Choosing the wrong form of investment from the outset can cost a foreign investor months of rework, or result in an application being rejected because the intended business line does not match the form selected. The 2025 Investment Law, effective from 1 March 2026, sets the legal framework for this choice, but not every form suits every business objective.
Should your company establish a 100% foreign-owned entity, or simply acquire shares in an existing Vietnamese company? Is a Business Cooperation Contract (BCC) with a local partner the fastest way to get started, or will it create obstacles when you want to expand later? Many foreign investors choose a form of investment based on generic advice found online, without realizing that each form carries its own set of procedures, market access conditions, and compliance obligations. This article analyzes the lawful forms of investment into Vietnam under the 2025 Investment Law, how to choose the form that fits your business objective, and the mistakes that cause applications to be delayed or rejected.
Five lawful forms of investment under the 2025 Investment Law
The 2025 Investment Law (Law No. 143/2025/QH15), which replaces the 2020 Investment Law and took effect on 1 March 2026, sets out the forms that foreign investors are permitted to use to invest in Vietnam.
Each form suits a different objective. Establishing an economic organization, commonly known as a 100% foreign-owned company, or a joint venture if a Vietnamese partner contributes capital alongside you, suits investors who want to build a long-term presence, hold assets, sign contracts, and hire employees in their own corporate name. Capital contribution or share purchase suits investors who want to join a Vietnamese business that already has a market, customers, or an industry license, rather than building from scratch. A BCC suits short-term or pilot cooperation projects, where the parties share profits or output without setting up a joint legal entity.
Whichever form involves a foreign investor, it must satisfy the market access conditions applicable to the intended business line.
This means the question "can my industry have 100% foreign ownership" has no single answer that applies to every case. For most business lines, foreign investors are subject to the same conditions as domestic investors. But for a business line on the restricted list, the conditions may cap the foreign ownership ratio, limit the forms of investment that can be used, or impose requirements on the investor's capacity and its partners. Clarifying this is the first step, to be done before choosing a form, not after.
One notable change under the 2025 Investment Law concerns the sequence between establishing an economic organization and obtaining the Investment Registration Certificate (IRC).
Previously, foreign investors typically had to obtain an IRC before they could establish the company. Under the new rule, an investor may establish the economic organization first, provided the market access conditions for the intended business line are met. Many articles and advisors have not updated this point and continue to guide clients through the old sequence, causing unnecessary delay.
How procedures differ across the forms of investment
Not every form requires the same set of documents. The procedural difference is a factor worth weighing alongside your business objective when choosing a form.
| Form of investment | Is an Investment Registration Certificate (IRC) required? | Key characteristics |
|---|---|---|
| Establishing an economic organization | Yes, if the project belongs to a foreign investor or to an economic organization controlled by foreign capital | Creates a new legal entity; may now be established before the IRC is finalized under the new rule |
| Capital contribution, share purchase, or purchase of contributed capital | No separate IRC; registration is required only in specific circumstances | No new legal entity created; usually faster, as it uses an existing entity and licenses |
| Business Cooperation Contract (BCC) | Yes, if at least one party is a foreign investor | No legal entity created; the parties form a coordination board and remain liable under the contract |
| Implementing a new investment project within an existing organization | Follows project-level procedures; no new legal entity required | Applies when a foreign-invested organization already established in Vietnam wants to launch a new project |
For capital contribution and share purchase, the 2025 Investment Law requires a foreign investor to register before changing members or shareholders only in specific circumstances, rather than for every share purchase transaction.
In other words, if you purchase a small stake in a company operating a business line that is not on the restricted list, and the transaction does not push foreign ownership above 50%, the procedure is usually much simpler than establishing a new company. This is why many investors seeking rapid entry into the Vietnamese market choose to buy shares in an operating business rather than build from the ground up.
For a BCC, if all parties are domestic investors, the contract only needs to comply with civil law. But once at least one party is a foreign investor, the BCC must go through the same Investment Registration Certificate procedure as an ordinary investment project.
