FDI Investment Structures in Vietnam under the 2025 Investment Law: IRC, ERC and M&A Approval in a Post-Licensing Regulatory Framework

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Key regulatory developments and their implications for foreign investors entering the Vietnamese market.

Standfirst

The 2025 Investment Law, which takes effect on 1 March 2026, introduces a number of adjustments to Vietnam’s legal framework governing foreign investment. While the new law does not fundamentally overhaul the existing licensing system, it provides several notable refinements concerning investment procedures, approval requirements for investment projects, and the regulatory approach to foreign capital contributions and share acquisitions. These changes reflect Vietnam’s broader policy shift toward a more flexible investment regime, moving gradually from an ex-ante licensing approach toward enhanced ex-post supervision. For foreign investors, understanding these developments is essential in structuring market entry strategies and ensuring regulatory compliance.

1. Legal Structures for Foreign Investment in Vietnam

In practice, foreign investors entering the Vietnamese market typically adopt one of two primary investment structures:

(i) Establishing a new foreign-invested enterprise (Greenfield investment);

(ii) Acquiring equity in an existing Vietnamese company through capital contribution or share acquisition (M&A investment).

Both structures are governed primarily by the Investment Law and involve different regulatory procedures, particularly with respect to:

the Investment Registration Certificate (IRC);
the Enterprise Registration Certificate (ERC); and
the approval process for foreign capital contribution or share acquisition (M&A Approval).

The 2025 Investment Law retains this overall regulatory structure but introduces certain procedural refinements that may significantly influence the way foreign investors structure their investments in Vietnam.

2. The IRC–ERC Framework for Establishing FDI Enterprises

For greenfield investments, the traditional regulatory framework in Vietnam requires two key steps:

Obtaining an Investment Registration Certificate (IRC), which records the investment project of the foreign investor; and
Obtaining an Enterprise Registration Certificate (ERC), which establishes the legal entity responsible for implementing the project.

Under the Investment Law 2020, this process followed a fixed sequence:

IRC → ERC

In other words, the investment project must first be approved before the enterprise implementing the project can be legally established.

3. Greater Flexibility in the IRC–ERC Sequence

One of the noteworthy developments under the Investment Law 2025 is the introduction of greater flexibility in the order of licensing procedures. In certain circumstances, foreign investors may establish a company first and subsequently register the investment project.

This effectively allows two alternative investment structures:

Traditional structure: IRC → ERC

Flexible structure: ERC → IRC

This adjustment is particularly relevant for multinational groups that intend to establish a holding company or regional operating entity in Vietnam before launching multiple investment projects.

By allowing greater flexibility in the licensing sequence, the new framework may facilitate more efficient investment structuring and reduce delays in the initial market entry phase.

4. Adjustments to Investment Policy Approval Procedures

The Investment Law 2025 also clarifies the scope of projects subject to investment policy approval, which remains a key regulatory requirement for certain types of investment projects.

Instead of relying primarily on the authority of different government bodies to determine the applicable procedure, the new law provides a more explicit list of project categories that require investment policy approval, as well as cases where such approval is not required.

In addition, the law further clarifies the approval authority of different state bodies:

The National Assembly approves projects that involve special mechanisms or exceptional policy frameworks;
The Prime Minister approves certain categories of major investment projects;
Provincial People’s Committee Chairpersons approve most investment projects implemented at the local level.

This clearer allocation of authority is expected to reduce administrative overlap and enhance predictability for investors when preparing investment projects.

5. Simplification of Investment Project Adjustments

Another significant change under the Investment Law 2025 concerns the simplification of procedures for adjusting investment projects.

Under the previous regulatory framework, various changes to an investment project — including adjustments to total investment capital or technological processes — could trigger the requirement to amend the investment policy approval.

The new law removes certain cases from this requirement and retains only those adjustments that are considered fundamental to the project, such as:

changes to the project’s objectives or core business activities;
changes to the project location;
significant changes to land use scale;
extensions of the project implementation schedule beyond the permitted threshold.

By narrowing the circumstances requiring investment policy adjustment, the new framework aims to reduce unnecessary administrative procedures and allow investors greater operational flexibility.

6. M&A Procedures for Foreign Investors

Apart from establishing new enterprises, foreign investors frequently enter the Vietnamese market through capital contribution or share acquisition in existing Vietnamese companies.

In certain circumstances, foreign investors are required to obtain approval for capital contribution or share acquisition prior to completing the transaction.

The Investment Law 2025 retains this approval mechanism, particularly for transactions involving:

companies operating in sectors subject to market access conditions for foreign investors;
transactions resulting in foreign investors obtaining controlling ownership;
transactions that significantly alter the ownership structure of the target company.

However, the new regulatory approach also signals a gradual reduction in administrative intervention for transactions that do not raise significant regulatory concerns.

7. The Shift from Ex-Ante Licensing to Ex-Post Supervision

A key policy trend reflected in the Investment Law 2025 is the gradual transition from ex-ante licensing toward ex-post supervision.

Under the traditional approach, many regulatory requirements had to be satisfied before an investment project could be implemented. The new law seeks to streamline certain approval procedures while strengthening post-licensing monitoring and regulatory oversight.

As a result, foreign investors may enjoy greater operational flexibility. At the same time, they will also bear greater responsibility for ensuring ongoing compliance with Vietnam’s regulatory framework.

In this evolving regulatory environment, establishing effective internal compliance systems and conducting regular legal reviews will become increasingly important for foreign-invested enterprises.

The Investment Law 2025 does not fundamentally change Vietnam’s licensing framework for foreign investment, but it introduces several notable refinements designed to increase regulatory flexibility and improve the investment environment.

Changes relating to the sequencing of IRC and ERC procedures, the scope of investment policy approval, and the regulatory approach to foreign share acquisitions may create new opportunities for foreign investors when structuring their investments in Vietnam.

As Vietnam continues to enhance its investment climate and deepen its integration into the global economy, a thorough understanding of the new regulatory framework will be essential for foreign investors seeking to develop effective market entry strategies and manage legal risks.