On November 26, 2014, the Vietnamese National Assembly passed a new law on investment (LOI). The LOI appears to make changes to the existing investment structure that will incentivise investment activities and improve the operating environment. The LOI redefines the term ‘foreign investor’ and offers fewer conditional investment sectors in comparison with the current law on investment 2005.
Foreign investors under the investment law
Under the current law on investment, foreign investors must conduct procedures to obtain an investment certificate (IC) which concurrently acts as an enterprise registration certificate (ERC) granted to domestic companies. It only takes one week to obtain an ERC for a domestic company, but about two months or more for foreign investors to obtain an IC. Under the LOI, an IC will be replaced by an investment registration certificate (IRC) and the foreign investor shall conduct separate procedures to obtain both an IRC and an ERC. However, the timeline to obtain an IRC under the LOI is reduced to 15 days only. For certain large or strategic investment projects, both foreign and domestic investors must first obtain an in-principle approval from the government.
Where the foreign investor or the EO involved with 51 percent foreign ownership, as mentioned above, conducts an M&A activity into a conditional investment project or as a result of a transaction acquiring 51 percent or more of the target company’s charter capital, they only need to conduct a simple registration, but not an IC as previously required, for such M&A activity at the licensing authority of the target company.
Conditional investment sectors
The LOI takes effect on 1 July 2015.
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