Foreign-Owned Company Formation in 2026: Latest Procedures

In the context of global economic integration, Vietnam is becoming an ideal “landing spot” for FDI capital flows thanks to political stability and outstanding growth potential. However, the legal corridor for investment in Vietnam is quite complex and frequently changes. To realize business goals, investors need to clearly understand the process of establishing a foreign-owned company as accurately as possible. The article below will provide a detailed “roadmap” from conditions and documents to implementation procedures, helping you start smoothly.

1. Overview: What is Establishing a Foreign-Owned Company and Investment Forms

1.1. Concept of foreign-invested company under the Law on Investment 2020

The concept of establishing a foreign company, or more precisely, establishing an economic organization with foreign investment capital, is clearly defined in the Law on Investment 2020. Accordingly, this is an enterprise established and operating under Vietnamese law, with foreign investors as members or shareholders. The foreign ownership ratio can range from 1% to 100% of the charter capital, depending on Vietnam’s market opening commitments (WTO, CPTPP…) for each specific industry.

1.2. Distinguishing between establishing a new economic organization and capital contribution/share purchase

When wishing to establish an enterprise with foreign elements, investors have two main choices:

• Direct Investment: Establishing a new legal entity from scratch. This form requires a more complex process due to the requirement to apply for an Investment Registration Certificate (IRC).
• M&A (Mergers and Acquisitions): Investing by contributing capital, purchasing shares, or buying capital contributions in an existing Vietnamese enterprise. This form mainly focuses on capital contribution registration procedures.

1.3. Why do investors choose to establish a company in Vietnam?

The wave of establishing FDI companies in Vietnam has increased strongly due to several factors:

• Strategic location: Vietnam has a strategic geographical position in Southeast Asia and a long coastline favorable for logistics.
• Competitive costs: Labor and operating costs remain competitive compared to the region.
• Tax incentives: The Vietnamese Government is applying many tax incentives (CIT exemption, reduction) for high-tech and supporting industry projects. These are the motivations making the establishment of a foreign company a strategic move for multinational corporations.

1.4. Common types of enterprises for foreign investors

When proceeding with business establishment, foreign investors usually choose two main types:

• Limited Liability Company (LLC): (Single-member or multi-member). More preferred due to a lean management structure, quick decision-making process, and limited liability regime within the scope of contributed capital.
• Joint Stock Company (JSC): Suitable for large-scale projects with high capital mobilization needs and plans to list on the stock exchange in the future.

1.5. Current legal basis governing foreign investment activities

All activities related to companies with foreign investment capital are currently directly governed by the Law on Investment 2020, Law on Enterprises 2020, Decree 31/2021/ND-CP guiding the implementation of the Law on Investment, and international trade commitment schedules to which Vietnam is a member. Mastering these documents is a prerequisite for the company establishment application file to be approved, avoiding application file return due to violations of regulations on prohibited or restricted investment sectors.

2. Conditions for Establishing a Foreign-Owned Company

2.1. Conditions regarding nationality and legal status of the investor

To establish a foreign company, the investor (individual or organization) must have nationality belonging to countries/territories that are WTO members or have signed bilateral investment treaties with Vietnam.

• Individuals: Must have a valid Passport.
• Organizations: Must have a Business License/Certificate of Incorporation in the host country.
• Important Note: All these foreign documents must be “Consularly Legalized” and notarized translated into Vietnamese to have legal validity in Vietnam.

2.2. Market access conditions and restricted sectors list

This is the biggest barrier when establishing an FDI enterprise. Investors must check if the intended business line belongs to the “List of business lines with restricted market access for foreign investors.”

• If the sector is not yet committed to opening, investors must seek approval from specialized Ministries, a process that consumes considerable time.
• Conversely, if the sector is fully opened, procedures will be faster.
• Note: Some sensitive sectors like security services, journalism, or fishing are still prohibited or strictly restrict foreign capital.

2.3. Strict regulations on financial capacity and investment capital

Vietnamese law does not stipulate a general minimum capital level for establishing a foreign company (except for specific sectors like real estate, education, banking…). However, the investment registration agency will appraise the “feasibility” of the project through the registered capital. Investment capital must be commensurate with the project scale. Investors must prove financial capacity through:

• Bank balance confirmation (for individuals).
• Audited financial statements for the last 2 years (for organizations). This is evidence ensuring the project is not a “ghost project.”

2.4. Legal requirements for headquarters and project location

A foreign-invested company must have a legal project implementation location in Vietnam. The application file needs to include a notarized Lease Contract for house/office/factory accompanied by the lessor’s Land Use Right Certificate (Red Book).

• Note: Apartments designated for residential purposes and collective housing are not allowed to be used as company headquarters. For manufacturing projects, investors should lease land or factories in Industrial Zones or Export Processing Zones to ensure compliance with planning and ease of obtaining environmental and fire safety permits.

