital Contribution, Share Purchase, or Capital Contribution Purchase by Foreign Investors.

Documents Required and Format for This Case:

1. Passport of the foreign investor: 02 notarized copies or legalized copies.
2. Bank balance confirmation of the investors: Original for Vietnamese documents; translated and certified by a translation company if foreign documents (no need for consular legalization for this document).
3. Lease contract for the project location: Original or 02 notarized copies.