What is an FDI company in Vietnam? The foreign-invested enterprise (FIE) explained
An FDI company in Vietnam is the everyday name for what the Investment Law calls an economic organisation with foreign investment capital (a foreign-invested enterprise, or FIE). Law 143/2025/QH15 defines it as an economic organisation that has a foreign investor as a member or shareholder (Clause 22, Article 3), with no minimum percentage. The 50% line only decides which procedures apply when that company invests further (Clause 1, Article 20).
Investment Law No. 143/2025/QH15 and Decree 96/2026/ND-CP
Official legal texts
Key takeaways for businesses
- The Investment Law does not use the term FDI. The legal term is an economic organisation with foreign investment capital: an economic organisation with a foreign investor as a member or shareholder (Clause 22, Article 3). The nationality of the director or legal representative does not decide whether a company is an FDI company; membership or shareholding does.
- The definition has no percentage threshold. The 50% line applies only when the company invests further: above 50% foreign-held capital, it follows the procedures for foreign investors; at 50% or below, those for domestic investors (Clauses 1 and 2, Article 20).
- An FDI company needs an Investment Registration Certificate (IRC) only for projects of foreign investors and of the above-50% group; buying shares or contributing capital does not need an IRC (Clause 1 and Point c, Clause 2, Article 26). A share purchase may still require registration of the capital contribution before the members or shareholders change (Clause 3, Article 21).
What is an FDI company in Vietnam under Vietnamese law?
"FDI company" is the everyday name for an economic organisation with foreign investment capital. FDI stands for foreign direct investment and is not a legal term. Investment Law No. 143/2025/QH15 defines four connected concepts in Article 3:
- A foreign investor is an individual with foreign nationality or an organisation established under foreign law that carries out investment and business activities in Vietnam (Clause 19).
- A domestic investor is an individual with Vietnamese nationality or an economic organisation that has no foreign investor as a member or shareholder (Clause 20).
- An economic organisation is an organisation established and operating under Vietnamese law, including enterprises, cooperatives, cooperative unions and other organisations carrying out investment and business activities (Clause 21).
- An economic organisation with foreign investment capital is an economic organisation that has a foreign investor as a member or shareholder (Clause 22).
An FDI company is therefore still a limited liability company, joint stock company or other form under the Law on Enterprises. What makes it "FDI" is its ownership structure. The Investment Law 2025 took effect on 1 March 2026 and replaced the 2020 Investment Law (Clause 4, Article 51).
How to tell whether a company is an FDI company in Vietnam: any foreign investor is enough
Clause 22, Article 3 mentions no percentage. In practice:
- A Vietnamese company with one foreign shareholder, however small the stake, falls within the definition. A company with no foreign member or shareholder is a domestic investor under Clause 20.
- The nationality of the director, general director or legal representative is not the test. The test is who holds the capital contribution or shares.
- The foreign investor can be an individual or a legal entity. A subsidiary more than 50% owned by a company in the above-50% foreign group also follows the foreign-investor procedures when it invests (Point b, Clause 1, Article 20; see the table below). If that subsidiary has no foreign investor directly among its members or shareholders, however, it is not an economic organisation with foreign investment capital under Clause 22, Article 3.
The quickest check is the register of members or shareholders. If it shows an organisation established under foreign law or an individual with foreign nationality, the company is an FDI company. For a Vietnamese citizen who also holds foreign nationality, see the FAQ on Clause 2, Article 16 of Decree 96/2026/ND-CP.
Is the 50% rule what makes an FDI company in Vietnam? No, it is about procedure
This is the most common confusion. The above-50% threshold does not decide whether a company is an FDI company. It decides which procedures the company follows when it invests further, under Article 20 of the Investment Law 2025:
Ownership structure of an FDI company and the procedures that apply, under Articles 20 and 26 of Investment Law 143/2025/QH15
| Ownership structure | An economic organisation with foreign investment capital? | When investing in other companies or carrying out other projects | Must its own project obtain an IRC? |
|---|---|---|---|
| Foreign investors hold more than 50% of charter capital (Point a, Clause 1, Article 20) | Yes | Conditions and procedures for foreign investors | Yes (Point b, Clause 1, Article 26) |
| An organisation in Point a holds more than 50% of charter capital (Point b) | Only if a foreign investor is directly a member or shareholder (Clause 22, Article 3) | As for foreign investors, even with no direct foreign member | Yes |
| A foreign investor together with an organisation in Point a holds more than 50% (Point c) | Yes | As for foreign investors | Yes |
| A foreign investor is a member or shareholder but none of the three cases applies, for example a 30% stake | Yes | As for domestic investors (Clause 2, Article 20) | Not required (Point b, Clause 2, Article 26) |
Two points on the table:
- For a partnership, Point a, Clause 1, Article 20 uses a different test: a majority of general partners who are foreign individuals.
