When doing business in Vietnam, not all projects are required to do investment registration procedure(s) and/or apply for investment registration certificate. The 2020 Law on Investment stipulates that investors must apply for investment registration in specific cases. In this article we will discover which cases should investors register the investment project and step by step guide on investment registration procedures.
Law on investment (2020), requires certain groups to apply for investment application. These requirements are specified as follows:
1. Cases required to carry out investment registration procedure(s)
1.1. Investment projects of foreign investors to establish economic organizations
Foreign investors who are establishing organizations in Vietnam must follow procedures to obtain an Investment Registration Certificate (IRC).
1.2. Investment projects of foreign-invested economic organizations
When establishing a business organization/making investment by contributing capital/purchasing shares/purchasing stakes of a business organization/ investing under a business cooperation contract in one of the following cases, the foreign investor must satisfy the conditions and follow the investment procedures applicable to foreign investors:
- Over 50% of its charter capital or more is held by a foreign investor(s) or majority of the general partners are foreigners if the business organization is a partnership (hereinafter referred to as “foreign-invested economic organizations”).
- Over 50% of its charter capital or more is held by a foreign-invested economic organizations.
- Over 50% of its charter capital or more is held by a foreign investor(s) and foreign-invested economic organizations.
1.3. Investors operating in legally specified fields must obtain approval for investment guidelines
These are businesses with large-scale impacts, located in the fields that affect national security, politics, society, natural resources, environment, etc. Such projects need to be controlled and must follow appropriate mechanisms and policies. Accordingly, all investors must obtain investment approval from competent state agencies (National Assembly, Prime Minister, Provincial People’s Committee) before investment and operation of such projects.
1.4. Investment in the form of capital contribution, or purchase of shares or stakes
Foreign investors must carry out procedures for registration of capital contribution, purchase of shares, or stakes of an economic organization before changing members or shareholders if they fall into one of the following cases:
- The capital contribution or purchase of shares or stakes increases the ownership ratio by foreign investors in a business organization conducting business in the restricted business lines.
- The capital contribution or purchase of shares or stakes results in a foreign investor or business organization holding over 50% of the charter capital of the business organization, applicable to the following cases:
- The holding of charter capital by the foreign investor is increased from less than/equal to 50% to over 50%.
- The holding of charter capital by the foreign investor is increased while such foreign investor is holding over 50% of the charter capital of the business organization.
- The foreign investor that contributes capital, purchases shares or stakes of a business organization which has a certificate of rights to use land on an island or along the border, or in a coastal commune, or in an area that affects national defence and security.
2. Cases in which investment procedure(s) can be carried out as per demand
2.1. Apply for the IRC
Case 1: Case 1: Foreign investors who do not fit the criteria outlined in Section 1.2 of this article but are required to obtain an IRC can follow the same regulations as those required for an IRC application. These include:
- Foreign investors holding 50% or less of the charter capital, or when the majority of general partners is not composed of foreign individuals (for economic organizations being partnerships).
- There is a foreign-invested economic organization holding 50% or less of the charter capital.
- There are foreign investors and foreign-invested economic organizations holding 50% or less of charter capital.
Case 2: Vietnamese investors can choose to apply for an IRC if they intend to secure one for their business investment project.
2.2. Register for capital contribution, or purchase of shares, or stakes
In case foreign investors do not fall into the cases mentioned in section 1.4 of this article and wish to apply for approval to contribute capital, purchase shares or stakes, the investor still has the right to carry out registration procedures according to the legal provisions when:
- The contribution of capital, purchase of shares or purchase of contributed capital does not increase the foreign investor’s ownership ratio in the economic organization conducting conditional market access for foreign investors.
- Capital contribution, share purchase, or purchase of contributed capital of foreign investors or foreign-invested economic organizations in which, after investment, foreign investors hold 50% or less than 50% of economic organization’s charter capital.
- The foreign investor who contributes capital, or purchases shares or stakes of a business organization which is not on an island or along a border, or in a coastal commune, or in an area that affects national defence and security.