With the developed market economy of Vietnam at the moment is quite hot. Despite the adverse effects from the COVID-19 pandemic, foreign investors still put their full faith in Vietnam’s economy and investment environment. According to statistics in the first 8 months of 2022, foreign investors have invested nearly 16.8 billion USD in Vietnam. This can be said to be a good sign for our country and shows that Vietnam is still maintaining its position as a reliable investment location. What are the provisions of Vietnam’s law on procedures for establishing foreign-invested enterprises in Vietnam? Let’s find out with Lawyer X through the article below!
Legal grounds
Enterprise Law 2020
Investment Law 2020
Commitment 318/WTO/CK services
What are the conditions to establish a foreign-invested company in Vietnam?
Foreign investors, including foreign individuals and organizations, are allowed to establish companies in Vietnam in accordance with the law. carry out procedures for granting investment registration certificates in accordance with the law. In addition, the investor must meet the following conditions:
To own unlimited charter capital, except for the following cases:
- The percentage of foreign investors’ ownership in listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities;
- The percentage of foreign investors’ ownership in state-owned enterprises equitized or converted into other forms shall comply with the law on equitization and transformation of state-owned enterprises;
- The percentage of foreign investors’ ownership that does not fall into the above two cases shall comply with other provisions of relevant laws and international treaties to which the Socialist Republic of Vietnam is a contracting party.
- Investment form, scope of activities, Vietnamese partners participating in the implementation of investment activities and other conditions under the provisions of international treaties to which the Socialist Republic of Vietnam is a signatory.
Thus, whether or not a foreign investor can establish a foreign-invested company will also depend on the industry in which the investor intends to do business in Vietnam.
For example, with the business of providing services to send workers to work abroad, investors are not allowed to establish a foreign-invested company to do this business because current law stipulates that only foreign-invested enterprises are allowed to operate in foreign countries. Enterprises established and operating under the Law on Enterprises have 100% charter capital of Vietnamese organizations and individuals to be licensed to operate (according to Article 6 of Decree 38/2020/ND-CP).
Or with the business of film production services, foreign investors are only allowed to invest in the form of a business cooperation contract or a joint venture with a Vietnamese partner to establish a company and the investor’s capital contribution. foreign investment must not exceed 51% of the charter capital of the company (according to point a Sub-sector D. Audiovisual services, Section 2. Information services, Commitment 318/WTO/CK services).
Order and procedures for establishing a foreign-invested enterprise
Step 1: Register the investment policy at the competent authority to establish a foreign-owned company
When a foreign investor enters Vietnam to invest in a project, he/she must carry out procedures to apply for an Investment Registration Certificate. However, before carrying out the procedures to apply for an Investment Registration Certificate, in some cases, the investor must register the investment policy under the authority of the Prime Minister or the provincial People’s Committee.
Only the following projects, investors must register for provincial investment policies
The project is allocated or leased land by the State without auction, bidding or transfer; projects requiring change of land use purpose;
The project uses technologies on the list of technologies restricted from transfer in accordance with the law on technology transfer.
Dossier of application for approval of investment policy of the People’s Committee of the province includes:
A written request for the implementation of an investment project;
For individual investors: Copy of identity card, identity card or passport
For institutional investors: copy of Certificate of Establishment or other equivalent document certifying legal status;
The investment project proposal includes the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, and investment schedule. , demand for labor, proposal for investment incentives, assessment of the project’s socio-economic impact and efficiency;
A copy of one of the following documents: Financial statements of the last 2 years of the investor; Commitment to financial support of the parent company; Commitment to financial support of financial institutions; Guarantee on the financial capacity of the investor; Documents explaining the financial capacity of the investor;
Proposing land use needs; In case the project does not request the State to allocate or lease land or permit the change of land use purpose, a copy of the location lease agreement or other document certifying that the investor has the right to use the site for implementation. current investment project;
The explanation on the use of technology includes the following contents: technology name, technology origin, technological process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines for projects using technologies on the List of technologies restricted from transfer
BCC contract for investment projects in the form of BCC contract.
