Procedures for establishing an enterprise for foreign investors in Vietnam under the Law on Investment 2025

Vietnam continues to assert its position as one of the most attractive investment destinations in Southeast Asia. A stable political environment, sustainable economic growth, an extensive network of Free Trade Agreements (FTAs), and open investment attraction policies serve as magnets drawing foreign capital flows.

However, establishing a foreign-direct-investment (FDI) company in Vietnam is far more complex compared to setting up a domestic one. Investors must not only carry out business registration but also satisfy a range of stringent conditions regarding market access, capital contribution ratios, and foreign exchange management.

To help investors optimize their market entry process, DAVILAW presents an overview of the procedures, application dossiers, and critical legal considerations in the article below.

1. Current legal framework

The investment and enterprise establishment activities of foreign individuals and organizations in Vietnam are primarily regulated by the following system of legal documents:

The Law on Investment 2025 and Decree No. 96/2026/ND-CP guiding the implementation thereof.

The Law on Enterprises 2020 along with Law No. 76/2025/QH15 amending and supplementing a number of articles of the Law on Enterprises.

Decree No. 168/2025/ND-CP on enterprise registration.

Decree No. 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the Law on Investment (especially the List of business lines with restricted market access for foreign investors).

International commitments to which Vietnam is a member, such as WTO, CPTPP, EVFTA, UKVFTA, RCEP, etc.

2. Prerequisites for market entry

First and foremost, foreign investors are required to review and satisfy the following four groups of condition:

Market Access: Investors are only permitted to operate in sectors not prohibited by Vietnamese law. For business lines with restricted market access, foreign investors must meet criteria regarding the charter capital ownership ratio, form of investment, scope of operations, and the capacity of domestic joint-venture partners (if any).

Lawful Project Location: The headquarters of an FDI company must have a clear address, legal rights of usage (such as an office or factory lease agreement), and must align with local socio-economic development planning.

Stable Financial Capacity: Investors must prove transparent capital flows and the capability of establishing the project through documents such as audited financial statements (for organizations) or bank account balance confirmations (for individuals).

Specialized Sub-licenses (Sub-licenses): If the enterprise intends to operate in specialized sectors such as education, healthcare, retail, logistics, or real estate, foreign investors must complete additional procedures to obtain specialized operational licenses after the company's incorporation.

3. New legal regulations allow foreign investors to flexibly choose IRC and ERC procedures

One of the breakthrough reforms of the Law on Investment 2025 is the flexible mechanism in the sequence of investment registration procedures for foreign investors. Instead of being legally mandated to follow the traditional route - obtaining the Investment Registration Certificate (“IRC”) first and the Enterprise Registration Certificate (“ERC”) later, foreign investors can now choose one of two options suitable for their business strategies.

A comparison of the two approaches is detailed below:

Note: For projects subject to “Investment policy approval”, investors are still required to obtain this approval before proceeding with subsequent steps.

4. Key considerations for obtaining the ERC prior to the IRC

Pursuant to general regulations on the sequence of enterprise registration and investment registration procedures under Article 72 of Decree No. 96/2026/ND-CP, investors choosing to apply for the Enterprise Registration Certificate (ERC) before obtaining the Investment Registration Certificate (IRC) must pay close attention to the following:

Commitment to market access conditions in the incorporation dossier: Right from the enterprise establishment dossier preparation step, the ERC Application Form must clearly demonstrate the commitment to fully satisfy the market access conditions applicable to foreign investors as prescribed by law.

Time pressure to complete the IRC within 12 months: Upon being granted the ERC and officially established, the economic organization must complete the procedures for obtaining the IRC within a maximum period of 12 months from the date of incorporation. This strict timeframe requires investors to proactively and thoroughly prepare the investment project dossier in parallel with or immediately after obtaining the ERC.

Restrictions on expanding business lines: The enterprise is not free to arbitrarily add new investment and business sectors. Such additions are only permitted after the economic organization has officially been granted the IRC by the competent authority.

Mandatory condition for implementing the investment project: The economic organization is only permitted to conduct activities for implementing the investment project after fully completing the procedures for the issuance or adjustment of the IRC.
In practice, there are cases where foreign investors register for an IRC to establish an economic organization, and the project is still recorded as the "Investment project of Company...". However, Decree No. 96/2026/ND-CP has not yet clarified whether the "implementation of the investment project" must be performed specifically by the economic organization established by the foreign investor. This is a legal grey area that requires careful consultation or specific guidance from competent authorities.

Flexibility in charter capital and investment capital structures: A favorable point for investors is that the charter capital of the economic organization established by the foreign investor does not necessarily have to equal the investment capital of the project. The enterprise can proactively contribute charter capital and mobilize other lawful capital sources in accordance with the schedule specifically recorded in the IRC.

5. Application dossier requirements

(Under the guidelines in Official Letter No. 5427/BTC-DNTN)

Depending on the chosen sequence of procedures (applying for the IRC first or the ERC first), the enterprise registration application dossier will have distinct differences as follows:

5.1. Applying for the IRC before the ERC

For this traditional option, the enterprise registration (ERC) dossier is prepared similarly to standard procedures but must contain the prior investment decision. Specifically:

Legal basis: Prepared in accordance with Articles 20, 21, and 22 of the Law on Enterprises 2020 and Articles 24.2, 24.3, and 24.4 of Decree No. 168/2025/ND-CP.

Mandatory accompanying document: The enterprise establishment application dossier must include a copy of the previously issued Investment Registration Certificate (IRC).

5.2. Applying for the ERC before the IRC

This is a special case designed to simplify initial steps for investors; therefore, the dossier features two key differences:

No IRC required: The enterprise registration dossier does not include a copy of the Investment Registration Certificate (IRC).

Commitment requirement: The Application Form for Enterprise Registration must integrate the foreign investor's commitment to fully satisfying the market access conditions applicable to foreign investors.

6. Post-Incorporation Compliance Requirements

Obtaining the ERC is only the beginning. For the enterprise to operate lawfully and avoid administrative fines regarding licensing and procedures, foreign investors must immediately complete the following action items:

• Corporate Seal: Proactively carve and manage the corporate legal seal of the enterprise.
• Office Setup: Display the company signboard at the headquarters for tax authority inspection.
• Tax & Financial Declarations: Register for a digital signature, register an electronic tax account, perform initial tax declaration procedures, and set up an e-invoicing system.
• Bank Account Opening includes opening a standard payment account to cover operating expenses and opening a Direct Investment Capital Account (DICA) at a bank licensed to operate in foreign exchange in Vietnam to receive capital contributions transferred from abroad.
• Timely Capital Contribution: Proceed to transfer the full registered charter capital within the time limit prescribed by law (ordinarily 90 days from the date of ERC issuance).

7. Conclusion

Evidently, the new legal framework has introduced highly progressive reforms. These policies grant foreign investors greater autonomy in scheduling their enterprise establishment timeline in Vietnam. The mechanism of applying for the ERC before the IRC, under the spirit of Decree No. 96/2026/ND-CP and Official Letter No. 5427/BTC-DNTN, opens up a flexible pathway, allowing foreign investors to quickly establish legal entity status in Vietnam without getting bottlenecked at the initial investment procedural stage. However, this new provision also presents a strict risk management challenge with the rigorous 12-month milestone to finalize the IRC, alongside certain constraints on expanding business lines and implementing the project. To transform this mechanism into a true competitive advantage rather than a timing trap, investors need to chart a clear legal roadmap, proactively prepare dossiers in parallel, and closely follow practical guidance to ensure smooth operations and absolute compliance from their very first steps in the Vietnamese market.