Forms of foreign investment under Vietnamese Law

by QuynhHuong

Hence the steady movement of the global economy, attracting foreign investment has long been the key part of Vietnam’s external economic affairs. Acknowledging the importance of foreign investment, the Vietnamese Government has put quite an effort into boosting international economic integration and constantly making changes to attract foreign investment. Then, what exactly are the forms of foreign investment under Vietnamese Law? Let’s find out in this article.

  • 2020 Investment Law
  • Decree 118/2015/ND-CP
  • Decree 15/2015/ND-CP

Forms of foreign investment

Accordingly, the provisions of Investment law, foreign investors’ investment in Vietnam can be implemented in one of the following forms:

  • Establishment of an economic organization
  • Capital contribution, purchase of shares, purchase of contributed capital
  • Investment in the form of PPP contract
  • Investment under BCC contract

In particular, for each form of investment, the Investment Law 2020 and other guiding documents have specific provisions as follows:

Establishment of an economic organization

Firstly, forms of establishment of an economic organization include two methods, namely:

  • Establishment of a company with 100% capital from foreign investors,
  • Establishment of a company between domestic investors or the domestic government and foreign investors

However, before establishing an economic organization, a foreign investor must have an investment project; carry out procedures for issuance of an investment registration certificate. Besides, they must satisfy the conditions on the ratio of ownership of charter capital according to provisions of the law on securities, on equitization, transformation of state-owned enterprises, conditions under the provisions of international treaties; which Vietnam is a contracting party.

Accordingly, in Article 44 of Decree No. 118/2015/ND-CP, foreign investors may own unlimited charter capital in economic organizations, except for the following cases:

  • The percentage of foreign investors’ ownership in listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities
  • Foreign investment in state-owned enterprises that are equitized or converted to other forms of ownership shall comply with the law on equitization and transformation of state-owned enterprises
  • Ownership ratio of investors Foreigners not specified in the above provisions shall comply with other provisions of relevant laws and treaties; which the Socialist Republic of Vietnam is a signatory.

Capital contribution, purchase of shares, purchase of contributed capital

Contribution of capital, purchase of shares or capital contribution to economic organizations is a form of indirect investment by foreign investors. In fact, this form of investment is through the purchase of stocks, bonds, and other valuable papers where investors are not directly involved in the management of investment activities. When making this form of investment, investors need to comply with the forms and procedures for capital contribution, share purchase, and capital contribution.

Specifically, this investment forms include:

  • Buy shares issued for the first time or additionally issued shares of a joint-stock company
  • Contribute capital to limited liability companies and partnerships
  • Buy shares of a joint stock company from the company or shareholders
  • Buy the capital contribution of members of a limited liability company to become a member of a limited liability company
  • Purchase capital contributions of capital-contributing members in a partnership to become a capital-contributing member of a partnership
  • In addition, foreign investors can purchase capital contributions from members of other economic organizations.

At the same time, the contribution of capital, purchase of shares or contributed capital by foreign investors in the forms mentioned above must satisfy the investment conditions applicable to foreign investors; as in the case of investment in establishing an investment group. economic organization.

Investment in the form of PPP contract

PPP contract is an abbreviation of an investment contract in the form of corporate partnership thus Clause 16 Article 3 of the 2020 Public-private partnership investment law. Basically, this is the type of contract signed between a competent state agency and an investor, project enterprise. When investing in this form, investors sign contracts with competent state agencies and Vietnamese investors to implement, manage and operate the project.

Accordingly, there are 7 types of contracts in the form of public-private partnership, including:

  • (BOT) Build-Operate-Transfer Contract
  • (BTO) Build-Transfer-Operate Contract
  • (BT) Build-Transfer Contract
  • (BOO) Build – Own – Operate Contract
  • (BTL) Build – Transfer – Lease Contract
  • (BTL) Build – Lease – Transfer Contract
  • (O&M) Business-Management Contract

Investment under BCC contract

Lastly, we got BCC. BCC is an investment form signed between investors for business cooperation, profit sharing, and product distribution without establishing a new legal entity. This form of investment helps investors to conduct investment activities quickly without spending time and money to establish and manage a new legal entity.

Thank you for paying attention. Hope this article “Forms of foreign investment under Vietnamese Law” could help you solve your problem. If you have any questions, please contact Lawyer X for quick and best legal services: 0833102102.

What is the definition of foreign investment?

Foreign investment means that organizations and individuals of one country bring capital in different forms into another country to conduct business activities for profit. Foreign investment is made in the form of direct investment or indirect investment.

Can foreign investors establish a company with 100% foreign investment capital in Vietnam?

Yes, they can. According to the provision of law, foreign investors can establish a company with 100% foreign investment capital in Vietnam. Still, it will vary depending on the business line.

What are the business lines that Foreign Capital Companies can operate in?

The provisions of the 2020 Enterprise Law and WTO Law allow enterprises to freely conduct business in industries, as long as the regulation does not prohibit.

5/5 - (1 vote)

You may also like

Leave a Comment