Regulations on current forms of investment

In the context of Vietnam’s economy increasingly integrating into the global market, investment forms have become more diverse and flexible, meeting the development needs of both domestic and international investors. The choice of a suitable investment form not only determines business efficiency but also directly affects the legal rights and obligations of enterprises. This article by NPLaw provides an overview and detailed analysis of current legal regulations on investment forms in Vietnam, helping readers clearly understand the available options and corresponding legal requirements.

In the context of Vietnam’s economy increasingly integrating into the global market, investment forms have become more diverse and flexible, meeting the development needs of both domestic and international investors. The choice of a suitable investment form not only determines business efficiency but also directly affects the legal rights and obligations of enterprises. This article by NPLaw provides an overview and detailed analysis of current legal regulations on investment forms in Vietnam, helping readers clearly understand the available options and corresponding legal requirements.

I. Introduction to investment forms in the current period

1. Definition of investment form

Investment is the process by which individuals or organizations use resources such as capital, labor, intellectual capacity, and time to carry out activities aimed at generating profit or economic value in the future. This entails the willingness to forgo certain present resources in pursuit of long-term benefits.

In that process, the investment form is the method chosen by investors to implement investment activities in a country or a specific sector. This is not only a strategic decision but also a legal basis that determines the rights, obligations, and scope of operations of investors throughout the project.

2. Examples of issues related to investment forms in practice

For example: Samsung opted for the 100% foreign-invested enterprise (Greenfield) model to build its electronic factories in Bac Ninh and Thai Nguyen. With this form, Samsung retained full control over technology, management, and profits but also bore high costs, operational risks, and legal responsibilities in Vietnam.

Meanwhile, projects under the Joint Venture model or Business Cooperation Contract (BCC) are more suitable when:

Investors wish to share risks and take advantage of the local market.
For instance, investments in wind power or software, where businesses want to maintain flexible control without establishing a new legal entity.

Thus, identifying the correct investment form helps optimize benefits, minimize risks, and avoid unnecessary legal consequences.

3. Forms of investment recognized by Vietnamese law

According to Article 21 of the Law on Investment 2020, current Vietnamese law recognizes and allows investors to implement the following forms of investment:

Establishment of new economic organizations: such as limited liability companies, joint-stock companies, joint ventures, etc.
Capital contribution, purchase of shares, or equity interests: in enterprises operating in Vietnam.
Implementation of investment projects: either directly or indirectly, with or without establishing an economic organization.
Investment through Business Cooperation Contracts (BCC): cooperation between parties without forming a new legal entity.
Other investment forms or types of economic organizations: as prescribed by the Government depending on each stage and development policy.

Accordingly, depending on the scale, objectives, and sector of investment, investors may select the most appropriate form to ensure legal compliance, efficient management, and business effectiveness.

II. Legal regulations relating to investment forms

1. Main regulations to note

When selecting an investment form in Vietnam, investors should pay attention to:

Compliance with law: The investment form must be recognized under Article 21 of the Law on Investment 2020.
Sectoral suitability: Certain business sectors are conditional under Appendix IV of the Law on Investment 2020 (as amended in 2025).
Proper investment procedures: Foreign investors must register projects and obtain an Investment Registration Certificate if required under Article 37 of the Law on Investment 2020 before commencing operations.
Capital contribution and shareholding rules: Ensure compliance with ownership ratios, transfer conditions, and tax obligations.

Understanding these regulations enables lawful investment, minimizes risks, and enhances operational efficiency.

2. Conditions for applying investment forms

A project may only adopt a particular investment form if it meets the following conditions:

Compliance with current laws.
Alignment with approved planning and development strategies.
Suitability for the nature, scale, and capital recovery capacity of the project.
Availability of sufficient resources.
Meeting criteria for specific investment forms (e.g., PPP).
Approval by competent authorities.

In short, the correct application of investment forms ensures not only effective project implementation but also legal compliance, efficient use of resources, and alignment with broader development goals.

3. Measures for handling violations of investment forms

When organizations or individuals violate regulations on investment forms, depending on the severity, they may be subject to one or more of the following measures:

Administrative sanctions: Monetary fines for violations such as illegal investments, failure to comply with registered content, or procedural breaches under Decree 122/2021/ND-CP. In addition, investors may be required to remedy consequences, such as adjusting the investment form or project documentation in accordance with the law.
Criminal liability: In serious cases causing significant damage or involving fraud, appropriation of assets (Article 174 of the Penal Code 2015) or abuse of trust to appropriate property (Article 175 of the Penal Code 2015).

Strict handling of investment form violations aims to ensure legal compliance, prevent risks, and safeguard the interests of the State, investors, and the community.

III. Questions on investment forms

1. What procedures are required if investors want to change their investment form?

When investors wish to change their investment form (e.g., from establishing an economic organization to capital contribution, or from direct investment to PPP), they must undertake the following steps:

Step 1: Submit a written request for adjustment to the investment registration authority (e.g., Department of Planning and Investment or Management Board of industrial zones), specifying reasons, details, and the new investment form.
Step 2: Update or amend the Investment Registration Certificate (if applicable), as stipulated in Article 41 of the Law on Investment 2020.
Step 3: Obtain appraisal and approval from competent authorities if the change alters the investment policy (for projects requiring such approval).
Step 4: Complete additional investment procedures corresponding to the new form (e.g., feasibility study report if converting to PPP).

Thus, changes must be registered and approved before implementation. Investors should prepare complete documentation and consult the investment registration authority to avoid errors.

2. What if an investment form is not yet regulated by law?

If the intended investment form is not clearly regulated by law, investors may:

Convert to a lawful existing form: Choose from legally recognized forms under the Law on Investment 2020.
Submit a proposal to authorities: Clearly outline investment objectives and implementation methods, requesting approval under special or pilot mechanisms (if supported by legal grounds).

In all cases, investors should not arbitrarily implement unregulated investment forms, but rather comply with existing regulations or seek official approval.

3. How should investors select an appropriate investment form when multiple options are available?

Investors should base their choice on:

Legal framework: Must be legally permissible and consistent with the investment sector.
Nature and scale of the project: Large-scale or complex projects requiring significant capital may be better suited to PPP or establishing a new entity.
Financial capacity and expertise: The form should match the investor’s resources, experience, and risk tolerance.
Capital recovery and benefit-sharing: Select forms that ensure financial efficiency, equitable risk-sharing, and stable profitability.

Investors should evaluate these factors comprehensively and, if necessary, seek legal or official consultation before deciding.

4. Does the transfer of rights under investment forms follow specific procedures?

Transfers of investment rights must comply with applicable laws. Depending on the form, investors may be required to:

Notify or register with authorities,
Amend the Investment Registration Certificate,
Comply with holding period requirements (notably in PPP projects).

For foreign investors, transfers are also subject to market access conditions and, in some cases, prior approval from competent authorities.

IV. Should investors seek legal counsel for advice on investment forms?

Engaging a lawyer is highly recommended for investors seeking to choose appropriate investment forms, ensure legal compliance, and minimize risks. Lawyers can analyze suitable options based on objectives, scale, and capacity, assist in preparing documentation, handle legal procedures, and resolve arising issues during investment.

These are the legal insights from NPLaw regarding investment forms. If you have further questions or require tailored advice, please contact NPLaw directly.