The case of the Prime Minister’s decision on investment policy
In the case, projects of foreign investors in the fields of shipping business, business of telecommunications services with network infrastructure, afforestation, publishing, press, establishment of scientific and public organizations, etc. technology, science and technology enterprises with 100% foreign capital. Accordingly, in case a company with 100% foreign capital is established and related to the above issues, it must register the investment policy with the Prime Minister in accordance with the provisions of the Law on Investment 2020.
Dossier of application for approval of investment policy of the Prime Minister includes:
The documents are the same as the investment policy registration of the Provincial People’s Committee Agency
Plan on site clearance, migration and resettlement (if any);
Preliminary assessment of environmental impact, environmental protection solutions;
Assessment of economic and social impacts and efficiency of investment projects.
The case of the National Assembly’s decision on investment policy
In Article 30 of the Law on Investment in 2020
Nuclear power plants;
Investment projects requiring change of land use purpose of special-use forests, watershed protection forests or border protection forests of 50 hectares or more; protection forest against wind, flying sand and protection forest against waves and sea encroachment of 500 ha or more; production forests of 1,000 ha or more;
Investment projects that require migration and resettlement of 20,000 people or more in mountainous areas, and 50,000 or more people in other areas;
Investment projects that require resettlement of 20,000 people or more in mountainous areas, and 50,000 or more people in other areas.
Dossier of application for approval of investment policy of the National Assembly includes:
Plan on site clearance, migration and resettlement (if any);
Preliminary assessment of the impact on the environment and solutions to protect the environment;
Assess the economic, social and effective impacts of the project;
Propose specific mechanisms and policies (if any).
Step 02: Apply for an Investment Registration Certificate for a company with foreign capital
If the projects that do not use land (in other words, lease land directly from the state) do not use technologies on the list of restricted transfers, step 1 above is not required).
In the following cases, the investor must carry out the procedures for applying for an Investment Registration Certificate.
Investment projects of foreign investors;
Investment projects of the following economic organizations:
Having a foreign investor holding 50% or more of the charter capital or having the majority of general partners being foreign individuals, for economic organizations being a partnership;
Having the above-mentioned economic organizations hold 50% or more of the charter capital;
Foreign investors and economic organizations specified as above hold 50% or more of charter capital.
Dossier for issuance of Investment Registration Certificate for a company with 100% foreign capital
A written request for the implementation of an investment project;
Documents on investor’s legal status
For individual investors: Copy of identity card, identity card or passport
For institutional investors: copy of Certificate of Establishment or other equivalent document certifying legal status;
The investment project proposal includes the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, and investment schedule. , demand for labor, proposal for investment incentives, assessment of the project’s socio-economic impact and efficiency;
Copy of one of the following documents:
The investor’s financial statements for the last 2 years;
Commitment to financial support of the parent company;
Commitment to financial support of financial institutions;
Guarantee on the financial capacity of the investor;
Documents explaining the financial capacity of the investor;
Proposing land use needs; In case the project does not request the State to allocate or lease land or permit the change of land use purpose, a copy of the location lease agreement or other document certifying that the investor has the right to use the site for implementation current investment project;
The explanation on the use of technology includes the following contents: technology name, technology origin, technological process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines for projects using technologies on the List of technologies restricted from transfer
BCC contract for investment projects in the form of BCC contract.
The agency that submits the application for the Investment Registration Certificate to the 100% foreign-owned company at the investment registration agency
If the company is located in an industrial park, it is the Management Board of industrial zones.
If the company is located outside the industrial zone, it is the Department of External Economic Relations – Department of Planning and Investment at the provincial level.
Time to issue Investment Registration Certificate for 100% foreign owned company
For investment projects not subject to decision on investment policies: 15-20 working days from the date of receipt of complete dossiers.
For investment projects subject to investment policy decision: 05 – 10 working days from the date of receipt of the decision on investment policy.
Step 03: Establishment of an enterprise, granting an enterprise registration certificate to a foreign-invested company
After obtaining the investment registration certificate, investors need to prepare documents to set up a business.