Risks and common mistakes when choosing a form of investment
In practice, most difficulties do not arise at the filing stage. They arise from choosing the wrong form from the start.
A common mistake is choosing a BCC to "test the market" quickly, only to later realize the business needs to hold assets in its own name, sign long-term employment contracts, or borrow from a bank as a corporate entity, none of which a cooperation contract without legal personality can do. At that point, the business must convert to establishing an economic organization, and much of the time already invested in the BCC structure effectively has to be redone.
Another mistake is purchasing shares or contributing capital to a Vietnamese business without first checking whether its business line is on the restricted market access list. The investor signs the transfer agreement, remits the funds, and only then discovers that the application to change shareholders is rejected because foreign ownership would exceed the permitted level for that business line. The deal then has to be renegotiated, causing losses on both sides.
The 50% charter capital ownership threshold is another point many businesses overlook. A Vietnamese economic organization in which a foreign investor holds more than 50% of the charter capital will be treated as a foreign investor when that organization goes on to make further investments, contribute capital, or purchase shares elsewhere. Many businesses only discover this rule when an expansion project is suddenly subject to additional procedures they had not anticipated.
Finally, because a BCC creates no legal entity, it lacks the clear governance and liability framework of a company. If the BCC is drafted loosely, the parties can end up disputing who bears tax obligations and who is liable to third parties when problems arise during the cooperation.
Beyond choosing the right form and completing the initial procedures, many foreign businesses, particularly small and medium-sized enterprises without an in-house legal department, stop there and fail to track the compliance obligations that continue to arise after the investment: periodic investment reports, updated registrations when the ownership structure changes, or new regulations that directly affect their business line. This gap is where legal risk quietly accumulates over time, not because the business did something wrong, but because no one has been tracking it continuously.
DEDICA's role, from choosing a form of investment to long-term support
For businesses considering investment in Vietnam, DEDICA advises on the form of investment that fits the business objective and the specific industry, checks the market access conditions before the client signs any commitment, and then handles the corresponding procedures on the client's behalf, from establishing the economic organization and obtaining the Investment Registration Certificate to registering capital contribution or share purchase.
After the investment is completed, many foreign businesses in Vietnam, especially small and medium-sized enterprises without an in-house legal department, continue to use DEDICA's ongoing legal advisory service, which functions as an outsourced legal department at a cost considerably lower than building an in-house team. The team pairs legal staff with experienced lawyers, and every piece of advice or contract sent to a client is reviewed by a lawyer before it is finalized. DEDICA also provides bilingual support in English and Chinese for management teams made up of foreign nationals.
Conclusion
The 2025 Investment Law allows foreign investors to choose among five forms: establishing an economic organization, contributing capital or purchasing shares, implementing an investment project within an existing organization, entering into a BCC, and new forms prescribed by the Government. To choose correctly, follow this order: (1) clearly define your business objective and the intended business line; (2) check the market access conditions for that business line under Article 8 at the time of implementation; (3) compare the procedures and legal nature of each form to select the option that fits, not just the fastest one to set up; (4) carry out the corresponding procedure correctly, paying particular attention to the 50% charter capital ownership threshold if you plan to expand your investment later; (5) do not stop once the initial procedure is complete, but keep tracking the compliance obligations that continue to arise. If you are considering investing in Vietnam but are not yet sure which form fits your industry and scale, clarify the market access conditions before signing any agreement with a partner.
Every investment plan in Vietnam has its own specifics in terms of business line, capital scale, and long-term objectives. DEDICA Law Firm supports foreign investors from identifying the right form of investment and handling licensing procedures, through to ongoing legal advisory once the business is operating in Vietnam. Contact DEDICA for advice tailored to your industry and investment plan.
This article is for general reference based on the law in force at the time of writing. Every investment plan has its own particulars; please consult a DEDICA lawyer for advice tailored to your specific case.