Setting Up an FDI Company in Vietnam: IRC and ERC Explained
Step-by-step guide to setting up a foreign-invested (FDI) company in Vietnam: 2-stage IRC + ERC process, 15-day and 3-day timelines, sectoral conditions, and capital requirements.
Setting Up an FDI Company in Vietnam: IRC and ERC Explained
Quick answer: Foreign investors setting up a company in Vietnam must complete a 2-stage process: first obtain an Investment Registration Certificate (IRC) within 15 working days under Article 38 of the Investment Law 2020, then register an Enterprise Registration Certificate (ERC) within 3 working days under Article 27 of the Enterprise Law 2020. Sectoral conditions, WTO market access commitments, and minimum capital requirements apply based on business lines.
What is an FDI company in Vietnam
A Foreign Direct Investment (FDI) company is a legal entity in Vietnam where one or more foreign investors hold equity. Under Article 22 of the Investment Law 2020 (No. 61/2020/QH14), a foreign investor establishing an economic organization in Vietnam must satisfy market access conditions and complete two separate but linked procedures: investment registration and enterprise registration.
The most common FDI vehicles are:
- Single-member limited liability company (LLC): 100% foreign-owned, one founding investor.
- Multi-member LLC: 2 to 50 members, foreign and/or domestic.
- Joint-stock company (JSC): minimum 3 shareholders, allows future share issuance.
The choice of entity is governed by the Enterprise Law 2020 (No. 59/2020/QH14) and affects governance, profit distribution, and exit options.
The 2-stage process: IRC then ERC
Vietnam separates the approval of the investment project (IRC) from the creation of the legal entity (ERC). The order is fixed:
| Stage | Certificate | Legal basis | Statutory timeline | Issued by |
|---|---|---|---|---|
| 1 | Investment Registration Certificate (IRC) | Art 38 Investment Law 2020 | 15 working days | Provincial DPI or Industrial Zone Authority |
| 2 | Enterprise Registration Certificate (ERC) | Art 27 Enterprise Law 2020 | 3 working days | Business Registration Office, Provincial DPI |
After both certificates are issued, the investor must complete post-incorporation obligations such as seal registration, tax code activation, bank account opening, and capital contribution within 90 days.
Stage 1: Investment Registration Certificate (IRC)
The IRC is the government approval for the investment project itself. Article 38 of the Investment Law 2020 sets the procedure and timeline.
Authority: The Department of Planning and Investment (DPI) of the province where the project is located issues the IRC for projects outside industrial zones. Projects inside industrial parks, export processing zones, or high-tech parks are handled by the relevant zone Management Board.
Statutory timeline: 15 working days from the date a complete dossier is submitted (Art 38.1). In practice, complex sectors or projects requiring policy approval under Article 30 or 31 (large-scale, land-intensive, or strategic projects) take 30 to 90 working days.
Process:
- Pre-application due diligence: confirm the sector is open to foreign investors under the negative list and WTO commitments.
- Prepare dossier in Vietnamese (notarized translations required for foreign documents).
- Submit to DPI or Zone Management Board.
- Respond to clarification requests within 10 working days.
- Receive IRC bearing a unique project code.
The IRC records the project name, investor, project location, total investment capital, charter capital, project duration, and any conditions attached.
Stage 2: Enterprise Registration Certificate (ERC)
Once the IRC is granted, the investor proceeds to incorporate the legal entity. Article 26 and Article 27 of the Enterprise Law 2020 govern the procedure.
Authority: Business Registration Office under the provincial DPI.
Statutory timeline: 3 working days from receipt of a valid dossier (Art 27.5).
Process:
- Draft company charter consistent with the IRC.
- Prepare list of members or shareholders with notarized identification.
- Submit ERC application along with a copy of the IRC.
- Receive ERC containing the enterprise code, which also serves as the tax code under Decree 01/2021/ND-CP.
The ERC creates the legal personality of the company. Only after the ERC is issued can the company sign contracts, open bank accounts, and hire staff in its own name.
Required documents per stage
For the IRC (Stage 1)
- Application form for IRC (standard template under Decree 31/2021/ND-CP).
- Proposal of investment project including objectives, scale, capital, location, schedule.
- Financial statements of the foreign investor for the last 2 years, or bank statements confirming financial capacity.
- Notarized passport copy (individual investor) or business registration certificate plus articles of association (corporate investor), legalized and translated.
- Lease agreement or memorandum of understanding for the project site.
- Power of attorney if filed through a representative.
For the ERC (Stage 2)
- Application form for enterprise registration.
- Draft charter signed by founding members or shareholders.
- List of members (LLC) or list of founding shareholders (JSC).
- Notarized copy of the IRC.
- Notarized identification of legal representative and members.
Sectoral conditions: the negative list
Vietnam applies a negative-list approach to foreign investment. Article 9 of the Investment Law 2020, together with Decree 31/2021/ND-CP, classifies sectors as:
- Banned sectors: foreign investment is prohibited. Examples include narcotics, certain wildlife trade, prostitution, human trafficking, and human cloning.
- Conditional sectors: foreign investment is allowed only if specific conditions are met. The 2020 list includes 25 sectors fully open, 59 with limited foreign ownership, and several requiring local partnerships. Common conditional sectors include logistics, education, advertising, telecommunications, distribution, and real estate brokerage.
- Unconditional sectors: open to foreign investors on the same terms as domestic investors.
Conditions typically reflect Vietnam's commitments under the WTO Schedule of Specific Commitments in Services, the CPTPP, and the EVFTA. Where domestic law is more restrictive than treaty commitments, the treaty prevails for investors from member states.
