By Lawyer Luu Thi Hue – UniLaw LLC

UNILAW’S INSIGHTS ON THE HANOI STOCK MARKET

The landscape of foreign direct investment in Vietnam is continually evolving, driven by a robust legal framework and a growing appetite for capital among local enterprises. For global investors looking to invest to vietnam, the Hanoi stock market and the broader corporate investment environment offer significant opportunities. However, navigating these waters requires a deep understanding of both statutory laws and the practical application of these rules in Vietnamese courts. At Unilaw, we combine our extensive experience in corporate registration with a keen eye for litigation trends to guide our clients through the complexities of fdi vietnam.

A Cautionary Tale of Business Cooperation in Hanoi

To understand the stakes involved in investing việt nam, one must look at how disputes are adjudicated. A prominent example is the case involving General Transport Corporation T (the Plaintiff) and S Company Limited (the Defendant), which culminated in the Judgment No. 133/2020/KDTM-PT issued by the High People’s Court in Hanoi. This case centered on a dispute arising from a Business Cooperation Contract (BCC). The Plaintiff and the Defendant had entered into a complex arrangement to manage and operate transport assets. As the relationship soured, the parties found themselves embroiled in litigation over the distribution of profits and the fulfillment of operational obligations. At the trial level (Judgment No. 28/2019/KDTM-ST), the District Court of Hai Ba Trung initially ruled on the matter, but both parties appealed.

The High People’s Court in Hanoi, upon reviewing the case, identified serious procedural errors and a failure to clarify the rights and obligations of the parties within the BCC framework. The Court noted that the lower court had not properly evaluated the actual investment contributions and the financial performance of the cooperation. Consequently, the High People’s Court annulled both the trial and appellate judgments and ordered the case back to the trial court for a complete retrial. This result serves as a stark reminder for those seeking foreign direct investment in Vietnam: the clarity of your contract is only as good as the court’s ability to interpret it. Ambiguous clauses in a BCC can lead to years of legal deadlock and the complete nullification of prior legal victories.

In contrast, successful fdi to vietnam is exemplified by our work with an international software firm based in Hong Kong (referred to here as “the Investor”) that sought to establish a presence in the capital. The Investor aimed to set up a 100% foreign-owned subsidiary in Hanoi specializing in software processing and programming. Our team provided comprehensive support, from drafting the feasibility study to negotiating with the Hanoi Department of Planning and Investment. On August 24, 2011, the People’s Committee of Hanoi officially issued the Investment Certificate (also acting as the Business Registration Certificate), allowing the company to operate with a chartered capital of 100,000 USD. This success story highlights that while the market has risks, a disciplined adherence to fdi vietnam procedures ensures a smooth market entry.

Establishing the Foundation: Legal Definitions of Investment

For any entity considering foreign direct investment in Vietnam, the journey begins with Article 3 of the Law on Investment 2020, which provides the dictionary for all commercial activities. Understanding these terms is the first step to successful investing việt nam.

Article 3. Interpretation of terms

15. “Approval for investment guidelines” means an approval by a competent State agency of the objectives, location, scale, schedule, and duration of a project; the investor or the form of selecting investors and special mechanisms/policies (if any) to implement an investment project.

Plain Language: This is the “green light” from the government. Before you can build a factory or a large-scale facility, the authorities must agree that your plan fits the country’s development goals.

18. “Investment project” means a set of proposals to spend medium-term or long-term capital to conduct business investment activities in a specific area and for a specific period of time.

Plain Language: An investment project isn’t just a business; it’s a specific plan with a defined budget, location, and timeline that the law recognizes as a legal entity of its own.

19. “Expansion investment project” means an investment project that develops an existing investment project by expanding the scale, increasing capacity, innovating technology, reducing pollution, or improving the environment.

Plain Language: If you already have a business in Vietnam and want to make it bigger or cleaner, the law treats this as a specific type of project that may qualify for additional incentives.

22. “Business investment” means the investor’s spending of investment capital to perform business activities.

Plain Language: This is the act of putting your money to work to make a profit within the Vietnamese market.

23. “Business investment conditions” mean the conditions that an individual or organization must meet when performing business investment activities in conditional business lines.

Plain Language: In certain industries, like banking or education, you can’t just start; you must meet specific standards like having a certain amount of money or hiring licensed professionals.

The Regulatory Framework for Foreign Direct Investment in Vietnam

The Law on Investment 2020 is the primary statute governing how international players can invest to vietnam. It ensures that the state respects international treaties while maintaining national security.

Article 4. Application of the Law on Investment and relevant laws

1. Business investment activities in the territory of Vietnam must comply with the Law on Investment and other relevant laws.

Plain Language: Every investment, whether by a local or a foreigner, must follow the rules laid out in this main investment law and other specific laws (like land or tax laws).

