In Vietnam, the main legislation system regulating investment activities is the Law on Investment and the Law on Enterprises passed by the National Assembly on 29 November 2005 and shall be of full force and effect as of 1 July 2006.
1. Interpretation of terms
Direct investment means a form of investment whereby the investor invests its invested capital and participate in the management of investment activities.
Indirect investment means a form of investment by way of the purchase of shares, share certificates, bonds, other valuable papers or a securities investment fund and by way of intermediary financial institutions and whereby the investors does not participate directly in the management of the investment activity.
2. Forms of investment
2.1. Forms of direct investment
- To establish economic organizations in the form of 100% capital of domestic investors or 100% capital of foreign investors.
- To establish joint venture economic organizations between domestic and foreign investors.
- To invest in the contractual forms of BCC; BO; BTO and BT.
- To invest in business development.
- To purchase share or to contribute capital in order to participate in the management of investment activity.
- To invest in the carying out of a merger and acquisition of an enterprise.
2.1.1. Investments to enable establishment of economic organizations
- Enterprises organized and operating pursuant to the Law on Enterprises;
- Credit institutions, insurance enterprises, investment fund and other financial organization pursuant to various laws;
- Medical services, educational, scientific, cultural, sports and other services establishments which conduct investment activities for profit-making purposes;
- Other economic organizations in accordance with laws.
2.1.2. Investment in accordance with contract
- An investor shall be permitted to sign a BCC contract in order to cooperate in the production and to share profits or to share products and other forms of business co-operation.
- An investor shall be permitted to sign a BOT, BTO and BT contracts with the competent State bodies in order to implement projects for new construction, expansion, modernization and operation of infrastructure projects in the sector of traffic, electricity production and business, water supply or drainage, waste treatment and other sectors as stipulated by the Prime Minister of the Government.
2.1.3. Investment in business development
- Expanding scale, increasing output capacity and business capability.
- Renovating technology, improving product quality and reducing environmental pollution.
2.1.4. Capital contribution, purchase of shareholding, merger and acquisition
- Investors shall be permitted to contribute capital to and to purchase shareholding in companies and branches operating in Vietnam.
- Investors shall be permitted to merge and acquire companies and branches.
2.2. Indirect investment
- Purchase of shareholding, shares, bonds and other valuable papers;
- By way of securities investment funds;
- By way of other intermediary financial institutions.
3. Establishment of economic organizations and implementation of investment projects
a) Foreign investors investing in Vietnam for the first time must have an investment project and shall conduct investment procedures in order to be issued with an Investment Certificate in accordance with the Law on Investment. The Investment Certificate shall act concurrently as the business registration certificate.
b) With respect to foreign investors issued with an Investment Certificate in Vietnam:
- If they have a new investment project not involving the establishment of a new legal entity, they shall conduct investment procedures in order to be issued with an Investment Certificate in accordance with the provisions of the Law on Investment.
- If they have a new investment project associated with the establishment of a new legal entity, they shall conduct investment procedures in order to be issued with an Investment Certificate. The Investment Certificate shall act concurrently as the business registration certificate.
4. Types of Enterprises stipulated in the Law on Enterprises
- Limited Liability Company:
- One Member Limited Liability Company
- Limited Liability Company with more than one member
- Shareholding Company
- Sole Proprietorship
- Corporate Group:
- Parent company and subsidiaries
- Economic group
- Other forms
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