To have a suscessful investment project, Investors are first required to pick suitable investing form together with meeting the most fundamental conditions. We at HT Legal hereby provide those who are wishing to invest in Vietnam some basic information on the forms of investment and the conditions required for your reference.
According to the current law on investment of Vietnam, the forms of investment in Vietnam including:
Investment in establishment of a business organization
Investors can choose establishing an economic organization to carry out their investment activities in Vietnam, in which the most popular selected have been limited liability company, joint stock company and partnerships.
Investment by contributing capital, purchasing shares or capital of business organizations
In addition to the establishment of an economic organization for new investment project as said above, the investors shall be entitled to contribute capital, purchase shares or capital to the existing economic organizations operating in Vietnam. Including:
| Capital contribution | a) Buy shares of joint-stock companies through IPOs or additional issuance; b) Contribute capitals to limited liability companies and partnerships; c) Contribute capital to other business organizations not mentioned in above |
| Shares or capital purchase | a) Buy shares of joint-stock companies from the companies or their shareholders; b) Buy capital contributions to limited liability companies by their members and become members of limited liability companies; c) Buy capital contributions to partnerships by partners and become partners; d) Buy capital contributions to business organizations other than those mentioned above. |
Investment under PPP contracts
Investors and project management companies shall sign PPP contracts (Public-Private Partnership contract) with competent authorities to execute an investment project to build new infrastructural works, to improve, upgrade, expand, manage, and operate infrastructural works, or to provide public services.
Investment under business cooperation contracts (BCC)
Business cooperation contract (BCC) means a contract between investors for business cooperation and distribution of profits, products without establishment of a new business organization.
In particular, the most common forms are 1) Investment in establishment of a business organization and 2) Investment by contributing capital, purchasing shares or capital of business organizations, which are considered by majority of small and medium investors due to simpler legal procedures for medim project. Therefore, the information privided below will focus on these two popular forms.
On choosing form of investment, investors must meet certain conditions and comply with the procedures prescribed by law for each form. In general, however, investors should first notice and meet the following basic conditions:
Conditions on investment capital:
For the form of establishment of an economic organization, the investor should demonstrate their capital contribution ability in implementing and maintaining the project through financial credentials, usually bank statements (for individuals) or financial statements/reports of recent years (for organizations/companies).
For the second form, the investors are exempt from providing the above financial proofs, as the financial capacity of the investors should be checked and assessed by the enterprise selling capital/shares or receiving capital contribution.
Conditions on activities:
In Vietnam, some investment and business activities have specific conditions for foreign individuals and organizations and investors should thoroughly understand the regulations prior to their registration of investment in Vietnam,. These may be limitation on the scope of investing activities, professional capacity or the shares of foreign capital in an entity. Often, those conditions are set on the basis of agreements and commitments between Vietnam and the countries of investors, commonly WTO Commitments on Trade in Goods, Services, FTAs, AFAS,…
Therefore the investors should consult with a lawyer or consultant to find out if their investment activities are subject to restrictions by law.
Conditions on the place performing project
In the case of establishment of a new economic organization, a lease contract for office, workshops, warehouses, etc., must be entered into before and included when registering the investment project. However, investors may apply for adjustment if there is a change in location later.
Conditions on the capacity of speciality, management, operation of investors
Among the conditions, although this is an optional condition, it plays an important role in explaining the capacity of the investors in the registration procedure. Investors should provide proof of ability such as professional qualifications, managerial experience, management, work experience, etc., to prove their superiority and to facilitate for the process
Please feel free to contact us by email: huonghue.ht@gmail.com or phone number +84 935 439 454 if you need any further clarification. We look forward to long-term co-operation with you.