- A company at 50% or below is still an FDI company. When a foreign investor contributes capital to it, the step must still meet the market access conditions (Point a, Clause 2, Article 21). The company only follows the domestic-investor procedures for its own onward investment.
The restricted-sector list in Annex I of Decree 96/2026/ND-CP also applies to the above-50% group when it sets up another company, contributes capital, buys shares or signs a BCC contract (Point b, Clause 1, Article 16).
How an FDI company in Vietnam comes into being
There are three main routes:
- A foreign investor sets up a new company. The law allows the company to be established before the IRC procedure (Clause 2, Article 19 of the Investment Law), but market access conditions must be met at formation. Within 12 months of establishment the company must complete the IRC procedure, and may carry out the project only after the IRC is issued (Clause 4, Article 72 of Decree 96/2026/ND-CP); see what is an IRC. See company formation in Vietnam for foreign investors.
- A foreign investor buys shares or a capital contribution in a Vietnamese company, or contributes capital when the company issues new shares (Article 74 of Decree 96/2026/ND-CP). This does not need an IRC (Point c, Clause 2, Article 26 of the Investment Law), but registration of the contribution or purchase is required before the members or shareholders change in three cases under Clause 3, Article 21: the purchase increases foreign ownership in a conditional market access sector, it takes foreign ownership above 50% of charter capital, or the target holds land use rights in defence and security areas.
- An existing FDI company sets up a subsidiary or invests in another company under Article 20.
Terms such as "100% foreign-owned" and "joint venture" describe the ownership split in practice; they are not separate legal forms. Clause 1, Article 72 of Decree 96/2026 still requires establishment under the law on enterprises.
How an FDI company in Vietnam differs from a domestic company
Main differences between an FDI company and a domestic company, checked against Investment Law 143/2025/QH15 and Decree 96/2026/ND-CP
| Topic | Rule for an FDI company | Basis |
|---|---|---|
| Market access | Same as domestic investors, except sectors in Annex I: Section A lists 23 sectors not yet open, Section B lists 62 sectors with conditions. A company in several sectors must meet all the conditions | Article 8 of the Investment Law; Clauses 1, 2, 3 and 6, Article 17 of Decree 96/2026 |
| Investment Registration Certificate | Required for projects of foreign investors and of the above-50% group; must be obtained before the project starts | Clause 1, Article 26 and Clause 2, Article 29 of the Investment Law |
| Buying shares or contributing capital | Registration may be needed before members or shareholders change; for increases in conditional sectors or crossing 50%, the investment registration authority gives notice within 10 working days of receiving a valid file | Clause 3, Article 21 of the Investment Law; Clause 4, Article 76 of Decree 96/2026 |
| Transfer of capital and profits abroad | May transfer investment capital, liquidated investment proceeds and income after meeting financial obligations | Article 11 of the Investment Law |
| Dispute resolution | Disputes among investors with at least one foreign investor or an Article 20 group company may go to Vietnamese courts, Vietnamese arbitration, foreign arbitration, international arbitration or an ad hoc tribunal agreed by the parties | Clause 3, Article 13 of the Investment Law |
| Governing law of contracts | A contract with at least one foreign investor or Article 20 group company may choose foreign law or international investment practice if not contrary to Vietnamese law | Clause 6, Article 4 of the Investment Law |
For trading in goods and related activities by foreign investors, see also Decree 342/2026/ND-CP (in force from 18 October 2026). An FDI company must still obtain the sector licences that domestic companies need; the IRC does not replace them. See business licences for foreign-invested companies in Vietnam.
Do FDI companies set up before 1 March 2026 have to redo their procedures?
