Procedures for establishing foreign-invested economic organizations under the Law on investment 2025 – Key highlights
The Law on Investment 2025 officially came into effect on March 1, 2026, marking important changes to the regulatory framework governing foreign investment in Vietnam, particularly with respect to procedures for establishing foreign-invested economic organizations. One notable reform is the reordering of the sequence between enterprise establishment procedures and investment project approval procedures, thereby providing greater flexibility for investors. This article provides a detailed analysis of the process for establishing foreign-invested companies under the new provisions of the Law on Investment 2025.
1. Relevant Definitions
The Law on Investment 2025 does not provide a specific definition of foreign investment in Vietnam in the form of establishing a new economic organization. However, based on the provisions of Clauses 8, 18, 19, 21, and 22 of Article 3 of the Law on Investment 2025, the following related concepts are stipulated:
– “Business investment means the use of investment capital by an investor to conduct business activities”.
– “Investor means an organization or individual that carries out business investment activities, including domestic investors, foreign investors, and foreign-invested economic organizations”.
– “Foreign investor means an individual having foreign nationality or an organization established under foreign law that conducts business investment in Vietnam”.
– “Economic organization means an organization established and operating under Vietnamese law, including enterprises, cooperatives, unions of cooperatives, and other organizations that conduct business investment”.
– “Foreign-invested economic organization” means an economic organization having a foreign investor as a member or shareholder”.
Accordingly, foreign investment in Vietnam in the form of establishing a new economic organization may be understood as the contribution of capital by foreign individuals or organizations established under foreign law to establish enterprises, cooperatives, unions of cooperatives, or other entities in Vietnam to conduct business investment.
2. Conditions for Foreign Investment in Vietnam in the Form of Establishing a New Economic Organization
Pursuant to Articles 8 and 19 of the Law on Investment 2025, foreign investors must satisfy the following conditions:
(i) Satisfying the market access conditions applicable to foreign investors as set out in the List of sectors and trades with restricted market access for foreign investors under Appendix I of Decree No. 96/2026/ND-CP, including:
– The ratio of charter capital ownership by the foreign investor in the economic organization;
– The form of investment;
– The scope of investment activities;
– The capacity of the investor and partners participating in the investment activities; and
– Other conditions as prescribed by law, resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties to which the Socialist Republic of Vietnam is a party.
(ii) New provision under the Law on Investment 2025: Foreign investors are permitted to establish an economic organization to implement an investment project before carrying out procedures for issuance of the Investment Registration Certificate and must satisfy the market access conditions for foreign investors as prescribed in Article 8 of the Law on Investment 2025 when performing enterprise establishment procedures.
Previously, under the Law on Investment 2020, prior to establishing an economic organization in Vietnam, foreign investors were required to have an investment project and complete procedures for issuance or adjustment of the Investment Registration Certificate in accordance with the law. However, the Law on Investment 2025 introduces a significant change by allowing foreign investors to choose to establish an economic organization to implement the investment project before proceeding with procedures for issuance of the Investment Registration Certificate.
This new regulation represents an important reform in the State’s management approach to investment activities, shifting gradually from a “pre-approval” mechanism to strengthened “post-inspection”, while contributing to the simplification of administrative procedures. Permitting investors to establish the legal personality of the enterprise at an early stage facilitates the investment preparation process, including signing contracts, leasing of business premises, and completing other necessary procedures for project implementation.
3. Sequence and Procedures for Foreign Investment in Vietnam through the Establishment of a New Economic Organization Prior to the Completion of Investment Procedures
Step 1: Enterprise establishment in accordance with the Law on Enterprises. Pursuant to the provisions of Chapters III, V, and VI of the Law on Enterprises 2020, foreign investors may choose to establish one of the following types of enterprises: single-member limited liability company, limited liability company with two or more members, joint-stock company, or partnership. On that basis, the investor shall consider selecting the type of enterprise suitable to the scale of the investment project, capital contribution structure, as well as its own needs for governance and business organization.
Step 2: Perform post-establishment procedures such as seal engraving, registration of a digital signature, initial tax registration, and registration for the use of electronic invoices. Following the issuance of the Enterprise Registration Certificate, the enterprise shall carry out the necessary legal procedures to bring the enterprise into operational status in accordance with relevant laws, including:
a. Engraving and management of the enterprise seal: The enterprise shall decide on the form, quantity, and content of the seal in accordance with current enterprise law; the management and use of the seal shall be the responsibility of the enterprise itself.
b. Digital signature registration: The enterprise shall register a digital signature for the purpose of:
– Electronic tax declaration;
– Submission of electronic administrative dossiers;
– Transactions with state agencies.
c. Initial tax procedures, including:
– Registration of the tax calculation method;
– Registration of bank accounts with the tax authority;
– Registration of the person in charge of accounting (if any);
– Fulfillment of initial tax declaration obligations in accordance with the laws on tax administration.
d. Registration for the use of electronic invoices: The enterprise shall register for the use of electronic invoices in accordance with the laws on invoices and supporting documents before engaging in any sale of goods or provision of services.
Step 3: Apply for issuance of the Investment Registration Certificate at the competent authority in accordance with Clause 1 of Article 32 and Article 39 of Decree No. 96/2026/ND-CP.
4. Conclusion
The Law on Investment 2025 has established a new approach allowing foreign investors to choose the option of first establishing an economic organization and then completing procedures for issuance of the Investment Registration Certificate, instead of being required to complete investment procedures from the outset as previously required. This regulation not only reflects the trend of administrative procedure reform but also enhances flexibility and autonomy for investors in implementing projects in Vietnam.
However, foreign investors should also note the following when making investments in Vietnam under the new regulations. The establishment of an enterprise does not replace the obligation to apply for an Investment Registration Certificate for projects with foreign elements. Investors must still fully satisfy market access conditions from the time of establishing the economic organization.
In addition, investors should further note that, within 12 months from the date of issuance of the Enterprise Registration Certificate, the economic organization must complete procedures for issuance of the Investment Registration Certificate for the investment project consistent with the registered business lines. Any adjustment to the enterprise registration contents to add other business investment lines may only be carried out after the economic organization has been issued with the Investment Registration Certificate. The economic organization may only implement the investment project after completing procedures for issuance or amendment of the Investment Registration Certificate in accordance with the law.
Overall, the new process under the Law on Investment 2025 represents an important step in the transition from a “pre-approval” to a “post-inspection” mechanism, creating more favorable conditions for foreign investors while still ensuring state management requirements and transparency in investment activities in Vietnam.
This article was prepared by Vy Nguyen with consultation from Lawyer Huong Vu.
This article is provided for general informational purposes only and does not constitute legal advice for any specific case. The legal regulations cited herein are effective as of the publication date but may have been amended, supplemented, replaced, or become invalid at the time readers review this article. Accordingly, readers are advised to seek legal counsel before applying the information provided.
