One of the notable changes introduced by the Law on Investment 2025 (effective from 1 March 2026) and Decree No. 96/2026/NĐ-CP, which provides detailed guidance for the implementation of certain provisions of the Law on Investment 2025 (effective from 31 March 2026), is that foreign investors are now allowed to choose to establish a company before obtaining an Investment Registration Certificate (IRC).
This new regulation is expected to enable investors to enter the Vietnamese market more quickly and enhance flexibility in implementing their business plans. However, in practice, this change should not be viewed merely as an “advantage”, as it may also give rise to significant legal risks if investors fail to properly assess the investment landscape and the specific nature of their projects.
In this article, Lexsol provides a comprehensive analysis of the new regulation, compares it with the traditional investment process, and offers practical recommendations for foreign investors.
One of the notable changes introduced under the Law on Investment 2025 is the increased flexibility granted to foreign investors in determining the sequence of investment procedures. Previously, investors were required to follow a fixed order, whereby the Investment Registration Certificate (IRC) had to be obtained first, followed by the establishment of the enterprise and the issuance of the Enterprise Registration Certificate (ERC). This approach reflected a “prior control” model, ensuring that the investment project was reviewed and approved by the authorities before a legal entity could be established in Vietnam.
Under the new regulation, however, investors may choose either to follow the traditional sequence or adopt a reversed approach, whereby the enterprise is established first through the issuance of an ERC, and the IRC is obtained thereafter.
From a practical perspective, this allows investors to establish a legal entity in Vietnam within a relatively short timeframe—typically within 3 to 5 working days—rather than waiting for the investment project appraisal process, which may take several weeks or even months.
The new regulation introduces several notable advantages, particularly for investors seeking to accelerate project implementation or establish an early legal presence in the Vietnamese market. Most evidently, it significantly shortens the time required for market entry. Instead of waiting for the completion of the IRC process, investors can promptly establish a company, obtain a tax code, and secure a legal entity status to engage with business partners, thereby facilitating the preparation of subsequent steps in the investment process.
In addition, having a company in place at an early stage allows investors to take a more proactive approach during the pre-operational phase. In practice, the enterprise may enter into employment agreements with key personnel, engage service providers such as accounting, legal, and marketing firms, and negotiate and execute lease agreements for office space, land, or factory premises. It may also begin preparing documentation for the relevant sub-licenses required for its intended business activities. In many cases, the existence of a legal entity also enhances credibility and efficiency in negotiations with partners and suppliers.
Furthermore, the new regulation provides a certain degree of flexibility in investment strategy, particularly for “test market” models or foreign-invested startups. Establishing a company at an early stage enables investors to access the market sooner, test their business model, build an initial team, and refine their strategy before committing substantial resources to the project. From a policy perspective, this development can be seen as a positive step toward facilitating foreign investment inflows into Vietnam.
While the new regulation allows investors to establish a company at an earlier stage, a critical point that must be clearly understood is that obtaining an Enterprise Registration Certificate (ERC) does not, in itself, grant the right to carry out investment or business activities. For foreign investors, the Investment Registration Certificate (IRC) remains the fundamental legal basis for implementing an investment project in Vietnam.
Accordingly, where a company has been established but the IRC has not yet been granted, the entity essentially exists only in a legal sense and is not yet in a position to operate in practice. During this interim period, the company is not in a position to implement its investment project, cannot fully carry out its registered business activities, and is generally unable to lawfully recognize revenue derived from such activities. This creates a significant practical gap, where the enterprise exists on paper but is not yet capable of generating real economic value.
From a practical perspective, this is precisely why the new regulation should be approached with caution. Although early incorporation may provide a timing advantage, if it is not accompanied by a reasonable likelihood of obtaining the IRC within an appropriate timeframe, the company may remain effectively “idle”—incurring ongoing operational costs while being unable to commence its intended business activities.
One of the most significant risks associated with the “ERC-first, IRC-later” approach lies in capital contribution, particularly when considered in the context of the interplay between the Law on Enterprises and foreign exchange control regulations. This is an area that many foreign investors tend to underestimate during the initial stage of project implementation.
Under the Law on Enterprises, the owner, members, or shareholders are required to fully contribute the registered charter capital within 90 days from the date of issuance of the Enterprise Registration Certificate (ERC). In principle, this requirement applies uniformly to all types of enterprises, including foreign-invested companies. As a result, where investors opt to establish the company first, the 90-day capital contribution timeline begins to run immediately upon the issuance of the ERC, regardless of whether the investment project has been approved.
In practice, however, capital contribution by foreign investors cannot be made directly but must be carried out through a Direct Investment Capital Account (DICA), which must be opened with a licensed commercial bank in accordance with foreign exchange control regulations. The issue arises from the fact that, as of now, there is no clear regulatory guidance from the State Bank of Vietnam confirming whether a DICA can be opened in the absence of an IRC. Consequently, most commercial banks adopt a conservative approach and typically refuse to open a DICA unless the investment procedures have been completed or there is a clear legal basis supporting the foreign capital inflow.
This lack of regulatory alignment gives rise to a “practical deadlock”: the company has been duly established and is within the statutory timeframe for capital contribution, yet lacks the necessary legal mechanism to fulfill such obligation. As a result, investors may face the risk of failing to contribute capital on time, potentially leading to administrative penalties and adversely affecting the company’s legal standing in subsequent procedures, including investment project adjustments, capital changes, or dealings with regulatory authorities.