2. In case of different provisions between the Law on Investment and other laws enacted before the effective date of the Law on Investment regarding the lines of business prohibited from investment or conditional business lines, the provisions of the Law on Investment shall prevail.

Plain Language: The Law on Investment is the supreme authority on what businesses are allowed and what the rules are for restricted industries. It overrules older laws if they disagree.

4. For contracts in which at least one party is a foreign investor or an economic organization specified in Clause 1, Article 23 of this Law, the parties may agree in the contract to apply foreign laws or international investment customs if such agreement is not contrary to the provisions of Vietnamese law.

Plain Language: If you are a foreign investor, you have the flexibility to use international laws in your contracts, as long as you don’t violate fundamental Vietnamese rules.

Defining the Status of a Foreign Investor

Who exactly is a “foreign investor”? The distinction is vital for determining the procedures required for fdi to vietnam.

Article 3. Interpretation of terms (Continued)

32. “Investor” means an organization or individual that performs business investment activities, including domestic investors, foreign investors, and foreign-invested economic organizations.

Plain Language: An investor can be a person, a local company, or a foreign-owned company. All are treated as investors under the law.

33. “Foreign investor” means an individual with foreign nationality or an organization established under foreign laws that performs business investment activities in Vietnam.

Plain Language: If you have a foreign passport or your company was formed outside of Vietnam, you are officially a foreign investor.

34. “Domestic investor” means an individual with Vietnamese nationality or an economic organization that does not have foreign investors as members or shareholders.

Plain Language: To be a domestic investor, every single owner of the company must be Vietnamese. Even one foreign share changes this status.

36. “Foreign-invested economic organization” means an economic organization having a foreign investor as a member or shareholder.

Plain Language: This is any company registered in Vietnam that has at least one foreign owner.

Prohibited and Conditional Business Lines for FDI Vietnam

Not every door is open for foreign direct investment in Vietnam. The law explicitly bans certain activities to protect public health and safety.

Article 6. Prohibited business lines

1. Prohibited business investment activities include: a) Narcotic substances… b) Chemicals and minerals… c) Specimens of wild flora and fauna… d) Prostitution; dd) Human trafficking, human tissues, corpses… e) Activities related to human cloning; g) Firecrackers; h) Debt collection services.

Plain Language: These are the “no-go” zones. For example, debt collection used to be a business, but it is now strictly illegal to invest in this sector.

Article 7. Conditional business lines

1. Conditional business lines are those in which business investment activities must meet necessary conditions for reasons of national defense, national security, social order and safety, social ethics, or public health.

Plain Language: These are industries where you need special permission or must follow extra rules because they affect the safety or health of the public.

3. Business investment conditions… shall be prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties to which the Socialist Republic of Vietnam is a member. Ministries, ministerial-level agencies, People’s Councils, People’s Committees at all levels, and other organizations and individuals are not allowed to issue regulations on business investment conditions.

Plain Language: Only high-level government bodies can set these rules. Local officials or individual departments cannot make up their own requirements for you to start a business.

FDI via Capital Contribution and Share Acquisition

One of the most popular ways to invest to vietnam is through the stock market or by buying into existing companies. This is regulated by Articles 24, 25, and 26 of the Law on Investment.

Article 24. Investment through capital contribution, purchase of shares or stakes

1. Investors have the right to contribute capital, purchase shares or stakes in economic organizations.

Plain Language: You have a legal right to buy into Vietnamese companies, whether they are private or listed on the stock exchange.

2. Foreign investors’ capital contribution or purchase of shares/stakes must satisfy the following: a) Market access conditions for foreign investors… b) Assurance of national defense and security… c) Provisions of the law on land regarding conditions for receiving land use rights.

Plain Language: Buying a company isn’t always simple; you must check if foreigners are allowed in that industry and if the company owns sensitive land near borders or coastlines.

Article 25. Forms of capital contribution, purchase of shares or stakes

2. Foreign investors purchase shares or stakes in economic organizations in the following forms: a) Purchase of shares of a joint-stock company from the company or its shareholders; b) Purchase of stakes of members of a limited liability company to become a member… c) Purchase of stakes of members of other economic organizations.

Plain Language: You can buy new shares issued by a company or buy existing shares from the people who already own them.

Article 26. Procedures for investment through capital contribution, purchase of shares or stakes

2. A foreign investor shall perform procedures for registration of capital contribution or purchase of shares/stakes… if: a) The contribution/purchase increases the ownership ratio of foreign investors in an economic organization business in conditional market access sectors… b) The contribution/purchase results in a foreign investor… holding more than 50% of the charter capital.

Plain Language: If your investment is small and in a non-restricted industry, you can often skip the investment registration. But if you are taking over the company (more than 50%) or entering a restricted sector, you must get government approval first.

