To encourage foreign investment, the Vietnamese government now maintains a number of favorable policies for international investors when conducting business in Vietnam. As a result, Vietnam is seeing an increase in the number of foreign-invested businesses. On the other hand, foreign investors need to have an insight into Vietnamese law to start investments. First of all, to open and run a company, they have to apply for two kinds of certificates. In this article, LSX legal firm provides: “How long does it take to start a foreign-invested company in Vietnam?”
- Law on Investment 2020
- Decree 31/2021/ND-CP
Foreign investor and Foreign-invested company
“foreign investor” means an individual holding a foreign nationality or an organization established under foreign laws and carrying out business investment activities in Vietnam.
“foreign-invested business entity” means an entity whose members or shareholders are foreign investors.
Investment in the establishment of a business entity
Every investor shall establish a business entity in accordance with the following regulations:
- A domestic investor shall establish a business entity in accordance with regulations of law on enterprises and law corresponding to each type of business entity.
- A foreign investor that establishes a business entity shall satisfy market access conditions applied to foreign investors specified in Article 9 of the Law on Investment 2020.
- Before establishing a business entity, the foreign investor must have an investment project and follow the procedures for issuance or adjustment of an investment registration certificate, except for the establishment of a small and medium-sized start-up enterprise and a startup investment fund in accordance with the regulations of the Law on Small and Medium-sized Enterprises.
From the date of issuance of a company registration certificate or an equivalent document, the business entity established by a foreign investor become the investor that executes the investment project set out in the investment registration certificate.
Investment activities of foreign-invested company
Article 23 of the Law on Investment 2020 regulates the investment activities of foreign-invested company as follows:
Article 23. Conduct of investment activities by foreign-invested business entitiesWhen establishing a business entity, when making an investment by contributing capital, purchasing shares or purchasing stakes of a business entity, or when making an investment under a business cooperation contract in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:
a) Over 50% of its charter capital or more is held by a foreign investor(s) or the majority of the general partners are foreigners if the business entity is a partnership;
b) Over 50% of its charter capital or more is held by a business entity(ies) mentioned in Point a of this Clause;
c) Over 50% of its charter capital or more is held by a foreign investor(s) and a business entity(ies) mentioned in Point a of this Clause.
Business entities other than those mentioned in Points a, b and c Clause 1 of this Article shall satisfy conditions and follow investment procedures applied to domestic investors when establishing a business entity, when making an investment by contributing capital, purchasing shares, or purchasing stakes of a business entity or when making investment under a business cooperation contract.
If a foreign-invested business entity that is established in Vietnam has a new investment project, procedures for executing such investment project shall be followed without having to establish a new business entity.
The Government shall elaborate procedures for establishing business entities, and conduct of investment activities by foreign investors and foreign-invested business entities.
Procedure for applying for Investment Registration Certificate
The investor shall submit 01 application for the Investment Registration Certificate, including the contents specified in Clause 1, Article 33 of the Law on Investment, to the investment registration agency. In case the investment project is implemented in 02 or more provincial-level administrative units, the investor shall submit a dossier to the Department of Planning and Investment of a province or centrally run city where the investor implements an investment project, locates or plans to set up an executive office to apply for an investment registration certificate for the project.
The investment registration authority shall issue the Investment Registration Certificate to the investor within 15 days from the date of receipt of a valid dossier when the project meets the following conditions:
- Not in an industry or trade prohibited from doing business as prescribed in Article 6 of the Law on Investment and an international treaty on investment.
- Having the location of the investment project determined on the basis of a valid copy of the land use right document or a valid copy of the location lease agreement or other documents defining the right to use the location for the implementation of the investment project.
- The investment project conforms to the planning prescribed in Clause 7 Article 31 of this Decree.
- Satisfy the conditions on investment rate on a land area prescribed by the provincial People’s Committee based on the actual conditions of the locality and approved by the Standing Committee of the Provincial People’s Council (if any); the number of employees employed (if any).
- Satisfying the market access conditions for foreign investors.
For an operating investment project, the investor shall submit a dossier as prescribed in Clause 1, Article 33 of the Law on Investment, replacing the investment project proposal with a report on the implementation of the investment project from the time of implementation to the time of application for the Investment Registration Certificate.
Time limit for the issuance of company registration certificate
Article 33 of Decree 01/2021/ND-CP stipulates:
Article 33. Time limit for issuing enterprise registration certificate and certificate of changes to enterprise registration informationThe Business Registration Office shall issue the enterprise registration certificate and certificate of changes to enterprise registration information, and update enterprise registration information on the National Enterprise Registration Database within 03 working days from the receipt of the satisfactory application.
If the application is not satisfactory or the enterprise’s name is not conformable with regulations, the Business Registration Office shall inform the enterprise or its founder of necessary revisions within 03 working days from the receipt of the application. The Business Registration Office must include every necessary revision to the application in a notification.
After the aforementioned deadline, if the enterprise registration certificate or certificate of changes to enterprise registration information is not issued or enterprise registration information on the National Enterprise Registration Database is not changed, or no notification of necessary revisions to the application for enterprise registration is received, the enterprise or its founder is entitled to lodge a complaint as prescribed by regulations of law on complaints and denunciation.
How long does it take to start a foreign-invested company in Vietnam
To establish a foreign-invested company, investors need to perform 2 basic steps: investment registration and business registration. According to the above-mentioned regulations, the time for business registration as prescribed is 3 days and the time for investment registration is 15 days if the application is valid and does not need to be modified. So, it takes 18 days according to the law to set up a foreign-invested company. However, in reality, this time may extend to about 20 to 30 days to establish a foreign-invested company.
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Frequently asked questions
An investment project ID is a series of numbers automatically generated by the National Investment Information System and recorded in the Investment Registration Certificate. Each investment project assigned a unique code, which exists during the project’s operation and expires when the project terminates its operation.
Firstly, having sufficient documents with fully declared contents as prescribed for paper dossiers, presented in the form of electronic documents and named corresponding to the name of the type of paper.
Secondly, the information declared on the System is complete and accurate according to the information in the paper file; authenticated by the investor’s digital signature or uniformly compared with the paper documents.
In case the adjustment of an investment project involves the change of the name of the investment project or the name of the investor in the Investment Registration Certificate, the investor shall submit a written request for adjustment of the investment project to the Investment Registration Authority accompanied by documents related to the change of the name of the investment project, the name of the investor. Then, within 03 working days after receiving the written request for adjustment of the Investment Registration Certificate, the Investment Registration Authority shall amend the Investment Registration Certificate for the investor.