As a result of the growing interest from foreign investors, new opportunities have opened up for domestic businesses. Consequently, converting into a foreign-invested company brings many advantages. Specifically, these include access to abundant capital, advanced technology, and international management experience. Let me know if you’d like a more formal or more casual tone. Enterprises can also expand partnerships and pursue sustainable development. DNP Viet Nam Law Firm presents an overview of the process and key considerations when undertaking this conversion.
1. Relevant Definitions
Legal Basis: Clauses 19 and 22, Article 3 of the 2020 Investment Law
A foreign investor is an individual holding foreign nationality or an organization established under foreign laws investing in Vietnam.
A foreign-invested economic organization is an entity that includes foreign investors as members or shareholders.
2. Conditions for Capital Contribution by Foreign Investors
2.1. Investment in Permitted Business Sectors
Legal Basis: Articles 6 and 9 of the 2020 Investment Law; Section B, Appendix I of Decree 31/2021/ND-CP
Conditional sectors include finance, banking, telecommunications, real estate, education, and healthcare. Foreign investors must comply with specific ownership ratios and conditions.
Restricted or prohibited sectors include defense, security, press, and media. Investors must carefully review these before investing.
2.2. Compliance with Ownership Ratios
Legal Basis: Clause 10, Article 17 of Decree 31/2021/ND-CP
Firstly, the total ownership by foreign investors must not exceed the limits set forth under international treaties.
Moreover, even if the investors share the same nationality, their combined ownership must still comply with the applicable treaty provisions.
Specifically, for public companies, the ownership limit is capped at 50%, as stipulated in Article 139 of Decree 155/2020/ND-CP.
In contrast, in the case of securities companies or investment funds, foreign ownership can reach up to 100%, according to Article 77 of the 2019 Securities Law.
Finally, if the company operates in multiple business sectors, the lowest applicable sectoral limit shall prevail.
2.3. Conversion Scenarios
Partial capital transfer: The Vietnamese company retains shares and becomes a foreign-invested enterprise.
Full capital transfer: The company is entirely transferred to foreign investors and becomes 100% foreign-owned.
3. Implementation Procedures for Converting into a Foreign-Invested Company
Legal Basis: 2020 Investment Law, 2020 Enterprise Law, Decree 01/2021/ND-CP
3.1. Procedures for Capital Contribution, Share Purchase, or Equity Acquisition
Required Documents:
- First, the investor provides a power of attorney to authorize the transaction.
- Next, the investor submits the registration document for capital contribution, share purchase, or equity acquisition.
- Then, the parties sign a memorandum of understanding outlining the terms of the transfer.
- After that, the individual investor includes a certified and translated copy of their passport.
- Meanwhile, organizational investors prepare a certified translation or consular legalized copy of their business license.
- Finally, the authorized person presents a power of attorney to submit all required documents on behalf of the investor.
Process:
– First, submit the dossier to the Business Registration Office where the company is headquartered.
– Then, within 15–20 working days, the competent authority will issue a notice confirming the company’s eligibility.
3.2. Procedures for Converting into a Foreign-Invested Company
Required Documents:
- Company charter and enterprise registration request;
- Shareholder list, meeting minutes, and decision on changes;
- Share transfer contract and notice of change in registration details;
- Confirmation of investment eligibility;
- Copies of documents for foreign and Vietnamese investors (if any);
- Power of attorney (if any).
Process:
– Submit documents to the Business Registration Office or via the National Business Registration Portal.
– If valid, the new business registration certificate will be issued within five working days.
4. Post-Conversion Requirements
4.1. Update the Enterprise Registration Certificate
The company must update the certificate to reflect the foreign ownership.
4.2. Register for an Investment Certificate
Depending on the business line, the company must adjust the investment project with the Department of Planning and Investment or the Industrial Zone Management Board.
4.3. Fulfill Tax Obligations
– Update enterprise information with the tax authority.
– Register tax identification numbers for foreign investors.
4.4. Open an Investment Capital Account (if applicable)
FDI enterprises must open a DICA account to receive capital and conduct legal transactions.
4.5. Adjust Organizational and Governance Structure
The company must revise its charter and management system to align with investor requirements.
4.6. Remit Profits Abroad
Enterprises must complete tax obligations before transferring profits overseas.
5. Advantages and limitations of converting a Vietnamese company into a foreign-invested enterprise
| Advantage | Limit |
| – Promote technological innovation and process improvement. – Expand partnerships, markets, and global supply chains. – Improve market access with the help of local knowledge from foreign investors. | – Must comply with strict legal procedures and sectoral conditions. – Communication and management challenges due to cultural and language differences. – Financial burdens from higher capital requirements. |
Converting a Vietnamese company into a foreign-invested enterprise is a strategic move. In particular, it allows businesses to leverage international resources, expand their operations, and enhance their market competitiveness. When implemented correctly, this transformation can significantly improve operational efficiency while enabling access to global markets. Therefore, it is essential for businesses to approach the process with careful planning and legal precision. To support this, DNP Viet Nam Law Firm is fully committed to accompanying companies throughout every stage of the transition. Specifically, we offer in-depth legal consultation and practical guidance to ensure compliance with Vietnamese regulations. Ultimately, our goal is to help foreign-invested enterprises not only meet legal requirements but also thrive sustainably in the Vietnamese business environme
DNP VIET NAM LAW FIRM
Contact:
🏢 Address: 5th Floor, 52 Nguyen Thi Nhung Street, Van Phuc Estate, Hiep Binh Phuoc Ward, Thu Duc City, Ho Chi Minh City, Viet Nam.
📩 Email: info@dnp-law.com.
📞 Hotline: 0987 290 273 (Đinh Văn Tuấn Lawyer).
Website: https://www.dnp-law.com/
