International integration is a common development trend in the whole world. Nowadays, the Vietnamese government maintains a very open regime to attract foreign investors. In Vietnam, the procedures for conducting operational activities of foreign partners become simple and quick thanks to the Government’s policy. However, some might not fully understand the legal status of foreigners in Vietnam. So, in this article LSX legal firm would like to give you an insight into: “Legal status of foreign partner in Vietnam”
- Civil Code 2015
- Law on Commercial 2005
Legal status/Juridical person under Vietnamese legislation
The Civil Code of Vietnam (Civil Code 2015) defines a juridical person as follows: An organization shall be recognized as a juridical person if it meets all of the following conditions:
- Legally established as prescribed in this Code and relevant laws.
- Having an organizational structure prescribed in 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 is no system of legal documents regulating the concept of foreign legal entities. You can understand it as a legal entity established under foreign law, in a foreign country, and having its head office operating in a foreign country.
Under the Civil Code, there are 2 types of juridical persons: Commercial juridical persons and Non-commercial juridical persons.
Commercial juridical persons
Article 75 (Civil Code 2015). Commercial juridical persons
- Commercial juridical person means a juridical person whose primary purpose is seeking profits and its profits shall be distributed to its members.
- Commercial juridical persons include enterprises and other business entities.
- The establishment, operation, and termination of a commercial juridical person shall comply with regulations of this Code, Law on enterprises, and other relevant laws.
Non-commercial juridical persons
Article 76 (Civil Code 2015). Non-commercial juridical persons
1. Non-commercial juridical person means a juridical person whose primary purpose is not seeking profits and its possible profits may not distributed to its members.
2. Commercial juridical persons include regulatory agencies, people’s armed units, political organizations, socio-political organizations, political-socio-professional organizations, social organizations, socio-professional organizations, social funds, charitable funds, social enterprises, and other non-commercial organizations.
3. The establishment, operation, and termination of non-commercial juridical persons shall comply with the regulations of this Code, laws on the organizational structure of the state, and other relevant laws.
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.
Juridical persons in International Private Law
The legal status of a foreign juridical person means the rights enjoyed by the foreign juridical person and the obligations that the foreign juridical person performs in the host country. 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. For legal entities, it can be the most favored nation principle or national treatment principle.
Most favored nation (MFN) and National treatment (NT)
“Most-Favoured-Nation” (“MFN”) treatment, a founding principle of the WTO, requires Members to accord the most favorable tariff and regulatory treatment given to the product of any one Member at the time of import or export of “like products” to all other Members.
According to the rule of “national treatment,” nations should treat the imported goods such as intellectual property (including patents, trademarks, and copyrights), services, and merchandise the same way they treat their own. This helps create a level playing field in the marketplace by preventing domestic goods from having an unfair advantage. Under the national treatment rule, Members must not accord discriminatory treatment between imports and “like” domestic products (with the exception of the imposition of tariffs, a border measure).
Foreign partners operate commercial activities in Vietnam
Foreign juridical persons include non-commercial juridical persons and commercial juridical persons. However, most of the “foreign partners” in Vietnam take part in under the name of commercial juridical persons. In this case, Vietnamese law might recognize them as foreign traders. Accordingly, they have to comply with Vietnamese law in terms of foreign traders’ operations.
According to the Law on Commercial 2005:
Article 6.- Traders1. Traders include lawfully established economic organizations and individuals that conduct commercial activities in an independent and regular manner and have business registrations.
2. Traders are entitled to conduct commercial activities in occupations and sectors, in geographical areas, in forms and by modes which are not banned by law.
3. The right of traders to conduct lawful commercial activities is protected by the State.
4. The State exercises for a definite time its monopoly over commercial activities in respect to a number of goods and services or in a number of geographical areas in order to ensure the national interests. The Government shall specify the lists of goods, services and geographical areas subject to the State monopoly.
Article 16.- Foreign traders conducting commercial activities in Vietnam1. Foreign traders mean traders established and made their business registrations according to the provisions of foreign laws or recognized by foreign laws.
2. Foreign traders are entitled to set up their representative offices or branches in Vietnam; to establish in Vietnam foreign-invested enterprises in the forms provided for by Vietnamese law.
3. Vietnam-based representative offices and branches of foreign traders have the rights and obligations specified by Vietnamese law. Foreign traders shall be held responsible before Vietnamese law for all activities of their Vietnam-based representative offices and branches.
4. Foreign-invested enterprises established in Vietnam by foreign traders according to the provisions of Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a contracting party shall be regarded as Vietnamese traders.
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.
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Furthermore, using our service, you do not need to do the paperwork yourself. We guarantee to help you prepare documents effectively and legally.
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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.
This article contains information about “Legal status of foreign partner in Vietnam”. In recent years, we have supplied effective legal advice to businesses and individuals at reasonable prices and with efficient results. We always update and keep our operations and services in line with the law by adhering to legal principles. If you need any further information from the firm’s solicitors, please contact LSX Law firm: +84846175333 or Email: firstname.lastname@example.org
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Frequently asked questions
In Vietnam, you can consider establishing the following types of company to get legal status:
– Limited Liability Company
– Joint-stock company
Under Vietnamese legislation, when a legal entity is established within the territory of Vietnam, according to Vietnamese law, that legal entity hold Vietnamese nationality.
When a legal entity operates in a foreign country, the law of the host country and the law of the country where it was established concurrently govern it.