Dossier of establishment of a foreign-invested limited company
Business registration application form;
Company rules;
Members list;
Copies of the following papers: Citizen identification cards, People’s identity cards, Passports or other lawful personal identification of members being individuals;
The establishment decision, the enterprise registration certificate or other equivalent documents of the organization and the power of attorney; Citizen’s identity card, people’s identity card, passport or other lawful personal identification of the authorized representative of the member being an organization;
For a member being a foreign organization, a copy of the Certificate of Business Registration or an equivalent document must be consularly legalized;
Investment registration certificate for foreign investors in accordance with the Law on Investment.
Dossier of establishment of a joint stock company with foreign investment capital
Business registration application form;
Company rules;
List of founding shareholders and shareholders being foreign investors (list of authorized representatives if any);
Copies of the following papers: Citizen identification cards, People’s identity cards, Passports or other lawful personal identification of members being individuals;
The establishment decision, the enterprise registration certificate or other equivalent documents of the organization and the power of attorney; Citizen’s identity card, people’s identity card, passport or other lawful personal identification of the authorized representative of the member being an organization;
For a member being a foreign organization, a copy of the Certificate of Business Registration or an equivalent document must be consularly legalized;
Investment registration certificate for foreign investors in accordance with the Law on Investment.
The agency that submits the application for an enterprise registration certificate to a company with 100% foreign capital
Business registration agency – Provincial Department of Planning and Investment.
Time to issue business registration certificates for companies with 100% foreign capital
05 working days from the date of receipt of complete and valid documents
Step 04: Posting a statement of establishment of a foreign-invested company
After an enterprise is granted an enterprise registration certificate, it must make a public announcement on the national business registration portal according to the order and procedures and pay fees as prescribed.
The content to be announced includes the contents of the Business Registration Certificate and the following information:
Business;
List of founding shareholders and shareholders being foreign investors for joint-stock companies.
Executing agency: Reporting division of the Business Registration Authority – Provincial Department of Planning and Investment.
Step 05: Engrave the company’s seal
After obtaining the Certificate of Business Registration and having posted the enterprise establishment statement. The enterprise conducts seal engraving at one of the licensed seal engraving units. Enterprises decide by themselves the number and form of seals within the scope permitted by law.
According to the provisions of the Enterprise Law 2020, which takes effect from January 1, 2021, the enterprise engraves its own seal and is solely responsible for the use of the company’s legal seal. Therefore, foreign-owned companies as well as Vietnamese-owned companies do not have to publish a notice of seal sample as before. This is also a very new point of the Enterprise Law 2020, but it is also a concern of many businesses in the matter of self-management and use of the seal of the enterprise without supervision from relevant state management agencies to the seal.
Fees for establishing a foreign-invested enterprise in Vietnam
The cost of establishing a company depends on the industry that the company or individual investor conducts business registration. Below is the cost of establishing a company with foreign investment for your reference:
• Industry related to the service sector: 1,000 USD
• Industries related to trade – Import-Export: 1,700 USD
• Industry related to manufacturing: 2,500 USD
• Conditional business lines: 3,000 USD
• Business projects with capital over 300 billion: The cost of establishing a foreign-invested company will be negotiable.
=> The cost of establishing a foreign-invested company will include closing costs for state agencies and service costs for the company.
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Frequently asked questions
This is a new point in the investment registration procedure. According to the investment registration application form issued together with Circular 16/2015/TT-BKHDT, the content of this document contains an explanation of the investor’s experience with the intended investment objectives. The investor’s business experience can help the Vietnamese government to “believe” in the project they will implement in Vietnam.
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Establishment of a foreign-invested company in the form of investors contributing capital from the beginning
Accordingly, foreign investors will contribute capital right from the start of establishing a company in Vietnam. Accordingly, the capital contribution rate of foreign investors, depending on the field of operation, can contribute capital from 1% to 100% of the company’s charter capital.
Establishment of a foreign-invested company in the form of capital contribution or share purchase
With this form, foreign investors will contribute capital to a Vietnamese company that already has an enterprise registration certificate. Foreign investors, depending on the field of operation, can contribute 1%-100% of capital to a Vietnamese company. Foreign investors will carry out procedures to purchase contributed capital and shares of Vietnamese companies. After that, the Vietnamese company became a foreign invested company.
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