Foreign-invested enterprise means an economic organization established and operating under the provisions of Vietnamese law; with a foreign investor being a member or shareholder. From this definition; it can understand that an enterprise with 100% foreign capital is an enterprise in which foreign investors contribute 100% of the investment capital. LSX Lawfirm will give you an article: “Enterprise with 100% foreign investment capital in Vietnam” as follows:
Legal grounds
Law on enterprises 2020
Law on investment 2020
Enterprise with 100% foreign investment capital means?
Thus, an enterprise with 100% foreign investment capital is an enterprise foreign investors owned and established in Vietnam. Foreigners are responsible for their own management and self-responsibility for business results.
Related article: Service of applying for an investment license for foreign investors
Procedures for establishing a 100% foreign-owned company
The dossier of investment guidelines registration
An application for an Investment Registration Certificate in Vietnam
The characteristics of enterprises with 100% foreign capital
Vietnamese law and international treaties recognized governed .
- Firstly, one or more foreign investors established (organizations and individuals) with capital investment. Assets of enterprises with 100% foreign capital, 1 or more organizations/individuals who owned.
- Secondly, can establish in the form of limited liability companies; joint stock companies, partnerships, limited liability only by the amount of capital put into the business.
- In addition, Foreign organizations and individuals and are self-responsible for their business results controlled . (The State of Vietnam only manages through the granting of investment licenses and inspects the implementation of the law. The State of Vietnam does not interfere in the organization and management of enterprises with 100% foreign capital).
The process of establishing a 100% foreign owned enterprise
Firstly, please decide, investment policy. (for some cases that need to apply for investment decisions and policies)
Secondly, apply for an investment registration certificate.
Thirdly, business establishment procedures.
The advantages of a 100% foreign owned enterprise
Firstly, foreign-owned companies are under the management of foreign investors, so the management method will be different from domestic enterprises; often bringing higher economic efficiency.
Secondly, foreign investors established and developed entirely, so they can bring many advantages in technology and capital, and attract a lot of human resources both at home and abroad. water.
Thirdly the establishment of a foreign-owned company is in line with the current international integration trend. Foreign investors can take advantage of their advantages through extensive relationships.
Related article: Service of applying for an investment license for foreign investors
The disadvantages of 100% foreign owned enterprises
In addition to the outstanding advantages, it can be seen that a 100% foreign owned company also has some limitations as follows:
Firstly, foreign-invested companies entering Vietnam will encounter differences in business culture with domestic enterprises; affecting their access to the Vietnamese market. Not to mention the difference in business culture can bring disagreement among investors.
Second, although Vietnamese law has been extended to foreign investors; it is still within a certain framework because in part it is aimed at protecting domestic investors.
This manifests itself in two points: The rate of capital contribution may limit in some special industries Investment registration procedures must carry out; with quite complicated documents and procedures.
Related questions
The agency that licenses the establishment of a company with 100% foreign capital
Accordingly, the licensing agency continues to be decentralized to the people of the province. Then, the management committee and the management board of industrial parks, export processing zones and high-tech zones. For some important or sensitive business areas; the issuance of investment certificates by the provincial People’s Committee or the Board of Directors must be based on the investment policy or economic plan approved by the Prime Minister.
Importance of investment certificates to foreign individuals and organizations in Vietnam?
Investment certificates also serve as business registration certificates. The law will issue an investment certificate as part of the investment registration and/or evaluation process based on the type of project, the size of the investment capital, and whether the project is in the sector. conditional investment or not.
Investment certificates for foreign investment projects will have a fixed term of not more than 50 years; which the law can extended for up to 70 years with the approval of the Government.
The investment certificate will set out the specific scope of business activities that the law allowed foreign investor to conduct in Vietnam; the amount of investment capital; the location and area of land to use; and related incentives. (if any).
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