Procedure for finance company establishment in Vietnam

A finance company plays an important role in the country’s economy. This is a type of non-banking credit business with the function of using different capital sources to carry out monetary-related activities such as lending; investing; as well as providing services. The procedure for establishing a finance company now gaining the interest of many individuals, as well as businesses. So, to have an insight into this problem, follow this article of LSX: “Procedure for finance company establishment in Vietnam“

Legal grounds

• Law No. 17/2017/QH14 dated November 20, 2017 of the National Assembly on amending and supplementing a number of articles of the Law on Credit Institutions
• Law on Enterprise 2020

What is finance company?

According to the Law on Credit Institution:

“Non-bank credit institution means a type of credit institution which may conduct one or some banking operations under this Law, except taking deposits of individuals and providing services of payment via client accounts. Non-bank credit institutions include finance companies, finance leasing companies, and other non-bank credit institutions”

Before setting up a finance company, you need to choose the suitable type for your business. At the present, the law structures Finance companies in two types as follows:

• Firstly, Joint-stock company
• Secondly, Limited liability company

In fact, finance companies are established mainly under the joint-stock type because of its advantages in capital mobilization and model development.

Conditions to establish finance company

Conditions on owners

Owners as Individuals

• Having Vietnamese nationality and full civil act capacity.
• Not prohibited from establishing enterprises according to the law.

Owners as organizations

• Established in accordance with the Vietnamese legislation.
• Profitable business operations in 03 years before applying for a license.
• Fulfill tax and social insurance obligations as prescribed by the date of application submission.

Owners of finance companies must not prohibited from establishing or participating in enterprises by the State

Article 17. The rights to establish, contribute capital, buy shares/stakes and manage enterprises

2. The following organizations and individuals do not have the right to establish and manage enterprises in Vietnam:
a) State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their own interests;
b) Officials and public employees defined by the Law on Officials and the Law on Public Employees;
c) Commissioned officers, non-commissioned officers, career military personnel, military workers and public employees in agencies and units of Vietnam People’s Army; commissioned officers, non-commissioned officers and police workers in police authorities and units, except for those designated and authorized representatives to manage state-owned stakes in enterprises or to manage state-owned enterprises;
d) Executive officers and managers of state-owned enterprises prescribed in Point a Clause 1 Article 88 of this Law, except those who are designated as authorized representatives to manage state-owned stakes in other enterprises;
dd) Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons;
e) People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law.
If requested by the business registration authority, the applicant shall submit the judicial records;
g) Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code.

Conditions on capital

Non-bank credit institutions, specifically finance companies, have to meet the legal capital requirements as prescribed by the government in each period.

• Enterprises with a minimum capital of 500 billion VND; economic groups must have a minimum capital of 1000 billion VND and commit to supporting the finance company.
• Profitable business operation in the year before the year of establishment.
• Lastly, contributed capital must be the capital portion after minus the investment projects and debts.

Conditions on business lines

Conditions for finance companies to do banking operations:

• The banking operations of a finance company must be recorded in the establishment and operation license issued by the State Bank (hereinafter referred to as the License for short).
• Having a team of qualified staff; professional capacity, facilities; technologies, techniques; equipment, and internal regulations as prescribed by law to carry out banking operations as stated in the License.
• Equally important, having a team of qualified and professional leaders; infrastructure; technology; techniques, equipment, and internal regulations on foreign exchange management.
• Fully satisfy the conditions on the profession for banking operations prescribed by the State Bank.

Dossiers for establishing application of finance company

• Firstly, Application for a License (standard form).
• Secondly, Draft of the Charter, operation plan: clearly stating the contents, mode of operation, area of operation, benefits to the economy in which determine the specific operational plan for the first 3 years.
• Thirdly, List, resume (standard form), professional qualifications, and certificates of founding members, members of the Board of Directors, members of the Supervisory Board, and the General Director (Director) of the finance company.
• Fourthly, Charter capital contribution plan; the list and commitment on the amount of charter capital contribution of the capital contributors.
• Lastly, Financial status and relevant information about major shareholders.

Establishment procedure for finance company

Firstly, Prepare application (as above)

Secondly, Submit at the Business Registration Office of the Department of Planning and Investment.

Thirdly, Receive result.

Things to do after the establishment of finance company

Publication of business registration contents

Within 30 days from the date of business registration; Finance investment enterprises need to carry out procedures for publishing business registration information on the national electronic portal and pay the fees.

Apply for a qualified license to do business in the finance investment line

To make the company go into business; Enterprises need to carry out the procedures to apply for a license to meet all conditions for doing business in the finance investment line as prescribed.

Order seal engraving and publish seal sample

Enterprises can authorize or engrave their own seal, then notify the seal sample to the Department of Planning and Investment.

Enterprises can decide the form, quantity, and content of the seal. However, the seal must show the name and business code.

After receiving notice of seal sample; The Business Registration Office hands over the receipt to the enterprise and publishes notice of the enterprise on the National Portal. Then the Department issues notices on the publication of information about the enterprise’s seal samples to the enterprise.

Register a business bank account and purchase a digital signature to pay taxes online

The owner of the finance company or the legal representative of the company brings the company seal, ID card, business registration certificate to the bank to open a trading account for the company. Then notify the Department of Planning and Investment about the account number.

Besides, to pay taxes and submit tax returns online; Finance enterprises need to purchase digital signatures. Besides; businesses need to request the bank to install the tax payment function for the bank account so the accountant can use this digital signature to pay taxes online.

Issue invoices and hang signage of finance company

Finance companies need to notify the issuance of invoices in accordance with regulations and order to print invoices for use (or buy invoices from tax authorities).

On the other hand, companies have to make signages and hang them to facilitate management. Company signages can be large or small depending on the companies but must have names; addresses, and information of the businesses.

Declare and pay taxes

Companies have to pay taxes when establishing new businesses such as value-added tax; Corporate income tax; license tax (the rate of payment of license tax depends on the registered capital of the company).

In addition, the declaration of license tax and other taxes must be paid within the stipulated time.

LSX legal firm’s service on company establishment

When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
With a team of experienced, reputable, and professional consultants; The firm is 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.

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