Vietnam is an attractive destination for foreign investment and a popular choice for foreign companies looking to expand their business globally. However, doing business in Vietnam can be challenging due to the differences in legal systems and cultural norms. It is essential for foreign companies operating in Vietnam to understand the legal framework and their legal status in the country. In this article, LSX legal firm informs you: “Legal status of foreign company in Vietnam”
Legal grounds
- Civil Code 2015
- Law on Enterprise 2020
- Law on Investment 2020
Legal status/Juridical person under Vietnamese legislation
The Civil Code of Vietnam (Civil Code 2015) defines a juridical person as an organization that meets all of the following conditions:
- Legally established as prescribed in this Code and relevant laws.
- Having an organizational structure in accordance with Article 83 of this Code.
- Having property independent from other natural and juridical persons and bears liability by recourse to its property.
- Participates independently in legal relations in its own name.
On the other hand, every natural or juridical person has the right to establish a juridical person, otherwise provided for by law.
So, a legal person means a unified, independent, legal organization that has its own property and takes responsibility with its property, and participates in independent legal relations on its behalf. To serve their purposes and functions, many legal entities not only operate within the national territory but also expand the scope of activities in other national territories, thereby giving rise to the concept of foreign juridical persons. Currently, there are no provisions or legal documents regulating the concept of foreign legal entities. However, you can understand it as a legal entity established under foreign law, in a foreign country.
Juridical persons involving foreign elements
According to the Civil Code of Vietnam, the nationality of a juridical person shall be determined according to the law of the country in which such a juridical person was established.
Legal personality, name, legal representatives, organization, restructuring, dissolution of a juridical person; relations between a juridical person and its members; responsibilities of a juridical person and its members pertaining to its obligations shall be determined in accordance with the law of the country of which such juridical person holds nationality.
Besides, when a foreign juridical person establishes or performs civil transactions in Vietnam, its legal personality shall be determined in accordance with the law of Vietnam.
The legal status of a foreign juridical person in Vietnam means the rights enjoyed by the foreign juridical person and the obligations that the foreign juridical person performs in Vietnam. Countries often determine the legal regime of foreign legal entities according to their own laws and on the basis of international treaties as well as agreements that this country has participated in. International treaties usually stated the applicable legal status clearly. As for legal entities, they are usually treated with the most favored nation principle or national treatment principle.
Legal status of foreign companies in Vietnam
Foreign companies are legally recognized entities in Vietnam, but they have different legal statuses depending on their mode of operations. There are three ways in which foreign companies can operate in Vietnam:
- Branch office: A branch office means a dependent unit of a foreign company in Vietnam. It is not a separate legal entity from the parent company and is only allowed to conduct limited activities such as market research and promotion, and liaising with customers and partners. A branch office is not authorized to engage in commercial activities that generate revenue.
- Representative office: A representative office is similar to a branch office in that it is not a separate legal entity from the parent company. However, a representative office is only allowed to conduct non-commercial activities such as research, promotion, and marketing.
- Foreign invested company: A foreign invested company means a separate legal entity registered in Vietnam and owned by a foreign investor. A foreign invested company allowed to engage in commercial activities and generate revenue.
Registration procedures
For foreign companies to conduct business activities in Vietnam, they must register with the relevant authorities. The registration process varies depending on the legal status of the foreign company.
Branch office
To establish a branch office in Vietnam, the foreign company must submit an application to the Department of Planning and Investment of the province or city where it intends to operate. The application must provide the company’s details, the activities it plans to undertake, the proposed location of the branch office, and other relevant information.
Representative office
To establish a representative office in Vietnam, the foreign company must submit an application to the Ministry of Industry and Trade. The application must include the company’s details, the activities it plans to undertake, the proposed location of the representative office, and other relevant information.
Foreign invested company
To establish a foreign invested company in Vietnam, the foreign company must go through several steps:
- Obtain an Investment Registration Certificate from the Department of Planning and Investment of the province or city where the company intends to operate. The Investment Registration Certificate outlines the investment project’s details, including the investment capital, business activities, and implementation schedule.
- Obtain an Enterprise Registration Certificate from the Business Registration Office of the province or city where the company intends to operate. The Enterprise Registration Certificate confirms the company’s legal status and allows it to conduct business activities in Vietnam.
- Apply for relevant business licenses and permits from government agencies, depending on the company’s activities and industry sector.
Incentives and restrictions of foreign invested company in Vietnam
- Foreign companies investing in Vietnam can benefit from various incentives offered by the government, such as tax exemptions and reductions, land use rights, investment capital transfer, and repatriation of profits. However, there are also restrictions on foreign investment in certain industries, including rice production, fishing, and news media.
- Besides, foreign companies operating in Vietnam must comply with relevant laws and regulations, including labor, tax, and environmental laws. Foreign employees must obtain work permits and comply with local labor laws, including minimum wage requirements and working hours.
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
Contact LSX
In this article, we provide information regarding “Legal status of foreign company in Vietnam”. With qualified solicitors, LSX legal firm has provided efficient legal services to our customers. We guarantee to constantly update and keep our operations as well as services in line with the law. If you have any questions about the law, please get in touch with us via LSX Law firm: +84846175333 or Email: [email protected]
See more
Regulations of Vietnam law in case of winning bid against regulations
What to do in case of trademarks protection title refusal in Vietnam?
Inheritance rights of stepchildren in case of dispute in Vietnam
Frequently asked questions?
The law of Vietnam stipulates 2 types of juridical persons:
– Firstly, commercial juridical person.
– Secondly, non-commercial juridical person.
Most favored nation principle requires members of WTO to accord the most favorable tariff and regulatory treatment given to the product of any member at the time of import or export of “like products” to all other members.
Under the national treatment principle, members of WTO must not accord discriminatory treatment between imports and “like” domestic products (with the exception of the imposition of tariffs).
Conclusion: So the above is Legal status of foreign company in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
