Business investment means the investment by an investor to carry out business activities through the investment forms; prescribed by the investment law in Vietnam. Vietnam is currently becoming a fertile land to attract foreign investors in the fields of transportation, tourism… Therefore, the form of investment is an issue that many foreign investors are interested in. LSX Law firm will present the investment forms that foreign individuals can make when investing in Vietnam as follows.
Invesment law 2014
Enterprise Law 2020
Foreign investment in Vietnam and classification of forms of foreign investment in Vietnam
Business investment means that an investor invests capital to conduct business activities through the establishment of economic organizations. The purchase of shares or capital contributions from economic organizations investment under contracts or real estate investment; current investment project.
Accordingly the 2014 Investment Law, there are four forms of foreign investment in Vietnam: investment in establishing economic organizations, Investment in the form of capital contribution, purchase of shares or capital contribution to economic organizations ,Investment in the form of BPP contract and Investment in the form of BCC contract.
Invest in the establishment of an economic organization
Forms of establishing an economic organization include two methods, such as: establishment of a company with 100% capital from foreign investors; establishment of a company between domestic investors; or the domestic government; and investors foreign investors.
Before establishing an economic organization, a foreign investor must have an investment project, carry out procedures for issuance of an investment registration certificate and must satisfy the conditions on the ratio of ownership of charter capital according to regulations, provisions of the law on securities, on equitization and transformation of state-owned enterprises and conditions under the provisions of international treaties to which Vietnam is a contracting party.
Investment for 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. 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.
Implementation of investment projects
Foreign investors can sign investment contracts under the mode of public-private partnership (PPP contract). This is an investment method made on the basis of a limited-term cooperation; between the State and private investors through the signing of PPP contracts to attract private investors to participate in the implementation of investment projects PPP.
Investment under BCC contract
Thus, investment in the form of a BCC contract is an investment form established on the basis of a contract signed between investors but without the establishment of a new legal entity whereby the rights and obligations of the parties are not organizationally bound but contractually bound by the contracting parties.
BCC contracts signed between domestic investors comply with the provisions of civil law, a BCC contract with at least one party being a foreign investor shall carry out the procedures for issuance of an Investment Registration Certificate.
Foreign investors may own unlimited charter capital in economic organizations but except for the following cases:
Firstly, the percentage of foreign investors’ ownership in listed companies, public companies, securities trading organizations and securities investment funds; accordingly the securities law
Secondly, the percentage of foreign investors’ ownership in state-owned enterprises which are equitized or converted to another form; accordingly the law on equitization; and transformation of state-owned enterprises.
Lastly, if neither of the above two cases; the foreign investor’s ownership ratio must comply with the provisions of other relevant legal documents; and international treaties to which the Socialist Republic of Vietnam is a member
Regarding the form of investment, scope of activities; Vietnamese partners participate in the implementation of investment activities and other conditions under the provisions of international conventions to which the Socialist Republic of Vietnam is a signatory.