INVESTMENT METHODS IN VIETNAM

1. Legal basis

• Law on investment 2020

2. What is investment?

Investment is an activity that uses present resources (such as finance, material, labor, intellect, time, etc.), to achieve greater profits and economic benefits in the future than those spent.

3. Investment methods In Vietnam
   1. Investment in the establishment of economic organizations

• Economic organizations must meet conditions and carry out investment procedures according to regulations for foreign investors when investing in establishing economic organizations; buying capital, purchasing shares, contributing capital of economic organizations; Investment under BCC contract falls into one of the following cases:

1. Over 50% of its charter capital is held by a foreign investor(s) or, in case of a partnership, the majority of its general partners are foreigners
2. Over 50% of its charter capital is held by a business organization(s) mentioned in Point a of this Clause
3. Over 50% of its charter capital is held by a foreign investor(s) and a business organization(s) mentioned in Point a of this Clause.

• Business organizations do not meet aforementioned conditions shall follow investment procedures applied to domestic investors when establishing a business organization, when making investment by contributing capital, purchasing shares or purchasing stakes of a business organization or when making investment under a business cooperation contract.
• If a foreign-invested business organization that is established in Vietnam has a new investment project, procedures for executing such investment project shall be followed without having to establish a new business organization.
  2. Investment under the forms of capital contribution or purchase of shares or stakes

• A foreign investor may contribute capital to a business organization in the following forms:

1. Purchase of shares of joint-stock companies through the initial public or additional issuance;
2. Contribution of capital to limited liability companies and partnerships;

• A foreign investor may purchase shares or stakes of a business organization in the following forms

1. Purchase of shares in a joint-stock company from such company or its shareholders;
2. Purchase of stakes of members of a limited liability company to become a member of such limited liability company;
3. Purchase of stakes of a capital contributing member of a partnership to become a capital contributing member of such partnership;
4. Purchase of stakes of members of other economic entities
   3. Investment under PPP contract

PPP project contract means a written agreement between a contracting authority and a PPP project investor or enterprise on the State's concession to implement, manage, and operate infrastructure projects and provide public services.

1. 4. Investment under  BCC contract

“Business Cooperation Contract” means a contract between investors for business cooperation and distribution of profits or products without establishment of a business organization

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For more information, please contact:

Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

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Attention: This legal update is not an advice and should not be treated as such.