Capital requirements per sector
Note: The figures and classifications below are indicative; final sector classification and capital adequacy are subject to confirmation by the competent licensing authority (DPI or Zone Management Board) for each specific project.
The Investment Law 2020 does not impose a universal minimum capital, but several sectors carry statutory floors:
| Sector | Indicative minimum charter capital |
|---|---|
| Real estate business | VND 20 billion |
| Banking | VND 3,000 billion |
| Securities brokerage | VND 25 billion |
| Insurance (non-life) | VND 300 billion |
| International travel | VND 500 million plus deposit |
| Education (university) | varies by Decree 86/2018/ND-CP |
For unregulated sectors, the licensing authority assesses whether the proposed charter capital is reasonable in relation to project scale. Authorities assess whether proposed capital demonstrates substance sufficient for the project scale and for foreign manager work permit applications.
Post-incorporation obligations
After the ERC is granted, the following actions are time-sensitive:
- Seal registration: company seal under Article 43 of the Enterprise Law 2020, kept at the company office.
- Tax registration and invoice issuance: register for e-invoices, declare initial license tax within 30 days.
- Bank accounts: open a Direct Investment Capital Account (DICA) for capital inflows, plus operating VND and foreign currency accounts.
- Capital contribution: complete within 90 days from the ERC date (Art 47 and Art 75 of the Enterprise Law 2020). Contributions must flow through the DICA.
- Labor: register the labor utilization plan within 30 days of first hire.
- Social insurance (BHXH): register the employer code and contribute for all Vietnamese employees and qualifying foreign employees holding work permits of 12 months or more.
- Sub-licenses: obtain sector-specific licenses such as food safety, education operating license, retail license, or trading license before commercial operations begin.
5 common pitfalls
- Skipping the negative-list check: filing for sectors with foreign-ownership caps without WTO market access can trigger outright rejection at the IRC stage.
- Underestimating charter capital: capital that is too low signals lack of substance, undermines work permit applications, and may delay the IRC.
- Wrong project location: leasing premises not zoned for the proposed business invalidates the IRC dossier; verify land-use planning with the local authority first.
- Translating without notarization and legalization: foreign documents must be legalized by a Vietnamese diplomatic mission and translated by a licensed translator; uncertified copies are routinely rejected.
- Late capital contribution: missing the 90-day deadline under Article 47 of the Enterprise Law 2020 requires a charter amendment and may attract administrative penalties.
FAQ
How long does the full IRC plus ERC process take in practice? The statutory timeline totals 18 working days, but realistic end-to-end timing is 6 to 10 weeks once document legalization, clarification rounds, and bank account setup are included.
Can a foreigner own 100 percent of a company in Vietnam? Yes, for sectors that are unconditional or fully open under the negative list and WTO commitments. Conditional sectors may cap foreign ownership at 49, 51, 65, or other percentages.
Do I need a Vietnamese partner? Only for sectors that require joint ventures under conditional access rules. Many sectors, including most manufacturing, IT services, and consulting, allow 100 percent foreign ownership.
Is a physical office required? Yes. The company must have a registered head office in Vietnam at a verified address; virtual offices are not accepted for FDI companies in most provinces.
What if my sector is not on the negative list? Sectors not listed as banned or conditional are treated as open. The investor still needs the IRC because foreign capital is involved.
Asklaw Shortcut
Need to check whether your business line is open, conditional, or banned for foreign investment, and what minimum capital applies? Try the Asklaw FDI Eligibility Shortcut at asklaw.vn/shortcut/fdi-vietnam-eligibility. The tool maps your proposed sector against the Investment Law 2020 negative list and WTO commitments, and returns the indicative capital floor plus required sub-licenses. Output is indicative only and does not bind any licensing authority; final eligibility and capital adequacy are confirmed during IRC review.
Citations
| Provision | Source | Link |
|---|---|---|
| Art 9 Investment Law 2020 | Negative list framework | vbpl.vn (Law 61/2020/QH14) |
| Art 22 Investment Law 2020 | Establishment of economic organization by foreign investor | vbpl.vn (Law 61/2020/QH14) |
| Art 38 Investment Law 2020 | IRC procedure and 15-day timeline | vbpl.vn (Law 61/2020/QH14) |
| Art 39 Investment Law 2020 | IRC issuing authority | vbpl.vn (Law 61/2020/QH14) |
| Art 26 Enterprise Law 2020 | Enterprise registration procedure | vbpl.vn (Law 59/2020/QH14) |
| Art 27 Enterprise Law 2020 | ERC issuing timeline 3 working days | vbpl.vn (Law 59/2020/QH14) |
| Art 47, Art 75 Enterprise Law 2020 | 90-day capital contribution | vbpl.vn (Law 59/2020/QH14) |
| Decree 31/2021/ND-CP | Implementation of Investment Law 2020 | vbpl.vn |
| Decree 01/2021/ND-CP | Enterprise registration | vbpl.vn |
Disclaimer: This article is general reference information drawn from publicly available Vietnamese legal sources (see citation table). It is edited by the Asklaw Editorial Team in compliance with Vietnam's AI Law 2026 (transparency obligations) and the Law on Lawyers 2006 (65/2006/QH11, as amended by Law 20/2012/QH13). It does not constitute legal advice for any specific case and does not create a lawyer-client relationship. For personalized advice, please consult a Vietnam-licensed lawyer. Personal data (if any) is processed under Vietnam's Personal Data Protection Law 2026.