What foreign investors should consider regarding the form and scope of a corporate entity

Continuing our series of articles on investment registration procedures in Vietnam, herein we discuss what foreign investors should consider regarding the form and scope of a corporate entity

The formation of a corporate entity shall comply with the provisions of the Law on Enterprise and other regulations corresponding to each type of business. Accordingly, foreign investors can choose the main forms of entities including:  limited company, joint stock company, partnership, and private entity.

Investors should consider the following elements before making a decision on the type and scope of investment:

  • Minimum charter capital

The law requires a minimum amount of charter capital, or a certain percentage of charter capital as part of the total investment capital, when making investments in certain business lines such as banking, real estate, finance institution, telecommunication network service, film production, airline service, auditing, and the energy sector;

  • Industry, occupation and market access conditions

From time to time the Vietnam Government promulgates a list of industries and occupations that are not open to the market, and a list of industries and occupations with conditional market access. Foreign investors may be restricted to investing in some of these industries.

  • Deposits

According to the provisions of Investment Law No. 61/2020/QH14 (Law on Investment 2020), investors need to deposit or have a bank guarantee on the escrow obligation to implement an investment project upon request from the investor. The country allocates, leases, or permits the change of land use purpose, except for some cases specified in Clause 1, Article 43 of the Law on Investment 2020.

For further information,  please contact us at tham@ttvnlegal.com.vn

Note: This article is for informational purposes only and it is not a legal advice. The content of the article represents its own of TTVN Legal, it subject to change without prior notice.