WHAT IS INVESTMENT FORM? INVESTMENT FORMS IN VIETNAM AT PRESENT

Since the opening of the economy, more and more foreign investors have invested in Vietnam. To attract foreign investment, our government has policies on investment incentives and guarantees, including regulations on investment forms. So, according to current law, what types of investment are there? Let's find out with OTIS LAWYERS through the article below.

Legal grounds

Law on investment 2020

What is investment form?

Investment form is the way of conducting investment activities of investors in accordance with the provisions of law.

Foreign investors can choose the form of investment in accordance with their needs and ability to conduct investment.

Foreign investment form in Vietnam

According to Law on investment 2020, foreign investor can invest in Vietnam in the following forms:

• Investment in establishing economic organizations
• Investment to contribute capital, buy shares, capital contribution
• Implementation of investment projects
• Investment under BCC contract

Invest in the establishment of an economic organization

Forms of establishing economic organizations include two methods, namely: establishment of a company with 100% capital from foreign investors; establishment of a company between domestic investors or the domestic government and foreign investors

Foreign investors want to establish economic organizations, must meet the market access conditions for foreign investors, including:

• Ownership rate of charter capital of foreign investors in economic organizations;
• Investment forms;
• Scope of investment activities;
• Investor's capacity; partners participating in investment activities;
• Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties which the Socialist Republic of Vietnam is a member.

Before establishing an economic organization, a foreign investor must have an Investment Project and carry out procedures for granting and adjusting the Investment Registration Certificate, except for the case of setting up small, medium, creative start-ups and investment funds in accordance with the law on supporting small and medium enterprises.

Investment to contribute capital, purchase shares or contributed capital.

Capital contribution, purchase of shares or contributed capital to economic organizations is a form of indirect investment of foreign investors.

According to the provisions of Clause 2, Article 24 of Law on Investment 2020, foreign investors must meet the following regulations and conditions:

• Meeting the market access conditions for foreign investors;
• Ensuring national defense and security in accordance with this Law;
• Regulations of land law on conditions for receiving land use rights, conditions for using land in islands, communes, wards, border towns; communes, wards and coastal townships.

Investors may contribute capital to economic organizations in the following forms:

• Purchase of shares issued for the first time or additionally issued by a joint-stock company;
• Contributing capital to limited, partnerships companies;
• Contributing capital to other economic organizations that are not above two cases.

Investors purchase shares or purchase contributed capital from economic organizations in the following forms:

• Purchase shares of a joint stock company from the company or shareholder;

o Purchase the contribution capitals of a member of a limited company to become a member of a limited company;

o Purchase the contribution capitals of contributors in a partnership company to become a capital contributor of a partnership company;

• Purchase of capital contributions of members of other economic organizations that are not the above 3 cases
• Meeting the market access conditions for foreign investors;
• Ensuring national defense and security in accordance with this Law;
• Land law provisions on conditions for receiving land use rights, conditions for using land in islands, communes, wards, border towns; communes, wards and coastal towns.

Implementation of investment projects

Foreign investors can invest in Vietnam in the form of investment projects. Investors can sign investment contracts under the method of Public-Private Partnership (PPP contract). This is an investment method made on the basis of a limited-term cooperation between the Government and private investors. Through the signing of PPP contracts, the Government can attract private investors to participate in the implementation of PPP investment projects.

Investment in the form of BCC contract

According to Clause 14, Article 3 of the Law on Investment 2020, “Business Cooperation Contract (hereinafter referred to as BCC contract) is a contract signed between investors for business cooperation, profit sharing, and product distribution as prescribed by law without establishing an economic organization”.

Article 27 of the Law on Investment 2020 stipulates for investment in the form of BCC contract as follows:

• BCC contracts signed between domestic investors comply with the provisions of civil law.
• The BCC contract is signed between a domestic investor and a foreign investor or between foreign investors, parties carry out the procedures for issuance of an Investment Registration Certificate in accordance with the law.
• The parties to the BCC contract establish a coordination board to perform the BCC contract. The functions, tasks and powers of the coordination board shall be agreed upon by the parties.

Above is the consulting of OTIS LAWYERS on the forms of foreign investment in accordance with the laws. We hope the article will be a useful reference for you about investment forms of foreign investors.

Investment consulting service of OTIS LAWYERS

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