1. Concept

Foreign investor means an individual with foreign nationality, an organization established under foreign law that carries out business investment activities in Vietnam.

Economic organization means an organization established and operating in accordance with the provisions of Vietnamese law, including enterprises, cooperatives, cooperative unions and other organizations conducting business investment activities.

2. Conditions for establishment of economic organizations for foreign investors

Foreign investors establishing economic organizations must satisfy market access conditions for foreign investors specified in Article 9 of the Law on Investment 2020 as follows:

Firstly, foreign investors are entitled to apply market access conditions as prescribed for domestic investors, except for the case specified in Clause 2, Article 9 of the Law on Investment 2020.

Secondly, market access conditions for foreign investors specified in the List of industries and trades restricted from market access for foreign investors include:

• The percentage of ownership of charter capital of foreign investors in economic organizations;
• Forms of investment;
• Scope of investment activities;
• Competence of investors; partners engaged in the implementation of investment activities;
• Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a contracting party.

Before establishing an economic organization, foreign investors must have investment projects, carry out procedures for issuance and adjustment of investment registration certificates, except for the case of establishing innovative start-up small and medium-sized enterprises and innovative start-up investment funds in accordance with the law on supporting small and medium-sized enterprises.

From the date of issuance of the Certificate of Business Registration or other papers of equivalent legal validity, the economic organization established by the foreign investor is the investor implementing the investment project as prescribed in the Investment Registration Certificate.

3. Procedures for issuance of investment registration certificates

The investment registration agency shall grant the Investment Registration Certificate for investment projects subject to approval of investment policies by the National Assembly, the Prime Minister and provincial People’s Committees within the following time limits:

• 05 working days from the date of receipt of the written approval of the investment policy concurrently with the investor’s approval for an investment project subject to the issuance of an Investment Registration Certificate;
• 15 days from the date of receipt of the investor’s request for an Investment Registration Certificate for an investment project other than the case specified at Point a of this Clause.

For investment projects not subject to approval of investment policies by the National Assembly, the Prime Minister, People’s Committees of provinces, investors shall be granted investment registration certificates if they satisfy the following conditions:

• Investment projects not in industries or trades prohibited from business investment;
• Having a location for implementation of investment projects;
• The investment project conforms to the planning specified at Point a, Clause 3, Article 33 of this Law;
• Satisfy the conditions on investment rate per land area, number of employees used (if any);
• Meet market access conditions for foreign investors.

3.1. Procedures for issuance and adjustment of the Investment Registration Certificate for projects subject to approval of investment policies

For investment projects approved for investment policies concurrently with investor approval and subject to issuance of Investment Registration Certificates, the following shall be applied:

• Based on the Decision approving the investment policy, the Decision approving the adjustment of the investment policy, the investment registration agency shall grant and amend the Investment Registration Certificate within 05 working days from the date of receipt of the Decision approving the investment policy, Decision approving the adjustment of investment policies;
• For investment projects subject to the investment policy approval competence of 02 or more provincial People’s Committees, at the request of the Ministry of Planning and Investment, the Prime Minister shall assign the Department of Planning and Investment of a province or centrally-run city where the investor implements the investment project, locate, or plan to set up an executive office for the implementation of an investment project, issue an Investment Registration Certificate.

For investment projects that have been approved for investment policies and investors have won auctions or winning bids; investment projects subject to investor approval as prescribed in Clause 3, Article 29 of the Law on Investment and subject to issuance of Investment Registration Certificates, the investor shall submit a written request for an Investment Registration Certificate to the investment registration agency for issuance of an Investment Registration Certificate within 05 working days from the date the investment registration agency receives the written request.

For investment projects in case the economic zone management board approves the investor, the economic zone management board shall decide to approve the investor concurrently with the issuance of the investment registration certificate.

For projects not eligible for issuance of Investment Registration Certificates, if there is a need for an Investment Registration Certificate, the investor shall submit a written request for an Investment Registration Certificate, a valid copy of the Decision approving the investment policy and a valid copy of the Decision approving the investor (if any) to the investment registration agency to be granted an Investment Registration Certificate within 05 working days from the date of receipt of the written request.

3.2. Procedures for issuance of Investment Registration Certificate for investment projects not subject to approval of investment policies

The investor shall submit 01 dossier of application for an Investment Registration Certificate including the contents specified in Clause 1, Article 33 of the Law on Investment to the investment registration agency. In case the investment project is implemented in 02 or more provincial administrative units, the investor shall submit a dossier to the Department of Planning and Investment of a province or centrally-run city where the investor implements the investment project, locates or plans to set up an executive office to apply for an Investment Registration Certificate for the project.

For an investment project that has already been operational, the investor shall submit a dossier according to the above case, in which the investment project proposal is replaced by a report on the implementation of the investment project from the time of implementation to the time of application for an Investment Registration Certificate.

The investment registration agency shall issue the Investment Registration Certificate to the investor within 15 days from the date of receipt of a valid dossier when the project satisfies the following conditions:

• Not belonging to industries or trades prohibited from business investment as prescribed in Article 6 of the Law on Investment and international treaties on investment;
• Having an investment project execution location determined on the basis of a valid copy of a document on land use right or a valid copy of the site lease agreement or other documents or documents determining the right to use the location for the implementation of the investment project;
• The investment project conforms to the plannings specified in Clause 7, Article 31 of this Decree;
• Satisfy the conditions on investment rate per land area prescribed by the People’s Committee of the province based on actual local conditions and approved by the Standing Committee of the provincial People’s Council (if any), the number of employees employed (if any);
• Meet market access conditions for foreign investors.

4. Procedures for establishment of economic organizations by foreign investors

According to the provisions of Article 63 of Decree 31/2021/ND-CP, except for the case of establishment, capital contribution, share purchase, capital purchase in innovative start-up small and medium-sized enterprises, innovative start-up investment funds, foreign investors establish economic organizations and implement investment projects according to the following procedures:

– In case of implementation of a new investment project, the foreign investor shall carry out the procedures for approval of investment policies, grant the Investment Registration Certificate for the new investment project and carry out procedures for establishing an economic organization in accordance with the provisions of law corresponding to each type of economic organization;

– In case of receiving the transfer of an investment project and establishing an economic organization, the foreign investor shall carry out the procedures for issuance of the Investment Registration Certificate (in case such project is not granted an Investment Registration Certificate) or amend the Investment Registration Certificate (in case such project has been granted an Investment Registration Certificate) and carry out procedures for establishing economic organizations in accordance with the provisions of law corresponding to each type of economic organization.

– Dossiers, order and procedures for establishment of economic organizations shall comply with the provisions of the law on enterprises or other laws corresponding to each type of economic organization.

– The charter capital of an economic organization established by a foreign investor for the implementation of an investment project is not necessarily equal to the investment capital of the investment project. Economic organizations established by foreign investors shall contribute capital and mobilize other capital sources for the implementation of investment projects according to the schedule specified in the Investment Registration Certificate.

Above is the content of KALF’s advice on Procedures for establishment of economic organizations of foreign investors and related procedures. All of our above advice opinions are based on applicable legal provisions. If you have any questions or requests about legal issues, please contact us for timely answers.