No. Investment licences, investment incentive certificates, investment certificates and equivalent documents issued before the Investment Law 2025 took effect remain valid and carry the same legal value as an IRC (Clauses 1 and 2, Article 101 of Decree 96/2026/ND-CP). The point to watch is Article 104: from the date the new law took effect, the above-50% group must follow foreign-investor conditions and procedures when it adjusts a project, adds business lines, sets up another company, contributes capital, buys shares or signs a BCC contract. The registration authority then reviews only the proposed change, not the project already running (Clauses 2 and 3, Article 104). A company that wants to swap an old document for an IRC under the new law has it reissued within three working days of receiving the file (Point b, Clause 1, Article 109).
Common misunderstandings about FDI companies
- "FDI means 50% or more foreign capital." Wrong on the definition: 50% is the procedural line in Article 20, not the threshold for being an FDI company.
- "A foreign director makes it an FDI company." No. Look at the members or shareholders who contributed capital.
- "Buying a Vietnamese company only needs a change to the enterprise registration." Not if the deal falls in one of the three cases in Clause 3, Article 21. Otherwise the company only registers the change of members or shareholders with the business registration office (Clause 2, Article 76 of Decree 96/2026).
- "An IRC lets us run every registered line of business." The IRC records project information; conditional sectors still need their own licences.
- "Form the company first and get the IRC later, no rush." The law allows this order but within 12 months, and the project may not start before the IRC (Clause 4, Article 72 of Decree 96/2026).
Checklist for identifying and reviewing an FDI company
- List every member or shareholder and its percentage, down to the ultimate holder, including holdings through legal entities.
- Confirm the nationality or place of establishment of each member or shareholder, and note Vietnamese citizens with foreign nationality.
- Compare the percentages with Points a, b and c, Clause 1, Article 20 to know which procedures apply to further investment.
- Check current and planned business lines against Annex I of Decree 96/2026/ND-CP.
- Check which projects held an IRC or equivalent before 1 March 2026 and whether their content still matches reality.
- For a share or capital purchase, test the three registration cases in Clause 3, Article 21 before signing or closing.
- If the whole file needs reviewing before a deal, see what is due diligence in Vietnam.
Insight from Lawyer Ho Thi Ha Nhi
"When a company asks whether it is FDI, the answer is usually in the shareholder register, not in the nationality of the manager. Many filings stall because two questions are mixed up: is the company an FDI company, and which procedure does it follow when it invests further. The first is answered by Clause 22, Article 3, the second by the 50% line in Article 20. Separate the two before filing anything."
Frequently asked questions
What is the difference between an FDI company and a 100% foreign-owned company?
A 100% foreign-owned company is only one kind of FDI company. The concept is wider: it also covers joint ventures between Vietnamese and foreign investors, and Vietnamese companies where a foreign investor has bought shares or contributed capital. Under Clause 22, Article 3 of Investment Law 143/2025/QH15, any economic organisation with a foreign investor as a member or shareholder is an economic organisation with foreign investment capital.
Is a company with a foreign shareholder holding only 10% an FDI company?
Under the definition in Clause 22, Article 3, yes, because the definition sets no percentage. The difference is procedural: a company outside the above-50% group follows the conditions and procedures for domestic investors when it invests further (Clause 2, Article 20). When a foreign investor contributes capital, that step must still meet the market access conditions in Article 8 (Point a, Clause 2, Article 21).
If the director or legal representative is a foreigner, is the company an FDI company?
Not automatically. An FDI company is identified by having a foreign investor as a member or shareholder (Clause 22, Article 3), not by the nationality of whoever runs it. A foreigner working for the company is a separate question: a work permit or an exemption applies.
Does every FDI company need an IRC?
No. An IRC is required for projects of foreign investors and of economic organisations in Clause 1, Article 20, meaning those where foreign investors hold more than 50% of charter capital (Clause 1, Article 26). Projects of organisations in Clause 2, Article 20 and share or capital purchases are outside the IRC requirement (Clause 2, Article 26), although a domestic investor may still ask for one (Clause 4, Article 26). See the handbook entry on the IRC.
Which conditions apply to a Vietnamese citizen who also holds foreign nationality?
Under Clause 2, Article 16 of Decree 96/2026/ND-CP, for investment activity in Vietnam such a person may choose to be treated either as a domestic investor or as a foreign investor for market access conditions and investment procedures. If they choose domestic treatment, they may not exercise the rights and obligations of a foreign investor.
The Vietnamese original of this entry has been reviewed for legal accuracy against the Personal Data Protection Law No. 91/2025/QH15 and current implementing legislation. This English edition is an unofficial translation for reference; the official legal texts are in Vietnamese.
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