Process of investing abroad for projects not requiring approval for investment policy

The Investment Law 2020 not only allows investors to invest in Vietnam from abroad but also enables investors to invest from Vietnam to foreign countries. Accordingly, investors need to pay attention to several issues related to foreign investment as follows:

1. The subjects investing abroad:

Article 68 of Decree 31/2021/ND-CP defines the entities that can invest abroad as:

• Enterprises, cooperatives, cooperative unions, credit institutions, business households established and operating in accordance with the laws of Vietnam;

• Individuals who are Vietnamese citizens, except for those who do not have the right to establish and manage businesses in Vietnam according to the provisions of the Enterprise Law, such as officials, civil servants, public employees, etc.;
• Other organizations that conduct investment and business according to the laws of Vietnam.

2. Forms of foreign investment:

Article 52 of the Investment Law 2020 specifies the forms of foreign investment, including:

a. Establishment of an economic organization according to the regulations of the host country

This is a form of investment in which the investor establishes a new economic organization abroad. This organization could be a subsidiary, branch, or representative office. In this investment form, the investor may either establish a new economic entity abroad independently or cooperate with foreign partners to establish a new economic organization.

b. Investment in the form of contracts abroad

This is a form of investment where the investor signs a business cooperation contract with a foreign partner to implement a specific investment project. The investor will negotiate and sign a business cooperation contract with the foreign partner, and then fulfill the obligations under the contract and share profits and risks as agreed. This form requires the investor to submit the agreement, contract with the foreign partner regarding the investment, or equivalent documents along with documents on the legal status of the foreign partner as stipulated in Article 74.1 of Decree 31/2021/ND-CP.

c. Contributing capital, purchasing shares, or stakes in foreign economic organizations to participate in management

This is a form of investment where the investor contributes capital, buys shares, or acquires stakes in an already established foreign business to participate in managing that economic organization. The investor will find an established foreign organization and then sign an agreement for capital contribution/share transfer/stake transfer to carry out foreign investment procedures.

Notes:

• This form requires the investor to contribute capital, purchase shares, or acquire stakes in the foreign economic organization to participate in its management. Therefore, the investor’s shareholding ratio must be large enough to have management rights over the organization. The determination of the shareholding ratio to have management rights is according to the charter of the foreign economic organization and the laws of the host country.
• During the process of applying for the Foreign Investment Registration Certificate, the investor must submit an agreement, contract, or other documents that define the capital contribution, share purchase, or stake acquisition along with legal documents of the foreign organization, as per the provisions in Article 74.2 of Decree 31/2021/ND-CP

d. Buying and selling securities, other financial instruments, or investing through securities investment funds, other financial intermediary institutions abroad

This is an indirect investment form in the foreign stock market through buying and selling stocks, bonds, or fund certificates.

e. Other forms according to the regulations of the host country

This is a flexible investment form that allows the investor to carry out investment activities according to specific regulations of the host country, in addition to the traditional investment forms specified in the 2020 Investment Law. This form requires the investor to submit documents that define the investment form according to the laws of the receiving country or territory as stipulated in Article 74.3 of Decree 31/2021/ND-CP..

3. Procedure for applying for foreign investment registration certificate:

1. Step 1: Online declaration and submission of documents. The investor declares the information of the foreign investment registration certificate application on the National Investment Information System and submits three sets of documents (including one original set) to the Ministry of Planning and Investment within 15 days;
2. Step 2: The Ministry of Planning and Investment reviews the validity of the application. If the application is not valid or needs clarification, the Ministry of Planning and Investment will notify the investor within 5 working days of receiving the application;
3. Step 3: The Ministry of Planning and Investment seeks written opinions from relevant authorities on the investor’s project.
4. Step 4: Within 15 days from receiving the valid application, the Ministry of Planning and Investment will issue the Foreign Investment Registration Certificate.

Above are some basic contents related to the process of investment from Vietnam abroad.

Related articles:

1/ Some considerations when investing to establish companies or branches abroad

2/ Some notes regarding cooperation agreements for establishing a business by Vietnamese investors abroad

3/ Outbound investment activities of foreign-invested enterprises in Vietnam

4/ Legal regulations and investment opportunities in Japan

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