On 29 April 2025, the State Bank of Vietnam (SBV) has issued Circular 3 on the opening and using of VND account for conducting indirect investment in Vietnam (Circular 3/2025). From 16 June 2025, Circular 3/2025 will replace Circular 5 dated 12 March 2014 of the SBV (Circular 5/2014) guiding the opening and using of indirect investment capital account (IICA) for conducting indirect investment in Vietnam.

1. Replacing IICA with IIA

Circular 3/2025 uses the term indirect investment account (IIA) (tài khoản đầu tư gián tiếp) instead of IICA (tài khoản vốn đầu tư gián tiếp) as in Circular 5/2014.[1] Name of the account is changed but it is essentially the same VND current account opened at a licensed bank.

2. The 4 new types of transaction that must use IIA

Circular 3/2025 provides that the 4 following types of indirect investment must be conducted through an IIA:[2]

· Trading of securities on Vietnamese market and trading of other valuable papers;

· Contributing capital and buying shares or capital contribution in private companies in cases not subject to the use of direct investment capital account (DICA);

· Entrusting (ủy thác) investment in VND through fund management company and other organization permitted to conduct investment entrust operation; and

· Trading other types of securities in accordance with regulations on securities.

Different from Circular 5/2014, Circular 3/2025 does not define indirect investment.[3] It is also not clear on whether types of indirect investment other than the 4 specified types must be conducted through an IIA.[4]

3. No joint IIA

IIA cannot be a joint account (or account having 2 or more account holders).[5] This is a new point compared with Circular 5/2014.

4. New requirement on money transfer order

All money transfer order related to indirect investment in Vietnam of foreign investor must specify money transfer purpose for the banks to have ground to compare, check, and keep documents and to perform the transactions.[6]

5. No list of forms of indirect investment in Vietnam

Circular 3/2025 no longer provides a list of forms of indirect investment in Vietnam like in Circular 5/2014.

6. Foreign investor can have more than 1 IIA

Circular 3/2025 provides the following cases where a foreign investor can have more than 1 IIA:[7]

· A foreign investor, which is a securities company, can have 1 IIA for its own trading operation and 1 IIA for securities brokerage operation corresponding to each of its securities trading codes;

· A foreign investor, which is a foreign investment fund or a foreign organization managed by several foreign fund management companies, can have 1 IIA for each of its portfolio, which is managed by a foreign fund management company and granted a separate securities trading code; and

· A foreign investor, which is an investment organization under foreign government or an investment or finance organization under an international finance organization of which Vietnam is a member, can have 1 IIA for each portfolio, which is deposited at a custodian bank and granted a separate securities trading code.

7. Dossiers for opening an IIA

In the dossiers for opening an IIA, documents in foreign language or issued by a foreign authority must be notarized or certified in accordance with Vietnamese law or foreign law within 12 months before the date the dossiers are submitted to the bank.[8] While it is reasonable to interpret that the notarization will only be required if other regulations of Vietnamese law require that such documents must be notarized, it should be noted that the authority or the bank can view the provision of Circular 3/2025 itself as a notarization requirement.

On another point, Circular 3/2025 expressly stipulates that translation is not required for every document in a foreign language or issued by a foreign authority,[9] provided that the bank can get the information required to be provided under Circular 3/2025. The reduction in translation requirement is an improvement. However, the translation is still required if the competent authorities request, and what information Circular 3/2025 requires to be provided is not clear.

8. IIA use cases

Circular 3/2025 provides certain amendments to the use cases of the IIA:

· IIA can be used for deposit or escrow deposit in relation to the performance of foreign indirect investment transaction in Vietnam;[10]

· IIA can be used in performing “stock buying transactions where sufficient funds are not required when placing order”;[11]

· An IIA can be used to collect from or pay to another IIA of the same foreign investor in case such investor opens an IIA in another licensed bank;[12] and

· unlike as under Circular 5/2014, IIA cannot be used for common unspecified amounts like paying costs incurred in Vietnam or “other lawful collecting or paying transaction” related to indirect investment in Vietnam.[13]

8. New obligations of licensed banks

While the foreign investor is responsible for authenticity, validity and legality of the dossiers for opening an IIA,[14] the licensed bank is held responsible for the adequacy and validity of such dossiers.[15] In addition, the licensed bank is also held responsible for the opening and closing of IIA and the conducting of collecting and paying transactions on the IIA for the foreign investors.[16]

The licensed bank must issue internal regulations on dossiers and procedures for opening and using IIA, which must at least cover the following provisions:

· dossiers and procedures for opening IIA;

· agreement on opening and using of IIA;

· using of IIA;

· handling of inquiries and complaints, and sample request form for inquiries and complaints; and

· risk management in the opening and using of IIA.

9. 50% FIE

Circular 3/2025 lowers the threshold of foreign investor ownership for a company to be considered as an enterprise with foreign direct investment from 51% to 50%.[17] Companies having foreign investor ownership from 50% to 51% must open a DICA within 12 months from 16 June 2025.[18] During such period, the foreign investors in these companies can use their existing IICA for the contribution of capital into such companies or the purchase of shares or capital contribution of such companies.

This post is written by Nguyen Hoang Duy.

[1] A3.2 of Circular 3/2025. A3.4 of Circular 5/2014.

[2] A4 of Circular 3/2025.

[3] A5 of Circular 5/2014.

[4] A4 of Circular 3/2025.

[5] A3.6 of Circular 3/2025.

[6] A3.7 of Circular 3/2025.

[7] A5.2 of Circular 3/2025.

[8] A5.4(a) of Circular 3/2025.

[9] A5.4(b) of Circular 3/2025.

[10] A6.1(e) and 6.2(g) of Circular 3/2025.

[11] A6.1(dd) and 6.2(dd) of Circular 3/2025.

[12] A6.1(g) and 6.2(h) of Circular 3/2025.

[13] A7.1(dd), 7.2(c) and 7.2(e) of Circular 5/2014.

[14] A8.2 of Circular 3/2025.

[15] A7.1 of Circular 3/2025.

[16] A7.3 of Circular 3/2025.

[17] A11.3 of Circular 3/2025.

[18] A11.4 of Circular 3/2025.

Vietnam Business Law