In investment activities, verifying the legal conditions before entering into cooperation with investors plays a crucial role in ensuring legal compliance and minimizing risks. Conducting a thorough verification process contributes to a solid legal foundation for long-term and effective partnerships. Below, NPLaw provides an overview of the legal issues related to a verification of legal conditions for cooperation with investors.

I. The role of verifying legal conditions for cooperation with investors

Verifying legal conditions prior to cooperating with investors is essential to ensure legality, transparency, and safety throughout the implementation of investment projects. Such a process helps determine the investor’s legal status, financial capacity, project implementation ability, and compliance obligations under the law, particularly for foreign investors.

Moreover, such verification helps identify potential legal risks at an early stage, including restrictions on business sectors and market access, land ownership regulations, profit repatriation requirements, and applicable international treaties. As a result, partners can make well-informed investment decisions, negotiate contracts more effectively, and avoid potential disputes in the future.

II. Legal regulations on the verification of legal conditions for cooperation with investors

1. Circumstances requiring the verification of legal conditions for cooperation with investors

Verification of legal conditions is necessary in the following circumstances:

  • Establishment of enterprises with domestic or foreign investment capital;
  • Execution of Business Cooperation Contracts (BCC), joint ventures, or strategic partnerships;
  • Foreign investors participating in conditional business sectors;
  • Transfer of investment projects, mergers, acquisitions, or consolidations;
  • Fundraising and financial cooperation with domestic or foreign investors.

2. Legal conditions to be verified for cooperation with investors

Some main legal conditions that must be verified before cooperating with investors include:

  • Legal status of the investor: The investor must possess valid legal documents demonstrating its capacity, such as a business registration certificate, company charter, and financial statements.
  • Proposed business sectors: Whether the intended sectors fall under the list of prohibited or conditional business lines and whether foreign investors are permitted to invest in such sectors.
  • Ownership ratio: Particularly for foreign investors, it is required to verify compliance with statutory or international treaty-based ownership limits.
  • Market access conditions under international agreements.
  • Investment licenses and required approvals: Including Investment Registration Certificates and decisions approving investment policies.
  • Legal status of the partner enterprise: It needs to ensure that the entity is not under dispute, dissolution, bankruptcy, or subject to administrative sanctions. 

3. Authorities responsible for verifying legal conditions for cooperation with investors

According to Article 39 of the Law on Investment 2020, the following authorities are responsible for verifying the legal conditions for cooperation with investors:

  • Department of Planning and Investment: The main authority for issuing Investment Registration Certificates, and Enterprise Registration Certificates, and verifying relevant legal conditions.
  • Management Boards of Industrial Zones, Economic Zones, and High-Tech Zones: For projects located in specific areas, these bodies are responsible for licensing and supervising investment activities.

III. Questions on verifying legal conditions for cooperation with investors

1. What are the measures for verifying legal conditions for cooperation with investors?

The measures for verifying legal conditions for cooperation with investors include:

  • Reviewing the investor’s legal documents: Before cooperation, the investor’s legal capacity must be verified by examining documents such as the business registration certificate, company charter, appointment decisions of the legal representative, and licenses related to business activities.
  • Reviewing the intended business sectors: Whether the proposed sectors fall under prohibited, conditional, or restricted investment categories, or are subject to foreign ownership limits.
  • Requesting to verify from competent State authorities: In certain cases, it is necessary to submit written requests to authorities (such as the Department of Planning and Investment, Management Boards of Industrial Zones, or relevant ministries) to verify information or seek opinions on the proposed cooperation project.
  • Reviewing regulations on capital contribution, share transfer, and forms of cooperation: Before proceeding, it is obliged to ensure that all capital contributions, share acquisitions, or project transfers comply with legal requirements, including ownership caps, foreign shareholding limits, and permissible forms of investment.

2. When is the verification of legal conditions for cooperation with investors considered satisfactory?

Verification of legal conditions is considered satisfactory when:

  • The investor possesses full legal capacity and is not subject to any investment prohibitions or restrictions;
  • The business sector of cooperation is lawful and permitted under Vietnamese law and international commitments;
  • The ownership ratio and form of cooperation comply with legal and regulatory limits (particularly for foreign investors);
  • The project or cooperation content has been approved by competent authorities, where applicable;
  • There is clear legal confirmation or a formal assessment report issued by the competent authority or legal advisory entity.

3. What should be noted when verifying legal conditions for cooperation with investors?

Main considerations include:

  • Distinguishing between domestic and foreign investors: Legal requirements vary significantly. Foreign investors are often subject to additional conditions on ownership and business sectors.
  • Reviewing the intended business sectors: Not all sectors are open to investment or cooperation. It is required to carefully review whether the investor’s proposed business sector falls within the prohibited or conditional investment list or is subject to specific ownership restrictions to ensure legal compliance and avoid post-implementation risks.
  • Reviewing legal documents and licenses: All legal documents, including business registration certificates, investment licenses (if applicable), and licenses for conditional business sectors, must be carefully examined to avoid issues related to falsified, expired, or invalid documents.

IV. Legal consultancy services on verifying legal conditions for cooperation with investors

The above article by NPLaw provides an overview of the verification of legal conditions for cooperation with investors. With a team of experienced lawyers and legal experts, NPLaw is always ready to accompany, advise, and support clients in handling legal issues related to investment cooperation. Should you need legal assistance, please contact NPLaw using the information below: