Regulations for Foreign Investors Renewed: Vietnam's Circular on Indirect Investment Accounts
NEXORA LAWFIRM has extensive experience supporting foreign investors with capital transactions and financial regulatory compliance in Vietnam, and provides specialized support on the banking procedures and legal restrictions associated with remitting investment funds, making capital contributions, and transferring shares. In recent years in particular, regulation of account opening, fund management, and disclosure requirements relating to indirect investment has been tightening, making proper compliance in practice essential. This article is written for those interested in topics such as "investor accounts for indirect investment in Vietnam," "account-opening requirements for foreign investment accounts," "capital transactions and foreign exchange management," "differences between indirect capital contribution and remittance rules," and "anti-money-laundering measures for investment funds," and explains, from a practical perspective, the changes to the investor account regime for indirect investment and the steps companies and investors should take in response.
On April 29, 2025, the State Bank of Vietnam issued Circular No. 03/2025/TT-NHNN ("Circular 03/2025"), setting out new guidelines on the opening and use of Indirect Investment Capital Accounts (IICA) for indirect investment activities in Vietnam. This Circular took effect on June 16, 2025, formally repealing and replacing the previous Circular No. 05/2014/TT-NHNN (issued March 12, 2014).
Circular 03/2025 provides foreign investors with a clearer and more accessible legal framework, streamlining and simplifying the procedures for opening and using an IICA. In particular, it clearly sets out definitions of terms, the forms of investment covered, the conditions for the movement of funds, and the scope of account operations, creating an environment in which foreign investors can enter the Vietnamese market with confidence. This reform represents an important step toward enhancing transparency and consistency in Vietnam's indirect investment regime and improving convenience and reliability for foreign investors.
01 - Terminology Changes and Clarification of Scope
Circular 03/2025 introduces important changes to terminology and scope of application. Specifically, the former term "Indirect Investment Capital Account (IICA)" has been renamed the "Indirect Investment Account (IIA)," simplifying and clarifying account management and operation in the course of investment activity. This renaming is intended to make the regime easier to understand in practice and to improve accessibility for foreign investors.
The Circular applies to non-resident foreign investors in Vietnam, specifically including entities established under foreign law and individuals holding foreign nationality.
02 - Rules on the Opening and Use of the IIA (Indirect Investment Account)
Circular 03/2025 introduces clear and strict new rules governing the opening and use of Indirect Investment Accounts (IIA) by foreign investors.
In principle, a foreign investor may open only one IIA at a single licensed bank. Exceptions are permitted, however, for special cases such as foreign securities companies, foreign investment funds with multiple investment portfolios, foreign government-affiliated investment institutions, and international financial institutions.
This revision also expressly prohibits opening an IIA under joint (multiple) names.
Previously, opening an account under multiple names was permitted, which frequently led to disputes over nominee arrangements and authorized transactions. While this rule is intended to protect the rights of foreign investors, it may, on the other hand, create a practical constraint where the investor is not resident in Vietnam, making in-branch transactions (such as fund transfers or account closure) more difficult.
In addition, for all fund transfers, the remittance order must clearly state its purpose.
This is an important measure to allow the bank to verify the propriety of the flow of funds and to properly retain and cross-check documentation. In practice, many banks already operate in line with this requirement, having required proof of the source of remitted funds and statements of securities transactions — this Circular now formally codifies that existing practice into law.
03 - Simplification of IIA Opening Procedures and Relaxation of Documentation Requirements
To reduce the practical burden on foreign investors, Circular 03/2025 introduces several measures to simplify the procedures and documentation required for opening an IIA (Indirect Investment Account).
Notably, consular legalization is, in principle, no longer required. This allows the cumbersome legalization process to be omitted for documents drafted in a foreign language or issued by a competent foreign authority.
Alternatively, among the documents submitted when opening an IIA, a foreign-language document or a document issued by a foreign authority will be considered valid if it has been notarized or authenticated under Vietnamese or foreign law within 12 months of the date of submission. Note, however, that where notarization is required under other applicable Vietnamese law, or where the receiving bank or the supervisory authority interprets Circular 03/2025's requirement as a notarization requirement, this should be confirmed with the relevant party in advance, as a practical matter.
Furthermore, Circular 03/2025 expressly states that translation of foreign-language documents is not mandatory in all cases. That said, omission of translation is permitted only where the bank is able to accurately obtain the information it needs under the Circular without one. Because whether translation is required is left to be agreed between the bank and the customer on a case-by-case basis, it is recommended that this be discussed with the bank in advance.
These relaxed requirements symbolize the internationalization and improved convenience of Vietnam's indirect investment regime, and represent a significant positive development for foreign investors.
04 - Rules on Account Conversion for Foreign-Invested Enterprises and Revision of the Ownership Threshold
Circular 03/2025 introduces new rules on classifying companies based on the level of foreign ownership and on the type of investment account required accordingly.
Specifically, the threshold for a company in which foreign investors hold an interest to be treated as a "Foreign Direct Investment (FDI) enterprise" has been lowered from 51% or more to 50% or more. As a result, a company in which foreign ownership exceeds 50% will be required to open a Direct Investment Capital Account (DICA).
Companies falling within this category (foreign ownership of 50% or more but less than 51%) must open a DICA within 12 months from June 16, 2025. During this transition period, foreign investors contributing capital to such companies are permitted to use their existing IIA to make capital contributions or acquire shares.
🔹 Concrete Impact on Foreign Investors and the Market 🔹
The implementation of Circular 03/2025 is expected to have a wide-ranging impact on foreign investors, commercial banks, and Vietnam's financial market as a whole.
✅ Benefits for Foreign Investors
First, simplification of the IIA opening procedure and the required documentation improves the transparency and convenience of the process, saving investors time and cost. In addition, the clear rules governing transactions through the IIA make it easier to understand legal requirements and compliance obligations, contributing to stronger compliance overall.
✅ Requirements for Commercial Banks
Commercial banks will need to establish internal rules for opening and operating IIAs and to manage documentation rigorously, which will strengthen banks' management responsibilities. This is also expected to enhance investor confidence.
✅ Impact on Vietnam's Financial Market
The clarification of the rules governing fund movement through the IIA will allow the state to more effectively monitor and manage the flow of investment funds. This measure is expected to contribute to preventing money laundering and to stabilizing the inflow and outflow of capital.
Furthermore, Circular No. 03/2025/TT-NHNN is regarded as one of the important legal frameworks supporting Vietnam's ambition to be upgraded from a frontier market to an emerging market, and represents a step toward aligning with international investor standards.