Legal Procedures for Outbound Investment: What You Need to Know

Outbound Investment: Trends and Opportunities for Vietnamese Enterprises

Outbound investment has become a major trend, offering Vietnamese enterprises opportunities to expand markets, diversify capital sources, and enhance competitiveness. In the context of global integration, thoroughly understanding legal, financial, and risk-related requirements is essential to ensure successful investments.

1. Legal Regulations and Procedures for Outbound Investment

Outbound investment activities must strictly comply with Vietnamese laws and the regulations of the host country.

1.1. Legal Basis and Forms of Investment

• Primary legal framework: Chapter V of the Law on Investment 2020 (Articles 59–71) and Chapter VI of Decree No. 31/2021/ND-CP (Articles 68–87).
• Specific forms include:
  • Investment to establish economic organizations;
  • Capital contribution or acquisition of shares or capital contributions;
  • Implementation of investment projects;
  • Investment under Business Cooperation Contracts (BCC);
  • Other forms of investment and new types of economic organizations as prescribed by the Government.

1.2. Procedures for Outbound Investment

Outbound investment procedures generally consist of three main steps under centralized management:

2. Regulations on Transferring Outbound Investment Capital

Transferring investment capital abroad is a critical step and must strictly comply with foreign exchange control regulations.

2.1. Legal Notes on Fund Transfers

Under Article 65 of the Law on Investment 2020, all outbound investment capital transfers must be conducted through an outbound investment capital account opened at a licensed commercial bank in Vietnam, and transfers are only permitted when:

1.  An Investment Registration Certificate (IRC) has been issued, except for statutory exemptions;
2. Approval has been granted by the State Bank of Vietnam for foreign currency remittance (with a compliant capital account);
3. The investment activity has been approved or licensed by the competent authority of the host country.
   

2.2. Transaction Execution Requirements

• Transfer limits: Verify transfer limits in accordance with SBV regulations and the approved capital amount stated in the IRC.
• Transparent documentation: Fund transfer dossiers must clearly demonstrate the purpose of capital use (capital contribution, establishment costs, machinery procurement, etc.).
• Transfer channels: Funds must be transferred through lawful banking channels.

3. Risks, Key Considerations, and Practical Recommendations

Outbound investment inherently carries higher risks than domestic investment. Investors should conduct thorough assessments before making decisions.

3.1. Common Risks

• Legal risks: Insufficient understanding of business, tax, labor, and customs regulations in the host country may result in violations or disputes.
• Foreign exchange and currency risks: Exchange rate fluctuations may significantly affect capital value and repatriated profits.
• Capital management risks: Difficulties in managing and controlling overseas project operations and cash flows.
• Reporting risks: Failure to fulfill periodic reporting obligations on operations, capital, and profits to the Ministry of Planning and Investment and the SBV may result in penalties.

3.2. Recommendations for Investors

• Conduct comprehensive assessments of the market, partners, legal barriers, and cultural factors in the host country.
• Engage professional legal advisory services: Consult experts in Vietnamese Investment Law and host-country laws to ensure compliance from project preparation to operation.
• Maintain documentation: Retain all documents, bank receipts, contracts, and approval letters for inspection and audit purposes.

Frequently Asked Questions on Outbound Investment Procedures

1. Are outbound investment procedures complicated?
   Yes. Procedures are relatively complex due to multiple steps and approvals from state authorities. Proper dossier preparation is essential to avoid repeated rejections.
2. How long does the outbound investment process take?
   Typically 30–60 working days, depending on dossier readiness and project nature (including whether investment policy approval is required).
3. Is there a limit on the amount of money transferred abroad?
   Yes. The limit is determined based on the total investment capital stated in the IRC and the SBV’s foreign currency transfer limits.
4. What are the most common risks in outbound investment?
   Legal risks (host country), exchange rate risks, tax risks, and liquidity risks.
5. What should I prepare before transferring investment capital?
   An Investment Registration Certificate (IRC) and approved documentation proving the purpose of capital use.
6. Should I seek legal advice before investing abroad?
   Yes. Legal advisory services help ensure compliance with Vietnamese law, optimize capital use, and minimize legal risks overseas.

Outbound investment offers significant opportunities for enterprises and individuals, but requires a solid understanding of procedures, legal regulations, and fund transfer requirements. Thorough preparation—from documentation and procedures to professional legal advisory—ensures a smooth, safe, and effective investment process. Lexsol is ready to accompany investors with in-depth consulting and comprehensive legal solutions to successfully implement outbound investment strategies.

Contact Lexsol today to receive expert legal advice and complete guidance on outbound investment procedures.