VIETNAM Law and Practice Contributed by: Thang Nguyen, Minh Nguyen and Nguyet Le, ACSV Legal
Under the 2020 Law on Investment, there are currently 229 conditional business lines which
may result in full or partial mandatory termination of operations of the investment project. 2.3 Commitments Required From Foreign Investors Commitments from investors (in addition to the investment capital they promise to deploy dur - ing their engagement in Vietnam) are not gener - ally regulated. In practice, there are situations where the Vietnamese licensing authority will, at its discretion, make its agreement depend - ent on certain commitments from the investor (eg, contribution to infrastructure developments in the location of the business, etc). There are, however, no generally imposed commitments for foreign investors, outside of the general obliga - tion to comply with all the laws of Vietnam while doing business in the jurisdiction. 2.4 Right to Appeal While foreign investors may theoretically chal - lenge a negative decision by investment authori - ties (mostly DOF) under the 2015 Law on Admin - istrative Procedures, success is rare. The burden of proof is high, and, in practice, decisions are largely subject to the discretion of the authori - ties due to limited legal guidance. Investors fac - ing objections are usually given the opportunity to revise their business plans in line with official feedback. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity A foreign investor will usually choose one of two main types of legal entities to carry out a project. Currently, typical options for a foreign-owned legal entity include:
include, among others: • accounting services; • insurance services; • securities trading; • betting and casinos; • oil and gas;
• healthcare-related businesses; • businesses related to transport;
• real estate businesses; • educational businesses; • banking and finance-related businesses; and • agriculture-related businesses. A foreign investor in the market to purchase an existing (Vietnamese) entity – depending on the nature and scope of that entity’s business – may need to obtain prior approval from the Depart - ment of Finance (DOF) (formerly known as the Department of Planning and Investment – DPI) (“M&A Approval”) before capital can be contrib - uted to or acquired in an existing enterprise. 2.2 Procedure and Sanctions in the Event of Non-Compliance A foreign investor typically needs to complete a two-step procedure to operate in Vietnam. In the first step, the investor applies for an Investment Registration Certificate (IRC). In the second step, through the issuance of an Enterprise Registra - tion Certificate (ERC), a new (foreign-owned) company is born. For local investment by means of M&A, the investor must notify the acquisition to the com - petent authorities and obtain their approval. Given the strict oversight by regulatory authori - ties, especially DOF, the State Bank of Vietnam, unapproved foreign investment is virtually infea - sible. Any attempt to bypass legal procedure
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