From a practical standpoint, this represents a systemic risk stemming from the lack of coordination between investment law, enterprise law, and foreign exchange regulations. Without a careful assessment at the outset, choosing to establish a company first may inadvertently place investors in a reactive compliance position, rather than providing the intended strategic advantage.
Another noteworthy issue that may arise in the future is the scenario where regulatory authorities permit investors to open a capital account and make capital contributions based solely on the Enterprise Registration Certificate (ERC), without requiring an Investment Registration Certificate (IRC). In such a case, from a technical standpoint, investors would be able to fulfill their capital contribution obligations within the 90-day period prescribed under the Law on Enterprises. However, this would give rise to a fundamental “reverse risk”.
Specifically, if the investment project is subsequently not approved for an IRC—whether due to conditional business lines, foreign ownership restrictions, or failure to meet applicable legal requirements—the company, despite having been duly established and capitalized, would lack the legal basis to carry out its intended business activities. In other words, investors may find themselves in a situation where capital has already been committed, yet the business cannot be operated.
In such circumstances, the most likely course of action would be to proceed with the dissolution of the company in order to recover the invested capital. However, dissolution is not merely a simple administrative procedure; it involves a series of legal obligations, including tax finalization, tax code closure, completion of financial reporting, and compliance with all procedures required to formally terminate the company’s operations. These obligations apply even in cases where the company has not generated any revenue.
Accordingly, the practical consequences for investors extend beyond delays in project implementation to include legal costs, accounting and tax expenses, and the allocation of management resources to address the aftermath. More importantly, this risk underscores that accelerating the incorporation process does not necessarily equate to optimizing the overall investment strategy, particularly in the absence of a comprehensive assessment of the likelihood of obtaining the IRC at the outset.
While the new regulation offers greater flexibility for foreign investors, in practice, not all investment projects are well-suited to the “establish first, obtain IRC later” model. The effectiveness of this approach depends heavily on the nature of the business sector and the level of regulatory conditions applicable to the investment activity.
For sectors that are not subject to conditional business requirements, are not restricted in terms of market access, and involve relatively straightforward business models, establishing a company at an early stage may provide a clear advantage in terms of timing and allow investors to take a proactive approach in preparing for operations. However, for industries that are subject to regulatory conditions or strict foreign ownership controls—such as education, logistics, real estate business, or sectors requiring in-principle approval—the legal risks increase significantly.
In such cases, establishing a company before obtaining the IRC may result in a situation where the entity exists legally but lacks the necessary conditions to operate. At the same time, the company would still incur ongoing operational costs, including office lease expenses, accounting and tax compliance, and periodic reporting obligations. If the IRC application process is prolonged or ultimately rejected, the company may effectively become an “empty shell”—generating no revenue while continuing to incur costs, thereby undermining the overall investment efficiency.
From a policy standpoint, the introduction of the option to establish a company prior to obtaining an IRC reflects the Government’s clear effort to reform administrative procedures and facilitate faster and more flexible market entry for foreign investors. This marks a shift from a “prior control” approach to a model of “facilitated control”, aligning with broader trends of economic integration and foreign investment promotion.
However, in the current context, the practical effectiveness of this regulation remains constrained by the lack of alignment among the relevant legal frameworks, particularly between investment law, enterprise law, and foreign exchange regulations. In addition, the absence of clear implementing guidance from regulatory authorities—most notably the State Bank of Vietnam with respect to capital account opening and capital contribution—continues to create practical uncertainties in implementation.
Accordingly, the new regulation should not be viewed as a default advantage for all investors, but rather as a “conditional opportunity” that can only be effectively leveraged when applied in the appropriate context and supported by careful legal structuring from the outset.
In the current context, where the legal framework is still evolving, the decision to adopt the “ERC-first, IRC-later” approach should be based on a comprehensive assessment rather than driven solely by speed considerations. As a starting point, investors should conduct a thorough legal review of the proposed project, including whether the intended business lines are subject to conditions, whether they are restricted in terms of market access for foreign investors, and the practical likelihood of obtaining an IRC.
At the same time, a realistic capital contribution plan should be carefully developed, particularly with respect to the feasibility of opening a capital account, the expected timeline for capital injection, and contingency measures in the event of delays. In addition, investors should fully account for operational costs that may arise during the interim period when the company has been established but is not yet able to operate, including expenses related to office leasing, accounting and tax compliance, and personnel.
From a strategic perspective, the key consideration is not whether the company can be established as quickly as possible, but rather whether the chosen approach is the most appropriate for the specific characteristics of the project and the applicable legal framework at the time of implementation.
The introduction of the option for foreign investors to establish an enterprise prior to obtaining an IRC represents a notable step forward in Vietnam’s ongoing efforts to reform investment procedures, reflecting a commitment to creating a more flexible and investor-friendly business environment. However, this is inherently an “open” regulation, and its practical effectiveness will largely depend on the level of alignment within the legal framework, the clarity of implementing guidance from regulatory authorities, and how investors structure and execute their investment strategies.
At this stage, the application of this new approach should be undertaken with caution and a holistic perspective, in order to avoid situations where a company is formally established but unable to operate, while still incurring unnecessary costs. Ultimately, this reflects a broader strategic balance between speed of market entry and legal certainty—both of which are critical to the success of any investment project.
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