Foreign investment means the fact that organizations and individuals of one country bring capital in different forms into another country to conduct business activities looking for profits. Foreign investment is made in the form of direct investment or indirect investment. Based on the Law on Investment in 2020, there are four main types of foreign investment in Vietnam: Investment in the establishment of economic organizations; Investment in capital contribution, share purchase, capital contribution; Implementation of investment projects; Invest in the form of ACC contract.
1. . Investment in establishing an economic organization
The form of establishment of an economic organization consists of two methods:
– Establish a company with 100% foreign investment.
– Establishing a company between domestic investors or domestic and foreign investors.
With this form of investment before the establishment of an economic organization, foreign investors must have an investment registration certificate and at the same time must meet the following conditions:
- In terms of investment form, scope of operation
This form of foreign investment and the scope of activities, Vietnamese partners participate in the implementation of investment activities. And other conditions under the provisions of the International Convention to which the Socialist Republic of Vietnam is a member.
- About charter capital ownership ratio
Foreign investors may own unrestricted charter capital in economic organizations but except in the cases:
- The ownership rate of foreign investors in state-owned enterprises equitized or converted ownership in other forms in accordance with the law on equitization and conversion of state-owned enterprises.
- The ownership rate of foreign investors in listed companies and public companies, securities trading organizations and securities investment funds as prescribed in securities law.
If not in the above two cases, the ownership rate of foreign investors must comply with the provisions of other relevant legal documents. And the international treaty to which the Socialist Republic of Vietnam is a member.
2. Investment in capital contribution, share purchase, capital contribution to economic organization
Contributing capital, buying shares, contributing capital to economic organizations is a form of indirect investment by foreign investors. This form of indirect investment through the purchase of stocks, bonds, other valuable papers that investors are not directly involved in managing investment activities. When implementing this form of investment, investors need to comply with the forms and procedures for capital contribution, share purchase, capital contribution.
Foreign investors may contribute capital, buy shares and contribute capital to economic organizations in the following forms:
- Contribute capital to limited liability companies and partnerships.
- Purchase of first-time issued shares or additional issued shares of joint stock companies.
In addition, foreign organizations can contribute capital to other economic organizations in the following forms:
- Purchase of shares of the company's joint stock company or shareholders.
- Purchase the capital contribution of the member contributing capital in the partnership to become a contributing member of the partnership.
- Purchase the capital contribution of members of a limited liability company to become a member of a limited liability company.
3. Implementation of investment projects
Foreign investors can sign investment contracts in the form of public-private partnerships (PPP contracts) this is a method of foreign investment carried out on the basis of project enterprises, investors signed with competent state agencies to implement, management and operation of infrastructure projects and provision of public services.
Accordingly, there are 7 types of contracts in the form of public-private partnerships including:
- Construction – Business – Transfer (BOT)
- Construction – Transfer – Business (BTO)
- Business -Management (O&M)
- Construction – Transfer (BT)
- Construction – Ownership – Business (BOO)
- Construction – Transfer – Service Lease (BTL)
- Construction – Service Rental – Transfer (BTL).
4. Investment under BCC contract
The form of BCC contract is the form of contract signed between domestic investors and foreign investors. Either between domestic investors or among foreign investors according to the procedure of issuing investment certificates for business cooperation to divide profits and divide products without establishing economic organizations.
The parties to the BCC contract shall establish the Coordination Board for the performance of the contract, functions, tasks and powers of the Coordinating Committee which are self-agreed upon by the parties.
Thus, investment in the form of a BCC contract is a form of foreign investment established on the basis of contracts signed between investors but without the establishment of new legal entities, the rights and obligations of the parties are not organizationally binding but are bound by the contracts of the contracting parties.
Above are the 4 main types of foreign investment in Vietnam, customers can choose for themselves a suitable form to invest.
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