Vietnam: 05 forms of investment under the Law on Investment

Vietnam: 05 forms of investment under the Law on Investment (Image from the Internet)

1. 05 forms of investment under the Law on Investment in Vietnam

In Article 21 of the Law on Investment 2020, the investment forms are as follows:

(1) Investment in establishment of a business organization.

(2) Investment in the form of capital contribution or purchase of shares or stakes.

(3) Execution of an investment project.

(4) Investment in the form of a business cooperation contract.

(5) New forms of investment and types of business organizations prescribed by the Government's regulations.

2. Investment in establishment of a business organization in Vietnam

Article 22 of the Law on Investment 2020 stipulates investment in establishment of a business organization as follows:

- Every investor shall establish a business organization in accordance with the following regulations:

+ A domestic investor shall establish a business organization in accordance with regulations of law on enterprises and law corresponding to each type of business organization;

+ A foreign investor that establishes a business organization shall satisfy market access conditions applied to foreign investors specified in Article 9 of the Law on Investment 2020;

+ Before establishing a business organization, the foreign investor must have an investment project and follow the procedures for issuance or adjustment of an investment registration certificate, except for establishment of a small and medium-sized start-up enterprise and a  startup investment fund in accordance with regulations of the Law on Small and Medium-sized Enterprises.

- From the date on which the enterprise registration certificate or an equivalent document is issued, the business organization established by a foreign investor shall be the investor that executes the investment project set out in the investment registration certificate.

3. Investment by contributing capital, purchasing shares or purchasing capital contributions in Vietnam

Article 24 of the Law on Investment 2020 stipulates investment by contributing capital, purchasing shares or purchasing capital contributions as follows:

- Investors are entitled to contribute capital, purchase shares or purchase stakes of business organizations.

- Foreign investors making investment by contributing capital, purchasing shares and purchasing stakes of business organizations must:

+ Satisfy market access conditions applied to foreign investors as prescribed in Article 9 of the Law on Investment 2020;

+ Ensure national defense and security in accordance with the Law on Investment 2020;

+ Comply with regulations of the law on land and conditions for receipt of land use rights and conditions for use of land on islands or border or coastal communes.

5. Investment under business cooperation contracts in Vietnam

Article 27 of the Law on Investment 2020 stipulates investment under business cooperation contracts as follows:

- Business cooperation contracts signed between domestic investors shall be executed in accordance with the civil law.

- Procedures for issuance of investment registration certificates in Article 38 of this Law shall apply to business cooperation contracts signed between a domestic investor and a foreign investor, or between foreign investors.

- Parties to a business cooperation contract shall establish a coordinating board to execute the BBC. Functions, tasks and powers of the coordinating board shall be agreed upon by the parties.

6. Selecting investors to execute investment projects in Vietnam

Article 29 of the Law on Investment 2020 stipulates the selection of investors to execute investment projects as follows:

- The investor selection shall be carried out by:

+ holding land use right auction in accordance with regulations of law on land; or

+ bidding to select an investor in accordance with regulations of law on bidding; or

+ approving an investor as prescribed in Clauses 3 and 4 of this Article.

- The method of investor selection mentioned in Points a and b Clause 1 of this Article shall be adopted after the approval for investment guidelines is granted, except for the investment projects not subject to approval for investment guidelines.

- If a land use right auction is held but only one person registers for participation in the auction or the auction is unsuccessful in accordance with regulations of law on land or if bidding is conducted to select investors but only one investor registers for participation in the bidding in accordance with regulations of law on bidding, the competent authority shall carry out the procedures for approving an investor if the investor satisfies the conditions prescribed by relevant law.

- For an investment project subject to approval for its investment guidelines, the competent authority shall grant approval for both investment guidelines and investor without holding a land use right auction or bidding to select investor in the following cases:

+ The investor has the land use rights, except for the case where the State expropriates land for national defense and security purposes or for socio-economic development in the national or public interest in accordance with regulations of law on land;

+ The investor receives the agricultural land use rights, receives the agricultural land use rights as contributed capital or leases the agricultural land use rights to execute an investment project on non-agricultural production or business and the land is not subject to land expropriation by the State in accordance with regulations of law on land;

+ The investor executes the investment project in an industrial park or hi-tech zone;

+ Other cases not subject to an auction or bidding in accordance with regulations of law.

Ngoc Nhi

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