Setting up an FDI company under the Law on Investment 2025: the sequence has been reversed.

The Law on Investment No. 143/2025/QH15 is one of the most significant reforms of Vietnam's foreign investment rules in years. Besides replacing the Law on Investment 2020, it changes the order of project procedures, the authority to approve investment policy and the scope of conditional business lines.

For foreign investors, the most direct change is the choice between the traditional route of "IRC first, then ERC" and, where suitable, "ERC first, then IRC". This can shorten the time to establish a legal presence in Vietnam, but it also raises new questions about capital contribution, market access and compliance before the IRC is issued.

The new sequence: the enterprise may be established first and the investment certificate applied for afterwards

Under the old rules, a foreign investor had to obtain the Investment Registration Certificate (IRC) before establishing an enterprise and obtaining the Enterprise Registration Certificate (ERC). The investor had to wait for the investment registration authority to finish appraising the project before it had a legal entity in Vietnam to sign contracts, open bank accounts or start other preparatory work.

The Law on Investment 2025 lets the investor choose one of two routes, depending on the project and its practical needs:

Setting up the company first does not remove the legal risks. The time advantage of the ERC first mechanism does not mean that the legal risks are eliminated. Beyond the possibility that the IRC is refused, the investor must also address the interaction between the 90 day time limit for contributing the charter capital in full under the Law on Enterprises and the 12 month time limit for completing the IRC issuance procedure. Decree No. 296/2026/ND-CP has partly resolved the difficulty relating to the dossier by allowing an enterprise established before the IRC is obtained to use an undertaking to satisfy market access conditions in place of a copy of the IRC. However, for a project falling within business lines with conditional market access, the investor still needs to assess carefully the likelihood of obtaining the IRC before choosing this route.

Note: some sources still cite a 6-month period from a draft decree. Decree No. 96/2026/ND-CP sets the period at 12 months.

Procedural time limits have been shortened

The special investment procedure, often called the "green lane", applies to projects in industrial parks, export processing zones, hi-tech parks, economic zones, free trade zones and international financial centres. A qualifying project may skip or simplify certain construction, fire safety and environmental procedures, which greatly shortens preparation and implementation.

The Department of Finance and zone management boards receive investment applications

The two-tier local government model introduced on 1 July 2025 also changed which authorities receive and process investment applications. Investors need to identify the correct authority when preparing the application:

Under the new structure, the Department of Planning and Investment has merged into the Department of Finance, and at central level the Ministry of Planning and Investment has merged into the Ministry of Finance. Guidance and internal procedures that still refer to filing with the Department of Planning and Investment should be updated.

Incentivised areas are now identified down to commune level

Decree No. 96/2026/ND-CP allows provincial People's Committees to identify and publish investment incentive areas down to commune level, instead of relying only on a central list. For a commune formed by merging administrative units, the incentive regime follows the classification of most of the merged units. Investors should check the province's official publication when planning the project, not the old list.

Projects with significant impact still need in-principle investment approval

The Law on Investment 2025 keeps investment policy approval for projects with a major economic, social, defence or security impact. However, it sets out the criteria for who decides more clearly, in one article, and delegates more to local authorities than before.

Not every capital contribution or share purchase needs prior registration

Not every capital contribution or share purchase by a foreign investor must be registered with the investment registration authority. Registration is required in three cases that can materially change foreign ownership or affect national defence and security:

1. the transaction increases foreign ownership in a business line with conditional market access;
2. the transaction gives foreign investors more than 50% of the charter capital, including moving from 50% or less to over 50%, or increasing a holding already above 50%;
3. the target holds a land use right certificate on an island, in a border or coastal commune or ward, or in another area affecting national defence and security.

The authority decides within 10 working days. If the target holds land in a sensitive area, the investment registration authority must consult the Ministry of National Defence and the Ministry of Public Security within 2 working days, and they must reply within 5 working days. The overall 10-working-day limit still applies.

After receiving the approval, the enterprise updates its members or shareholders with the business registration authority. Decide at the outset whether a transaction needs registration, because skipping the approval can hold up the update of the ownership structure.

The prohibited list grows while the conditional list shrinks

Prohibited business lines increase to 11 groups

The Law on Investment 2025 extends the list of prohibited business lines from 8 to 11 groups. The three new groups are e-cigarettes and heated tobacco products, trading in national treasures, and exporting relics and antiquities. The other groups still cover narcotics; prohibited chemicals and minerals; specimens of endangered, precious and rare species; prostitution; trafficking in people, human tissue and body parts; human cloning; firecrackers; and debt collection services.

The conditional list now has 142 business lines

Several lines have been removed from the conditional list, including data centre services, tax procedure services, customs procedure services, multimodal transport, some construction activities and some insurance-related activities. Removal lowers the conditions for market entry, but investors must still check sector-specific requirements before starting operations.

Foreign investors must also check the restricted market access list

For foreign investors, the review does not stop at the conditional list. The investor must also check whether the business line is on the list of lines with restricted market access, which is set out in Appendix I to Decree No. 96/2026/ND-CP:

Notably, construction by foreign contractors has been added to the conditional market access group. This list is key to determining ownership caps, investment forms and conditions that apply specifically to foreign investors.

The foreign ownership ratio follows three principles

1. International treaties (WTO, CPTPP, EVFTA and RCEP commitments) take priority
2. Sector-specific laws apply where they contain specific provisions
3. If a line is restricted but no specific rule exists, foreign ownership is capped at 49%; an unrestricted line allows up to 100%

In 2026, many business lines were reclassified; data centre and customs procedure services, for example, left the conditional list. Investors should not rely on foreign ownership tables published before 2026. Use Appendix I to Decree No. 96/2026/ND-CP, sector-specific laws and the treaties that apply to the investor's nationality.

Enterprises must declare their beneficial owners

Law No. 76/2025/QH15 amending the Law on Enterprises, effective from 1 July 2025, introduced the "beneficial owner" and a duty to declare information about them. The aim is to make ownership structures more transparent and to identify the individual who actually controls the enterprise.

A beneficial owner is an individual who directly or indirectly owns 25% or more of the charter capital or voting shares, or who controls the appointment and removal of managers and amendments to the charter. Decree No. 168/2025/ND-CP sets out the 25% threshold and the control criteria in detail.

A joint stock company must also notify changes to its foreign investor shareholders within 10 days. The business registration authority then has 3 working days to update the database. Enterprises should distinguish between their own notification deadline and the authority's processing time.

An enterprise established before 1 July 2025 that does not supply its beneficial owner information as required may be fined VND 70 to 100 million under Decree No. 288/2026/ND-CP and ordered to supply the missing information.

The market entry route in six steps

Setting up a foreign-invested enterprise combines several groups of procedures; it is not just enterprise registration. Based on the changes above, investors can use this general route when preparing a project:

1. Review the business lines: check whether each line is prohibited, conditional or restricted for market access, and cross-check against the international commitments for the investor's nationality.
2. Check whether investment policy approval is needed, and at which level.
3. Choose the sequence: ERC first then IRC within 12 months, or IRC first then ERC. For conditional business lines, consider the traditional order to avoid the risks of the period before the IRC is issued.
4. File the application with the investment registration authority of the provincial Department of Finance, or with the zone management board for projects in a zone.
5. Declare the beneficial owners in the enterprise registration application.
6. Open a direct investment capital account and set up periodic reporting (see our separate article on post-establishment compliance).