When do you need to request an IRC? The Investment Registration Certificate (IRC) is the first question every foreign investor asks when intending to establish a company or implement a business project in Vietnam. However, not all activities with foreign elements are required to go through this procedure. Identifying the correct entities that need an IRC not only helps businesses comply with the Investment Law but also optimizes time and resources during the market entry phase.
What is an IRC? What is the legal significance of an investment license?
Based on Investment Law 2020, An IRC (Investment Registration Certificate) is a document, in paper or electronic form, that records the investor's registration information for a specific investment project.
The IRC is not simply a "parent license," but it establishes the legal status of the project, encompassing the following core elements:
- Information about the developer: The individual or organization implementing the project.
- Project scale: Objectives, location, and land area to be used.
- Investment capital: This includes both investor contributions and raised capital.
- Progress of implementation: Timeline for capital contribution and project operation schedule.
Understanding When do I need to request an IRC? This is a necessary stepping stone to carrying out subsequent procedures such as obtaining an Enterprise Registration Certificate (ERC) or opening an investment capital account.
What is the difference between IRC and ERC?
For businesses with foreign direct investment (FDI), the Clearly distinguish between the two types of licenses: IRC and ERC. It is extremely important to avoid confusion during the application process. Below is a summary table of the basic differences between an investment project and a business entity.
| Distinguishing criteria | Investment Registration Certificate (IRC) | Enterprise Registration Certificate (ERC) |
|---|---|---|
| Purpose | Managing information and progress of project specific investments. | Managing information about legal entity (business). |
| Issuing authority | Department of Planning and Investment or the Management Board of Industrial Parks/Export Processing Zones/High-Tech Industrial Parks. | Business Registration Office (under the Department of Planning and Investment). |
| Main content | Location, objectives, capital scale, timeline, investment incentives. | Tax identification number, company name, registered office address, legal representative. |
| Sequence | This is usually the first step (a condition for obtaining an ERC). | This is implemented after the project has received IRC or policy approval. |
Note the following table: In certain specific investment models such as M&A (mergers and acquisitions), investors can make direct changes to the ERC without applying for a new IRC, except for projects that require investment policy approval.
Current cases requiring an IRC in Vietnam
According to Article 37 of the 2020 Investment Law, the determination... When do I need to request an IRC? It will depend on the specific entity and form of investment.
1. Foreign investors establish new economic organizations.
This is the most common scenario. Regardless of whether an investor holds 1% or 100% of charter capital, when they want to establish a new company in Vietnam, they must go through the procedure of obtaining an investment registration certificate for the project before registering the legal entity.
2. Implement investment projects using the BCC contract model.
Business Cooperation Contracts (BCCs) between domestic and foreign investors, or between foreign investors themselves, that do not involve the establishment of a new legal entity are still subject to mandatory Incorporation of an Investment Regulatory Contract (IRC).
3. Economic organizations with FDI capital falling under the provisions of Article 23 of the Investment Law.
A business already established in Vietnam, when undertaking a new investment project, will have to determine When do I need to request an IRC? Based on ownership percentage. Specifically, a license is required if:
- There are foreign investors holding over 50% of the charter capital.
- In the case of a partnership company, the majority of the partners are foreign individuals.
- There is a combination of foreign investors and the aforementioned economic organizations holding over 50% of charter capital.
4. Projects subject to investment policy approval.
For large-scale projects or those in sensitive sectors (such as aviation, banking, and energy), investors must obtain approval in principle from the National Assembly, the Prime Minister, or the Provincial People's Committee. After receiving this approval, the investment registration authority will proceed with issuing the Investment Regulatory Authority (IRC).
Cases where an IRC is not required when investing in Vietnam.
To simplify administrative procedures, Vietnamese law stipulates several cases where the investment certificate issuance procedure is waived, which helps investors answer the question... When do I need to request an IRC? And when is it not needed?
- Investing through capital contribution and share purchase: An investor acquires a stake in an existing Vietnamese company. In this case, the "Registration of Capital Contribution/Share Purchase" procedure will be carried out instead.
- Representative Office: Trade promotion and market research activities conducted by representative offices are not considered direct profit-generating investment projects, and therefore do not require an Investment Regulatory Commission (IRC).
- Projects by domestic investors: Vietnamese individuals and organizations undertaking investment projects typically do not require an IRC (except in certain special cases).
Do foreign-owned companies under 50% need an IRC?
This is the issue that the team of experts at MAN – Master Accountant Network Regularly advise joint venture partners. According to current regulations, the determination... When do I need to request an IRC? For this group, it is as follows:
- Establishment phase: If foreign investors are involved from the outset in establishing the company, the business must still follow the general procedures for obtaining an IRC for foreign investors.
- Project expansion phase: Maintaining a foreign ownership ratio of $/le 50/%$ allows businesses to apply the same investment conditions and procedures as domestic investors when implementing new projects, providing greater flexibility in operation.
The legally compliant process and documentation for applying for an IRC.
To ensure project implementation progress, investors need to pay special attention to the legality of foreign documents. You can refer to the details below. Instructions on preparing documents for applying for an investment certificate. to optimize time.
Required documents
Investors need to prepare the following documents:
- Application for investment project implementation (using the provided template).
- Legal documents: Passport or Business License (already issued) consular legalization and certified translation).
- Proposed investment project and financial capacity report of the investor.
- Documents regarding the location: Office or factory lease agreement, or land lease agreement.
Authority and timeframe for resolution
- Legal timeframe: Approximately 15 working days for standard projects. For projects requiring appraisal or policy approval, the timeframe may extend from 30 to 90 days.
- Procedure: Investors must complete the online declaration form on the National Investment Information System before submitting the hard copy application to the competent authority.
What should businesses do after having IRC?
Receiving the IRC is just the beginning. To officially launch the project, the investor needs to complete a series of related procedures:
- Establishing an Entity of Law (ERC): Register for a tax identification number and a company seal.
- Open a Direct Investment Capital Account (DICA): This is a crucial step in legally transferring foreign investment funds into Vietnam.
- Contribute capital on time: Ensure that the registered capital and investment capital are fully contributed within 90 days of obtaining the ERC.
- Requesting sub-licenses: Applicable to businesses operating in regulated sectors (such as retail, education, and healthcare).
During its operation, if there are changes in capital scale, objectives, or location, the business must implement them. Procedures for amending investment registration certificates To keep the latest information updated with the authorities.
Important notes to ensure your application is processed quickly.
Based on practical experience from MAN – Master Accountant Network, The two biggest obstacles that usually cause delays in IRC applications are:
- Explanation of project objectives: It is necessary to use VSIC industry codes that are consistent with Vietnam's commitments in FTA agreements.
- Proof of financial capacity: Account balances or financial statements must be consistent with the registered capital size.
Preparing a professional project proposal that clearly explains the sources of funding and technology will help investors adequately answer questions from the authorities. When do I need to request an IRC? and the feasibility of the project.
Conclude
Accurate identification When do I need to request an IRC? This helps foreign investors mitigate legal risks and optimize project implementation time in Vietnam. In practice, each investment model will have different conditions and documentation, especially for businesses with foreign capital or projects in sectors with conditional investment requirements.
If you are having difficulty identifying When do I need to request an IRC? Or if you need more in-depth advice on capital structure, the experts at MAN – Master Accountant Network We are always ready to assist you to ensure your investment journey goes as smoothly as possible.
Note: The content of this article is for reference only at the present time. Investors should update themselves on the latest regulations from the Investment Law and its implementing decrees.
