What is the difference between IRC and ERC? What do investors need to know?

Understanding the differences between IRC and ERC is the first and most important step for any foreign investor wishing to enter the Vietnamese market. These are two separate but closely related types of licenses, determining the legal status and operational rights of FDI enterprises. This article will analyze in detail the fundamental differences, implementation procedures, and the latest legal regulations under the current Investment Law and Enterprise Law.

A quick summary of the differences between IRC and ERC.

Before delving into the technical analysis, investors can quickly grasp the following key points to gain an overview of the differences between these two types of licenses.

• An Investment Registration Certificate (IRC) confirms an investment project, recording its objectives, scale, and investment capital.
• An Enterprise Registration Certificate (ERC) establishes the legal status of an entity and records the legal information of the business, such as its name, address, and legal representative.
• The priority rule is that in most cases of new establishment, investors must complete the IRC application process first to get project approval, and only then use the IRC to apply for an ERC to conduct business operations.

Do FDI enterprises need both IRC and ERC?

To understand the relationship between IRC and ERC, it is first necessary to identify the entities subject to these types of licenses. FDI enterprises (Foreign Direct Investment) is an economic organization in which foreign investors are members or shareholders.

According to the 2020 Investment Law, foreign-invested projects must undergo screening and approval of investment objectives through an Investment Regulatory Commission (IRC). Only after project approval is the investor permitted to establish an Enterprise Regulatory Commission (ERC) to operate the project in practice. This mechanism allows regulatory authorities to closely monitor both the investment project and the operating entity, ensuring that the enterprise operates in line with national development goals.

What do IRC and ERC stand for?

In the field of investment consulting, these abbreviations are commonly used, but their correct legal definitions are necessary for effective collaboration with relevant authorities.

What is the definition of IRC?

IRC Investment Registration Certificate is an abbreviation for Investment Registration Certificate. According to Clause 11, Article 3 of the 2020 Investment Law, this document records the investor's registration information regarding the project. Many people often wonder about it. What is IRC?, Essentially, this is the "passport" for FDI projects. You can find more details in the article. What is IRC? To understand the relevant regulations.

What is the definition of ERC?

ERC stands for Enterprise Registration Certificate. According to Clause 15, Article 4 of the 2020 Enterprise Law, this is a document confirming that a business has registered its legal information. It is important to note that this should not be confused with... ERC fees in import and export This is a port equipment connection fee, which is completely different from a business license. You can refer to the details for more information. ERC Business Registration Certificate For more information about the relevant procedures.

What are the differences between IRC and ERC? Detailed comparison table.

The table below summarizes the most important criteria based on legal regulations and implementation practices to help you understand the differences between IRC and ERC.

Who is required to apply for IRC and ERC?

Identifying the right target can save investors considerable time and Costs of applying for an investment certificate initial.

Cases where both licenses are required.

Foreign investors must first apply for an IRC (Investment Registration Certificate) before applying for an ERC (Engineering, Procurement, and Development Registration Certificate) in cases of establishing new economic organizations or implementing new investment projects in Vietnam.

Additionally, in some specific projects, investors may hear about the concept. IRC and BRC. BRC, or Business Registration Certificate, is actually an old term or used in specific business registration contexts; currently, the standard for businesses is still ERC.

When do foreign investors not need to apply for an IRC?

According to Clause 2, Article 24 of the 2020 Investment Law, foreign investors do not need to apply for an IRC but only need to follow the procedure for obtaining a new ERC or amending an existing ERC when investing in the form of capital contribution or share purchase in an existing enterprise, provided that no new investment project subject to IRC licensing arises.

Procedure for granting licenses to FDI companies

The process of establishing a foreign-invested enterprise needs to be carried out sequentially according to the model. IRC → ERC → DICA → Sub-license.

1. Step 1, applying for an IRC (Investment-Residential Registration Certificate), is the most crucial stage for authorities to assess the feasibility of the project. Investors submit their applications to the Department of Planning and Investment or the Industrial Park Management Board.
2. Step 2, applying for an ERC, takes place after obtaining an IRC. Investors submit their application to the Business Registration Office to establish a legal entity. You can refer to this information. full-service business registration To receive optimal support for these steps.
3. Step 3 after licensing includes opening a Direct Investment Capital Account (DICA), closing the registered capital within 90 days, and submitting periodic reports.

Important considerations regarding capital and operating timeframe.

Investors need to clearly distinguish between the total investment capital on the IRC, which includes both equity and borrowed capital, and the charter capital on the ERC, which is the actual committed capital. Confusing these two figures can lead to improper capital transfers or violations of disbursement schedules.

Regarding duration, IRCs typically have a project-based term, usually 50 years, while ERCs usually have a longer operating term until dissolution. The Master Accountant Network (MAN) always advises clients to review the consistency between these two types of documents before conducting major banking transactions.

Frequently Asked Questions about FDI Licenses

Conclude

Understanding What is the difference between IRC and ERC? This helps investors understand the legal process when entering the Vietnamese market. In reality, many applications require amendments due to discrepancies in information between these two licenses, resulting in wasted time and costs. To ensure safety, investors should carefully review the consistency of capital information, location, and representative right from the initial application stage.