VI With the current economic situation of our country, for many different objective reasons, Vietnam is gradually becoming a strong attraction for foreign investment. Choosing a suitable form of investment is very important in the project implementation process, helping investors to make decisions so that the project can be deployed quickly and conveniently. high efficiency. Therefore, when deciding to invest in a project, the most important job of an investor is to choose the best form of investment. Through this article, Pham Consult will introduce 5 types of investment that investors can consider choosing the right one for them.
1. Invest in the establishment of an economic organization (Article 22 Investment Law 2020)
Foreign investors have the right to choose the form of investment in the establishment of an economic organization by one of the following methods:
- Establishment of a company with 100% capital from foreign investors.
- Establishment of a company between domestic investors or the domestic government and foreign investors.
Conditions for establishing an economic organization:
- Satisfying market access conditions for foreign investors (Article 9, Investment Law)
- Satisfy the conditions on the charter capital ownership ratio as prescribed by the law on securities, the equitization and transformation of state-owned enterprises and the conditions under the international treaties to which Vietnam is a member.
- Before establishing an economic organization, a foreign investor must have an investment project and have completed the procedures for issuance of an Investment Registration Certificate.
2. Investment in capital contribution, share purchase, purchase of contributed capital (Article 23 Investment Law 2020)
This is considered a form of indirect investment by foreign investors without directly participating in the management of investment activities through the following forms:
| Contributing investment capital to
economic organizations |
Invest to buy shares, buy contributed capital
of economic organizations |
| • Contributing capital to limited companies, partnerships
• Purchase of shares issued for the first time/additional issue of a joint stock company. • Contributing capital to other economic organizations that do not fall into the above two cases. |
• Buying shares of a joint stock company from shareholders or companies;
• Purchase of capital contributions of capital contributors in a partnership; • Purchase the capital contribution of members of the limited company; • Purchase of capital contributions from other economic organizations that do not fall into the above 3 cases. |
Conditions for capital contribution, share purchase, and capital contribution purchase:
- Market access conditions for foreign investors.
- Ensuring national defense and security
- Regulations on land law on conditions for receiving land use rights, conditions for using land in islands, communes, wards, border towns, communes, wards and coastal towns.
3. Implementation of investment projects
Investor selection is conducted through one of the following methods:
- Auction of land use rights in accordance with the law on land.
- Bidding to select investors in accordance with the law on bidding.
4. Investment under BCC contract
BCC contract is a contract signed between investors without establishing a new legal entity for the purpose of business cooperation, distribution of products and profits according to current regulations without the need to establish a business organization. economic. Can be signed between:
- Domestic investors (according to Civil Code regulations)
- Signing between domestic investors and foreign investors or between foreign investors according to the procedures for issuing investment registration certificates (according to Article 38)
* For investment projects subject to approval of investment policies according to the competence of the National Assembly, the Prime Minister and the People’s Committee of the province, the investment registration agency shall issue the investment registration certificate in duration.
| Investment projects in drugs subject to the issuance of investment registration certificates | Investment projects not subject to grant of investment registration certificates |
| 5 days from the date of receiving the contractor’s written approval of the investment policy and the investor’s approval. | 15 days from the date of receiving the investor’s application for an investment registration certificate. |
* For the remaining investment projects, the investor shall be granted an investment certificate when satisfying the following conditions for an investment project in the form of a BCC contract:
- Have a location for the implementation;
- Not on the list of industries and trades banned from doing business in Vietnam, and at the same time in line with national planning, urban planning, provincial planning, regional planning and economic administrative unit planning. special (if any);
- Meeting the conditions of market access for foreign investors and the conditions of investment rate per acreage and the number of employees employed.
=> A form of investment in which the rights and obligations of the parties are not organizationally bound but are bound by the contract the parties sign. The parties to the BCC contract establish themselves a Coordination Committee to perform the contract. The functions, tasks and powers of the Coordination Committee shall be mutually agreed upon by the parties.
5. New investment forms and economic organizations according to the Government’s regulations.
PROS/CONS OF INVESTMENT FORMS
| Ưu điểm | Nhược điểm | |
| Establishing an economic organization | – Investors have legal status.
– Independent legal status with investors. – Profits and liabilities will be divided according to the proportion of capital contributed by each party. – No scale limit. => Easy to implement and ensure the rights and interests of investors. |
– Complicated procedures.
– In addition to meeting the procedures under the Investment Law, it must also meet the provisions of the Enterprise Law. |
| Invest to contribute capital, buy shares, buy contributed capital | – Save time and costs.
– Less risk. – No management or control rights. |
– Must comply with:
• Regulations of Vietnamese law on market access conditions. • Regulations of international treaties to which Vietnam is a contracting party. |
| In the form of BCC contract | – Due to not establishing a legal entity, investors are often proactive, more flexible and less dependent on partners when deciding issues of investment projects.
– Save time and money. – Limit the risk when the cooperation is not as desired, just liquidate the contract. |
– There is no tight tie between the parties.
– Limited in paperwork, difficult legal liability. – There is no legal status, so the two parties will have to choose a seal either to serve the investment project. => There are many potential risks for investors. |
LEGAL BASIS
Enterprise Law 2020, amendments and supplements in 2021.
The Investment Law 2020 takes effect from March 1, 2022.
Decree 31/2021/ND-CP takes effect from March 26, 2021.
Above is the basic content of investment forms for foreign investors. In general, Vietnam is a country with many potentials and economic potential for foreign investors with many forms and diversified investment policies. But besides, going into the legal system of Vietnam for investment, procedure is still quite complicated and cumbersome. Therefore, to be able to carry out loan registration procedures effectively, businesses need to understand the provisions of the law as well as carefully prepared documents and records.
Our company has a professional staff team with many years of experience working with domestic and foreign businesses,… Pham Consult is committed to providing high-quality services with reasonable fees, customers will be fully satisfied. You can rest assured and accompany us in carrying out loan registration procedures with the State Bank.
To understand more about loan registration as well as related issues, please contact Pham Consult – a unit specializing in providing tax consulting services, financial consulting, accounting services, preparation and salary payment. Customers can contact us via hotline: (84-28) 3930 2487 or Facebook communication channel if they need support.