The 2025 Modernization of the Securities Market

The Hanoi stock market is seeing a wave of modernization with new decrees aimed at transparency. Decree No. 245/2025/ND-CP introduced critical updates for companies wishing to list. These “Insights” from our sources are crucial for those investing việt nam via securities.

Article 109. Specific conditions for listing (Amended)

c) The return on equity (ROE) of the year immediately preceding the year of listing registration must be at least 5%, and the business activities of the 02 years immediately preceding the year of listing registration must be profitable; there must be no accumulated loss based on the audited annual financial statement…

Plain Language: To be listed on the stock exchange now, a company must prove it is healthy. It needs to show a profit and a decent return for its owners for at least two years before joining the market.

Furthermore, foreign direct investment in Vietnam is now more easily tracked. Article 142 of the same decree mandates transparency regarding foreign ownership.

Article 142. Dossiers, order and procedures for notifying maximum foreign ownership ratio

3. Within 07 working days from the date of receipt of a valid dossier, the State Securities Commission shall notify in writing the receipt of the complete dossier notifying the maximum foreign ownership ratio… simultaneously send it to the Vietnam Securities Depository and Settlement Corporation and the Stock Exchange.

Plain Language: Public companies must now clearly state exactly how much of their stock can be owned by foreigners. This information is shared across all major financial bodies so investors know exactly how much room is left for them to buy in.

Market Access and the “Article 23” Threshold

A critical technicality in fdi vietnam is the treatment of companies that are already foreign-invested. Under Article 23 of the Law on Investment, some local companies are legally treated as foreign investors.

Article 23. Implementation of investment activities by foreign-invested economic organizations

1. An economic organization must satisfy conditions and perform investment procedures prescribed for foreign investors when investing to establish another economic organization; contributing capital/buying shares… if: a) It has foreign investors holding more than 50% of its charter capital… b) It has an economic organization specified in point a holding more than 50% of its charter capital.

Plain Language: If a foreign person owns more than half of a Vietnamese company, that company is then treated like a foreigner. If that company then tries to buy another local company, it has to follow the stricter rules meant for outsiders.

This threshold is vital because it determines market access. Source notes that foreign-invested organizations may be granted more favorable conditions if they were licensed before the current laws took effect, a principle known as grandfathering.

Grandfathering Provisions

Foreign-invested economic organizations that are allowed to apply more favorable market access conditions than those prescribed in the List… may continue to apply the conditions according to the issued Investment Registration Certificate.

Plain Language: If you got a great deal and a wide-open license years ago, the government generally won’t take it away just because new, stricter laws were passed later.

A Strategic View of WTO Commitments and Market Entry

When planning foreign direct investment in Vietnam, one must look at the WTO Schedule of Specific Commitments. These treaties often override local laws and provide the ultimate roadmap for investing việt nam.

For example, in Logistics and Distribution Services, the sources clarify the forms of “commercial presence” allowed.

Horizontal Commitments (WTO Schedule)

(3) Commercial presence: Unless otherwise specified… foreign enterprises are allowed to establish commercial presence in Viet Nam in the form of business co-operation contract, joint venture enterprise, 100% foreign-invested enterprise.

Plain Language: This is the “Big Promise” Vietnam made to the world. In most industries, you are allowed to start your own company or partner with a local one without the government blocking you just because you are a foreigner.

However, specific sectors have “limitations.” In Motion Picture Production (CPC 96112), for instance, the foreign direct investment in Vietnam was historically restricted to joint ventures where the foreign side could not exceed 51% ownership.

Specific Commitments: Audiovisual Services

(3) Only in the forms of business cooperation contracts or joint ventures with Vietnamese partners who are authorized to provide these services in Viet Nam. Foreign capital contribution may not exceed 51% of the legal capital of the joint venture.

Plain Language: In the movie business, you must have a local partner. You are not allowed to own more than 51% of the company, ensuring that local firms remain involved in cultural production.

Legal Protection and Investment Guarantees

One of the biggest concerns for those looking to invest to vietnam is the security of their assets. The Law on Investment 2020 provides explicit guarantees against expropriation.

Article 10. Protection of property ownership

1. Lawful assets of investors shall not be nationalized or confiscated by administrative measures.

Plain Language: The government cannot just take your factory or your office because they want it. Your ownership is protected by law.

2. In case the State compulsory purchases or requisitions assets for reasons of national defense, security… the investor shall be paid and compensated in accordance with the law on compulsory purchase and requisition.

Plain Language: If the government absolutely must have your property (for example, to build a road for national defense), they must pay you fairly for it at market rates.

Furthermore, Article 12 guarantees the right to take your money home after investing việt nam.

Article 12. Assurance of the right to transfer assets of foreign investors abroad

After fulfilling all financial obligations towards the Vietnamese State… foreign investors may transfer the following assets abroad: 1. Investment capital, investment liquidation proceeds; 2. Income from business investment activities; 3. Money and other assets under the lawful ownership of the investor.

