Investment Registration in Vietnam – Are we ready for the EU – Vietnam Free Trade Agreement?

The EU-Vietnam Free Trade Agreement (EVFTA) is expected to be ratified by all member countries by 2018 and take effect from 2019. It will create more opportunities and have a massive impact on the Vietnamese economy. In order to ensure full compliance with the EVFTA provisions, Vietnam’s legal system faces certain challenges. To shape the future and prepare for the fourth industrial revolution, it is vital for Vietnam to make reforms. This will prepare the way for transformation and to fully grasp the new opportunities that are coming their way.

What has been done?

Regarding the mechanism in dealing with the licensing process for a foreign invested company, different Chambers of Commerce in Vietnam have recognized significant improvement in the implementation of business and investment regulations since the effectiveness of the Enterprise Law No 68/2014/QH13 (Enterprise Law) and the Investment Law No 67/2014/QH13 (Investment law) on 1 July 2015.

In general, the Enterprise Law and Investment Law guarantee the principle of freedom of business. The licensing authority also fully complies with the prescribed time limit for the issuance of an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC). These improvements have indeed improved the business and investment environment.

New laws applied in an ambiguous way?

Although there have been significant improvement in the implementation of the Investment Law, Enterprise Law and their guiding documents, there remain concerns about inconsistencies between implementation and enforcement of the current laws in certain aspects. The new laws are still holding back potential foreign investment due to many uncertainties. For example the business registration process contains issues as below:

  • Overlapping investment approvals and documents. – The procedures for investment registration are overlapped in terms of formalities and documents which are time consuming. The Investment Law and Enterprise Law set a timeline for the licensing authorities to provide the IRC (15 working days) and the ERC (3 working days). However there are many cases where authorities miss such deadlines. In addition, Decree No. 23 requires a trading license for foreign invested enterprises doing trading activities but it is not certain when such license will be issued from the application date (could be from two to several months).
  • Time limit for capital contribution. – The time limit for capital contribution regulated by law is too short (90 days). This timeline is not feasible especially for projects whose total investment capital is of high value.
  • Procedure for purchase of shares by foreign investors .- According to Article 46.2 of Decree No. 118/2015, a foreign investor is only required to obtain an approval from the Ministry of Planning and Investment under limited circumstances listed by law (e.g., purchasing 51% or more shares in a local company). However, due to the lack of specific guidelines, many foreign investors have been required to obtain an approval whenever they acquire new shares, even in a company not operating in a conditional sector.
  • Payments for transfer of shares/stakes. – According Article 36.3 of the Enterprise Law, payments for transfer of shares and receipt of dividends of foreign investors must be made through their capital accounts opened at banks in Vietnam. Furthermore, the State Bank of Vietnam requires different regulations for foreign direct investment (FDI) and indirect investment (FII). For instance, FDI payments are made to the project company’s direct capital account. Meanwhile, FII payments are made to the investor’s VND account. In fact, local banks have adopted different interpretations to these regulations, thus creating confusion for the investors.
  • Share Swaps. – The Enterprise Law does not provide for share swaps.

Calling to action

As analyzed above, the current system for an investment registration in some cases makes it difficult to enforce current laws. Accordingly, administrative reforms should be conducted to simplify procedures, namely:

Ø To require only 1 or 2 approvals for the investment registration. In doing so, electronic submission should be allowed and overlapping documents must be removed.

Ø To allow shareholders to decide the time limit for capital contribution, except for certain projects.

Ø To ensure that approval of share acquisition complies with the requirements listed by law only.

Ø The State Bank of Vietnam should provide a guidance on transfer of payments among banks.

Ø To adopt provisions relating to share swaps.


The EU-Vietnam economic relationship is a mutual cooperation. The EVFTA is among tools to facilitate investment and trade between the parties. With the EVFTA, each party aims at guaranteeing non-discrimination treatment. However, if the current laws continue being enforced as they are now, it may trigger possible violations of that principle. In order to avoid this, it is vital not only to determine the incompatible regulations and institutions in the local legal framework but also to adopt appropriate solutions. For example, the Government should enhance information exchange among state agencies to prevent overlapping documents and time consuming process, and improve a single window and inter-agency regime. The Government should also ensure that licensing authorities operate more efficiently according to the regulation.


Please do not hesitate to contact Dr. Oliver Massmann under if you have any questions or want to know more details on the above. Dr. Oliver Massmann is General Director of Duane Morris Vietnam LLC.

Thank you!




Lawyer in Vietnam Oliver Massmann New Decree Guiding Enterprise Law on Enterprise Registration – Quicker Timeline and Simplified Procedure

On 14 September 2015, the Government issued Decree No. 78/2015/ND-CP on enterprise registration (“Decree 78”). This is a long-awaited decree guiding the 2014 Enterprise Law, replacing Decree No. 43/2010/ND-CP on enterprise registration and Decree No. 05/2013/ND-CP amending Decree No. 43/2010/ND-CP on administrative procedures. Decree 78 will take effect on 01 November 2015. Some positive changes of this new decree are discussed below:
Enterprises are now able to register their operation online
Online enterprise registration is a procedure carried out by the owner of the enterprise or the enterprise itself via the National information gate on enterprise registration.
Online enterprise registration dossier includes the same documents as required by the paper dossier and are converted into electronic form. Online enterprise registration dossier has the same validity as the usual paper one.
Who can execute the enterprise registration documents
The 2014 Enterprise Law allows enterprises to have more than one legal representatives. Signature of each legal representative in enterprise registration documents has the same legal validity. In addition, not only the owner of the enterprise but also the enterprise itself (through its legal representative(s)) could execute the enterprise registration documents and holds responsible for the lawfulness, accuracy and truthfulness of the declared information in the dossier.
Decree 78 no longer requires enterprises:
– Register changes in enterprise registration content within 10 working days from the date the enterprise decides on the changes, except as otherwise required by law;
– Submit their financial statements to the business registration authority in accordance with the law.
Role of the Request for enterprise registration and the Enterprise Registration Certificate (ERC)
The ERC concurrently serves as the Tax Registration of the enterprise and the ERC is not a business license. In case there is any inconsistency between the electronic ERC, Branch Registration Certificate, Representative Office Registration Certificate, Certificate on business location and the paper ones, the one which records information in the enterprise registration dossier has legal validity.
Each enterprise is issued with an enterprise code indicated in the ERC. This code is no longer the business registration code but tax code of the enterprise.
Simplified enterprise registration procedure
In an attempt to reforming administrative procedures and fighting against corruption, Decree 78 clearly states that the enterprise registration authority is not allowed to request for additional documents or other documents not required in the enterprise registration dossier by the law. In this regards, the number of required documents in the application dossier is also reduced significantly.
Time to get an ERC after submission of a valid dossier is shortened to three working days instead of five working days as previously. However, it needs to be seen in practice whether the authority sticks to this timeline.
In case there is any change to the business lines of the enterprise, it does no longer have to register the new business lines but only needs to notify the authority on the same. The notification dossier removes documents confirming the legal capital by the authority in case the new business line requires legal capital; or a valid copy of the certificate of practising for individual according to the specialized areas.
Notably, in a joint stock company, if a founding shareholder has not fully paid for the registered shares, it will automatically no longer be company’s shareholder and its name will be removed from the list of founding shareholders of the company.
Please do not hesitate to contact Oliver Massmann under if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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