A change in Decree 31/2021 implementing the Investment Law 2020 has raised confusion as to the need to obtain an Investment Registration Certificate (IRC) or investment policy approval (IPA) for the existing investment project(s) after a foreign investor acquires control of an existing Vietnamese company (the Target Company). 

Previously, Article 46.4 of Decree 118/2015 implements the Investment Law 2014  specifically exempts the Target Company from obtaining a new IRC or IPA or amending existing IRC or IPA for the investment project(s) of said Target Company which has already been under implementation before being acquired by a foreign investor.

However, such a clear exemption is no longer provided in Decree 31/2021 although it is provided in the first draft of Decree 31/2021. There is no clear explanation for the removal of the exemption. As a result, the removal of the exemption can be interpreted to mean that a Target Company might need to acquire IRC or IPA, as applicable, for all of its investment projects after having been invested in by foreign investor(s). In practice, however, this seems not to be the case so far.

This post is written by Le Thanh Nhat and edited by Nguyen Quang Vu.