Plain Language: Once you’ve paid your taxes and your bills, you are free to take your profits and your original investment money back to your home country. The government won’t trap your funds here.

Dispute Resolution: Litigation vs. International Arbitration

When a project encounters trouble, the choice of forum is critical. Article 14 of the Law on Investment defines how foreign direct investment in Vietnam disputes are handled.

Article 14. Resolution of disputes in business investment activities

1. Disputes related to business investment activities in Vietnam shall be resolved through negotiation and conciliation. If negotiation and conciliation fail, the dispute shall be resolved at Arbitration or Court…

Plain Language: The law prefers that you talk it out first. If that doesn’t work, you can go to a judge or a private group of experts (arbitrators) to decide the case.

3. Disputes between investors in which at least one party is a foreign investor… shall be resolved through one of the following agencies/organizations: a) Vietnamese Court; b) Vietnamese Arbitration; c) Foreign Arbitration; d) International Arbitration; dd) Arbitration established by the disputing parties.

Plain Language: If you are a foreign investor, you don’t have to use a Vietnamese judge. You can agree in your contract to have a group in Singapore, London, or Paris settle the dispute instead.

This was crucial in a client case we handled involving a Polish software company and a Vietnamese distributor. The distributor claimed independent development of a software module, while the Polish client asserted copyright infringement. By leveraging Vietnamese Intellectual Property laws and threatening formal litigation, we were able to protect our client’s source code and functional logic.

Investment Transitions: Changing Owners and Expanding Projects

As fdi vietnam projects mature, they often undergo restructuring. This might involve transferring shares or changing the legal representative. We handled a case for a Japanese electronics firm (let’s call them “a Japanese-invested distribution client Group”) that established a joint venture in Ho Chi Minh City.

The venture was established for the import and distribution of industrial machinery. Over time, the investors needed to adjust the chartered capital and update the list of members. Under Decree 31/2021/ND-CP, such changes must be meticulously documented.

Article 66. Procedures for investment through capital contribution, purchase of shares or stakes for foreign investors

1. …economic organizations having foreign investors… shall perform procedures for registration of changes of members/shareholders at the business registration agency in accordance with the law on enterprises.

Plain Language: If the owners of a company change, you must tell the government. They need to update their records so they know exactly who is responsible for the business and who owns the assets.

In another complex case, a multinational manufacturer (“Project M”) wanted to move their entire operation from a rural province to the capital. This relocation involved not just moving physical assets, but a wholesale amendment of the Investment Registration Certificate. This required coordinating with two different tax departments and two provincial investment agencies.

Managing Foreign Loans and Capital Accounts

Successful fdi to vietnam requires a firm grip on foreign exchange controls. When a foreign subsidiary takes a loan from its parent company abroad, it must be registered with the State Bank of Vietnam (SBV).

We assisted a European software firm that had merged two local subsidiaries. Before the merger, one subsidiary had a 100,000 USD short-term loan from its Swiss parent company. After the merger, the loan was extended to a five-year term, making it a medium-to-long-term loan.

Under Circular No. 25/2014/TT-NHNN, this change mandated registration with the SBV. Failure to register such loans can prevent the company from legally paying back the principal or interest abroad. Our role was to provide the “Explanation of Loan Purpose” and ensure the new entity inherited the debt correctly under Vietnamese law.

Conclusion: The Path Forward for Investors

The Hanoi market, while complex, is increasingly governed by transparency and international standards. Whether you are seeking fdi vietnam through a new manufacturing site in a high-tech park or through investing việt nam via the stock exchange, the legal safeguards are in place. However, the Judgment No. 133/2020/KDTM-PT mentioned earlier serves as a reminder that procedural diligence is paramount. Courts will not hesitate to annul years of business cooperation if the underlying contracts or procedures are flawed.

At Unilaw, we encourage investors to invest to vietnam with a strategy that anticipates both regulatory changes and potential litigation. From the initial market access check under Article 9 of the Law on Investment to the final capital repatriation under Article 12, every step must be handled with precision. By understanding the “Insights” of the Vietnamese legal system, you can turn complexity into a competitive advantage.

Key takeaways for foreign investors:

• Clarify your status: Know if your company is an “Article 23” entity (foreign-invested but treated as local, or vice-versa).
• Check the negative list: Ensure your business isn’t one of the prohibited or restricted lines under Articles 6 and 7.
• Register your loans: Any debt from overseas that lasts more than a year must be approved by the State Bank.
• Choose your forum: Decide in advance if you want disputes settled in a Vietnamese court or through international arbitration.

The journey of foreign direct investment in Vietnam is a marathon, not a sprint. With the 2025 regulatory updates raising the bar for transparency and financial health, only the most diligent investors will thrive in the Hanoi market.