Steps to Convert a Vietnamese Company into a Foreign-Invested Enterprise (FDI Company)
Converting a company into an FDI enterprise (Foreign Direct Investment) is becoming a popular trend amid Vietnam’s economic integration and globalization. Besides enhancing financial capacity, the participation of foreign investors opens access to advanced technologies, new markets, and modern management practices. However, to carry out this process legally and effectively, businesses must clearly understand each required step. This article will guide you through the full process of transforming a Vietnamese company into an FDI company — from preparation, legal procedures to post-conversion considerations.
Are you looking to expand your business and attract foreign capital? Let DEDICA Law Firm help you understand the most effective and lawful process for converting your company into an FDI enterprise in Vietnam.
Definition and Benefits of Converting to an FDI Company
Before going into the detailed steps, it is important to understand the nature of FDI conversion and the practical benefits of this model.
1. What is converting to an FDI company?
Converting to an FDI company is the process whereby a domestic enterprise receives capital contributions from foreign investors, thus becoming a company with foreign elements, as defined by Vietnam's Investment Law. When the foreign ownership reaches 1% or more, the enterprise is officially considered foreign-invested.
2. Benefits of becoming an FDI company
Easier access to capital: FDI companies often attract larger investments from international investors.
Market expansion: Connecting with foreign partners helps expand your business network regionally and globally.
Improved management capacity: FDI enterprises benefit from modern management methods, improving operational efficiency.
Access to new technologies: Foreign investors often bring advanced technologies and modern production processes.
Steps to Convert a Vietnamese Company into a Foreign-Invested Enterprise
Converting a company to an FDI entity involves more than simply selling shares to foreign investors. A clear legal process must be followed:
1. Prepare documents and determine capital contribution ratio
Businesses need to negotiate with foreign investors on the capital contribution ratio, business sectors, and relevant rights. Be aware that not all sectors are open to foreign investment — some are restricted or prohibited under WTO commitments and Vietnamese law.
Required documents include:
Legal documents of the Vietnamese company
Passport/ID of the foreign investor
Capital contribution or share transfer agreement
Latest financial statements
2. Submit capital contribution registration to the Department of Planning and Investment (DPI)
Submit the capital registration documents to the Foreign Investment Division of the local DPI where the business is based. The department will respond within 15 working days with approval or request for clarification.
3. Update business registration information
After approval, update the company registration to reflect:
New ownership structure
Addition of foreign shareholders/members
Company name (if changed)
Updated business sectors
These changes must be registered with the Business Registration Office.
4. Update tax information and open investment capital account
FDI companies must:
Notify the tax authority of changes in ownership
Open a foreign-currency investment capital account at a licensed bank
Transfer capital following Vietnam’s foreign exchange regulations
Important Notes When Converting to an FDI Company
While not overly complex, the FDI conversion process may face legal issues or be rejected if not handled properly.
1. Conditional business sectors
Businesses must check the list of sectors with market access restrictions for foreign investors. Some industries like media, national security, education, and healthcare may be prohibited or require special conditions.
2. Compliance with capital contribution deadlines
Foreign investors must contribute capital within the legal deadline (typically 90 days after approval), via the designated capital account. Violations may lead to penalties or loss of FDI status.
3. Recordkeeping and regular reporting
FDI companies must maintain proper documentation and file periodic reports with authorities:
Quarterly/annual investment reports
Reports on repatriation of profits (if applicable)
Audited financial statements
Converting to an FDI company is a critical step that helps Vietnamese enterprises enhance competitiveness, expand internationally, and improve operational efficiency. However, to carry out this process lawfully and successfully, businesses must understand the legal framework, prepare all necessary documents, and comply with sectoral and foreign exchange regulations.
Don’t hesitate to seek legal support from trusted advisors like DEDICA Law Firm to ensure everything is handled quickly and correctly.
✅ Converting to an FDI company is not just a trend — it's an opportunity for Vietnamese businesses to thrive in the global economy.
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