2.5. Specific conditions for manufacturing and technology sectors

If the company establishment project involves manufacturing or using technology, investors must explain the technology process, machinery, equipment, and environmental impact. For projects using technology on the list of restricted transfers, the application file must be sent for opinions from the Department of Science and Technology. Investors need to commit not to use outdated technology causing environmental pollution. This aims to ensure the Vietnamese Government’s goal of attracting high-quality, green, and sustainable investment.

3. Detailed Process and Documents for Establishing a Foreign-Owned Company

3.1. Phase 1: Application for Investment Registration Certificate (IRC)

This is the fundamental difference compared to domestic enterprises. Investors submit 01 set of application documents to the Department of Planning and Investment (or Management Board of Industrial Zones/EPZs).

• Application file includes: Request for project implementation, legal documents of the investor, financial capacity report, investment project proposal (scale, capital, objectives, location, labor…), and technology explanation (if any).
• Processing time: 15 working days by law if the application file is valid.
• Result: Investment Registration Certificate (IRC).

3.2. Phase 2: Procedures for Enterprise Registration Certificate (ERC)

After obtaining the IRC, investors proceed to submit the business establishment application file at the Business Registration Office. This step is similar to establishing a Vietnamese company.

• Application file includes: Application for business registration, Company Charter, List of members/shareholders, Copy of issued IRC.
• Processing time: About 03-05 working days.
• Result: Enterprise Registration Certificate (ERC), which also serves as the company’s tax code.

3.3. Phase 3: Seal engraving, opening capital account, and information disclosure

Immediately upon receiving the ERC, the enterprise engraves the legal seal (enterprises self-manage the seal sample under the Law on Enterprises 2020) and discloses business registration information on the National Portal. The next extremely important step is opening a “Direct Investment Capital Account” (DICA) at a bank. Investors must transfer contributed capital from abroad into this account within 90 days from the date of ERC issuance. Transferring money to the wrong account will lead to capital contribution not being recognized and difficulties in repatriating profits later.

3.4. Phase 4: Applying for sub-licenses (Business License) if any

For foreign-invested companies operating in sectors like retail distribution, travel services, education, healthcare…, after establishment, they must apply for an additional Business License or Certificate of Eligibility for Operation (often called Sub-license).

• Example: FDI enterprises wanting to retail goods must apply for a Business License at the Department of Industry and Trade. This is usually the longest and most complex phase, requiring enterprises to fully meet strict conditions regarding facilities and personnel.

3.5. Estimated time and costs for the entire process

The total time to complete the procedure for establishing a foreign company typically lasts from 25 to 45 working days, depending on the complexity of the business line and the completeness of the application file. Regarding costs, besides state fees, investors need to budget for translation, consular legalization, location rental, and legal service fees. Accurately estimating time and costs helps investors be proactive in their Go-to-market strategy.

4. Why Use Professional All-Inclusive Company Formation Services?

4.1. Solving the complex problem of legal administrative procedures

Vietnam’s legal system has many overlapping by-law documents. Self-implementing foreign company establishment procedures often confuses investors, leading to errors in drafting explanation application documents and multiple amendments. A professional company establishment service provider with a team of knowledgeable lawyers will help you “resolve” these barriers, ensuring accurate application documents from the first submission.

4.2. Optimizing time and travel costs for investors

Instead of flying back and forth to Vietnam multiple times to sign, submit application documents, and explain to state agencies, authorizing a service unit helps investors save significantly on travel and accommodation costs. We will represent the investor to work with the Department of Planning and Investment, Tax authorities, Police… The modern online working process helps you track the business establishment progress remotely easily and transparently.

4.3. In-depth consulting on investment incentives and capital flows

Not stopping at obtaining licenses, reputable company establishment services bring added value through strategic consulting. We help you identify tax incentives the project may enjoy (such as CIT exemption for 2 years, 50% reduction for the next 4 years), advise on structuring charter capital and loan capital reasonably to optimize cash flow and profit repatriation later.

4.4. Comprehensive support for tax and accounting procedures post-establishment

After establishing the company, FDI enterprises face a series of compliance obligations: tax declaration, labor usage reports, periodic investment activity reports… Accounting and tax regulations for FDI enterprises are often stricter than for domestic ones. Using all-inclusive services helps you operate your business with peace of mind, avoiding unnecessary administrative penalties due to lack of understanding of local laws.

4.5. Commitment to accompany and handle arising issues

We understand that establishing a foreign company is just the beginning. During operation, the enterprise will need to adjust the Investment Certificate, change the representative, increase capital, or expand business locations. As a long-term legal partner, we commit to accompanying and supporting the resolution of all arising legal problems, helping the enterprise grow sustainably in the Vietnamese market.

Establishing a foreign company in Vietnam in 2026 opens up great opportunities but also comes with many legal challenges. Thorough preparation of application documents and understanding of the business establishment process are the keys to success. 

If you have any questions, please contact our Hotline at (028) 3820 1213 or email us at [email protected] for prompt consultation and support. With an experienced team, Service thanhlap.wacontre.com is always ready to serve customers in the most enthusiastic and efficient manner. (For Japanese customers, please contact Hotline: (050) 5534 5505).