What is the definition of "business organization"? What are regulations on investment in establishment of a business organization in Vietnam?

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Question date: 26/09/2022

What is the definition of "business organization"? What are regulations on investment in establishment of a business organization in Vietnam? Thank you!

    • What is the definition of "business organization"?

      Pursuant to Article 3 of the Law on Investment in 2020 stipulating as follows:

      - “Business organization means an organization established and operating in accordance with Vietnam’s laws. Business organizations include enterprises, cooperatives, cooperative unions and other organizations that carry out business investment activities.

      - Foreign-invested business organization means an organization whose members or shareholders are foreign investors.

      Investment in establishment of a business organization in Vietnam

      Currently, there are forms of investment in Vietnam as follows:

      - Investment in establishment of a business organization.

      - Investment in the form of capital contribution or purchase of shares or stakes.

      - Execution of an investment project.

      - Investment in the form of a business cooperation contract.

      - New forms of investment and types of business organizations prescribed by the Government's regulations.

      Pursuant to Article 22 of the Law on Investment in 2020 stipulating investment in establishment of a business organization in Vietnam as follows:

      - Every investor shall establish a business organization in accordance with the following regulations:

      + A domestic investor shall establish a business organization in accordance with regulations of law on enterprises and law corresponding to each type of business organization;

      + A foreign investor that establishes a business organization shall satisfy market access conditions applied to foreign investors specified in Article 9 of this Law;

      + Before establishing a business organization, the foreign investor must have an investment project and follow the procedures for issuance or adjustment of an investment registration certificate, except for establishment of a small and medium-sized start-up enterprise and a startup investment fund in accordance with regulations of the Law on Small and Medium-sized Enterprises.

      - From the date on which the enterprise registration certificate or an equivalent document is issued, the business organization established by a foreign investor shall be the investor that executes the investment project set out in the investment registration certificate.

      Conduct of investment activities by foreign-invested business organizations in Vietnam

      - When establishing a business organization, when making investment by contributing capital, purchasing shares or purchasing stakes of a business organization or when making investment under a business cooperation contract in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:

      + Over 50% of its charter capital or more is held by a foreign investor(s) or the majority of the general partners are foreigners if the business organization is a partnership;

      + Over 50% of its charter capital or more is held by a business organization(s) mentioned in Point a of this Clause;

      + Over 50% of its charter capital or more is held by a foreign investor(s) and a business organization(s) mentioned in Point a of this Clause.

      - Business organizations other than those mentioned in Points a, b and c Clause 1 of this Article shall satisfy conditions and follow investment procedures applied to domestic investors when establishing a business organization, when making investment by contributing capital, purchasing shares or purchasing stakes of a business organization or when making investment under a business cooperation contract.

      - If a foreign-invested business organization that is established in Vietnam has a new investment project, procedures for executing such investment project shall be followed without having to establish a new business organization.

      - The Government shall elaborate procedures for establishing business organizations, and conduct of investment activities by foreign investors and foreign-invested business organizations.

      Best regards!

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    "This English translation is for reference purposes only and not a definitive translation of the original Vietnamese texts"

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