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Conditions, Dossiers and procedure for obtaining IRC

In the context of escalating tensions between US and China in the trade war  and the great impact of the  Covid-19 pandemic, economists have predicted there will be a significant shift of FID capital from developed countries to the Southeast Asia. The inflow of FDI gives developing countries access to a more plentiful source of capital than ever. FDI capital also provides much needed foreign exchange and, therefore, helps to adjust some of the macroeconomic imbalances in developing countries. Investors prefer to invest in places that offer attractive returns and are relatively less risky. Viet Nam is one of the ideal destinations for investors.

For an overseas investor, both natural and legal person, setting up a company in Viet Nam requires registration with State’s authorities of Viet Nam, and application for compulsory certificates and licenses. These procedures are necessary to protect the investor’s rights and prevent economic crimes. The investment registration certificate is one of the requisite documents.

This article is supposed to represent the procedure to apply for an investment registration certificate (the “IRC”) in Viet Nam.

1. WHAT IS IRC?

In Viet Nam, an IRC is a permission from the Vietnamese government granted to a foreign investor. This piece of document states information of an investment project that foreign investors intend to process through foreign direct investment (FDI). It includes investor details, investment objectives, project duration, land and requirements, and others.

2. CIRCUMSTANCES WHERE A FOREIGN INVESTOR MUST OBTAIN AN IRC

Pursuant to Article 36 of the Investment Law. The IRC is required in the following cases:
  1. Investment projects of foreign investors.
  2. Investment projects of the business organizations mentioned in Clause 1 Article 23 of the Investment Law.
Article 23 of the Investment Law: 1. When establishing business organizations, contributing capital, buying shares or capital contributions of business organizations; making investments under business cooperation contracts in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:
  1. 51% of charter capital or more is held by foreign investors, or the majority of the general partners are foreigners if the business organization is a partnership;
  2. 51% of charter capital or more is held by the business organizations mentioned in Point a of this Clause;
  3. 51% of charter capital or more is held foreign investors and the business organizations mentioned in Point a of this Clause.
3. CIRCUMSTANCES WHERE AN INVESTOR DOES NOT HAVE TO OBTAIN AN IRC

Pursuant to clause 2, Article 36 of the Investment Law. The cases in which an IRC is not required are as follows:
  1. Investment projects of Vietnamese investors;
  2. Investment projects of the business organizations mentioned in Clause 2 Article 23 of the Investment Law;
  3. Investment is made by contributing capital, buying shares, or buying capital contributions of business organizations.
4. PROCEDURES AND REQUISITE DOCUMENTS TO OBTAIN AN IRC

The procedures to obtain an IRC in Viet Nam are provided under Article 37 of the Viet Nam Investment Law 2014. Accordingly, there are two cases in which investment conditions must be met for an IRC to be issued, specifically:
  1. If the project is subject to issuance of a Decision on Investment Policies as prescribed in Article 30, Article 31, and Article 32 of Viet Nam Investment Law, the Investment Registry Office shall issue the IRC to the investor within 05 working days from the receipt of the Decision on Investment Policies.
  2. If the project it does not subject to issuance of a Decision on Investment Policies as prescribed in Article 30, Article 31, and Article 32 of Viet Nam Investment Law, the investor shall follow the procedures as below:
  1. The investor shall submit the documents as provided Article 33.1 of Viet Nam Investment Law to the Investment Registry Office;
  2. Within 15 days from the receipt of sufficient documents, the Investment Registry Office shall issue the IRC. In case of rejection, the investor must be notified in writing and provided with explanation.
As regards the required documents for issuance of IRC, per Article 33.1 of Law on Investment No. 67/2014/QH13, an "Investment Project File/Dossier" must comprise the following documents:
  1. A request for execution of the Investment Project in Viet Nam;
  2. A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of Establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization).
  3. An Investment Proposal that specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, requests for investment incentives, assessment of socio-economic effects of the project;
  4. Copies of any of the following documents: financial statements of the last 02 years of the investor; commitment of the parent company to provide financial support; commitment of a financial institutions to provide financial support; guarantee for investor's financial capacity; description of investor's financial capacity;
  5. Demand for land use; if the project does not use land allocated, leased out by the State, or is not permitted by the State to change land purposes, then a copy of the lease agreement or other documents certifying that the investor has the right to use the premises to execute the project shall be submitted;
  6. Explanation for application of technologies to the project mentioned in Point b Clause 1 Article 32 of Law on Investment No. 67/2014/QH13, which specifies: names of technologies, origins, technology process diagram, primary specifications, conditions of machinery, equipment and primary technological line;
  7. The business cooperation contract (if the project is executed under a business cooperation contract).
In practice, the time duration would be lengthened due to the time for preparation of documents from investor, getting them notarized, legalized and authenticated before being accepted in Viet Nam. The documents in foreign languages shall need to be translated into Vietnamese.  The actual time for processing paper at the State authority would also last longer in practice when the State authority evaluate the project plan of the investor to ensure that its investment purpose is achievable economically and in accordance with the regulations of Viet Nam.  It is advised that the client engage professional law firm in Viet Nam to assist with advisory and investment registration process.
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