In recent years, foreign investment in Vietnam has tended to grow strongly and has not shown any signs of decline. In which, establishing a 100% foreign-owned enterprise is a form that many investors chosen. So what is a 100% foreign owned enterprise, what are the advantages and disadvantages of this form of investment, and how is the establishment process? Then, LSX Lawfirm will answer questions through the article: “Procedures for establishing a 100% foreign-owned company”.
Legal grounds
Law on enterprises 2020
Law on investment 2020
What does establish company means?
From an economic perspective; the establishment of a company is the process of fully preparing business problems and conditions for the establishment of an economic organization. Business owners need to prepare relevant conditions such as name, head office address, machinery, equipment, acceptance…
Then, from a legal perspective, establishment of a company (100% foreign-owned company) is considered a legal procedure carried out by business owners at competent management agencies and state agencies. These documents and procedures will be simple or complicated depending on the type of company.
Procedures for establishing a 100% foreign-owned company
Step 1: Register investment policy
Accordingly, for an investment project subject to an investment policy decision, the investor must register the investment policy with the provincial-level People’s Committee.
An investment policy registration dossier includes:
- Firstly, a written request for the implementation of an investment project
- Secondly, for institutional investors: copy of Certificate of Establishment or other equivalent document certifying legal status as prescribed.
- Thirdly, for individual investors: Notarized copy of ID card or valid ID card or passport
- Investment project proposal includes the following contents: investor; objective; scale; location; duration; investment capital; investment progress, labor demand; proposal for priority investment incentives; socio-economic efficiency of investment projects.
Related article: Copy of one of the documents about registering investment policy
Step 2: Procedures for applying for an investment registration certificate
Then, the second step in the process of establishing a company with 100% foreign capital is applying for an investment registration certificate. For projects subject to a decision on investment policies, the investment registration agency shall issue an investment registration certificate to the investor within 05 days from the date of receipt of the written decision on investment policy investment.
In case the project is not subject to the decision on investment policies; the investor shall carry out the procedures for granting an Investment Registration Certificate as follows:
Before carrying out the procedures for granting an Investment Registration Certificate; foreign investors need to declare online information about their investment projects on the national information system. Within 15 days from the date of online declaration; the investor shall submit an application for an Investment Registration Certificate at the Investment Registration Authority.
Then, the investment registration authority receives the application and the investor is granted an account to access the national information system and monitor the processing of the application. In addition, the investment registration agency shall receive; process and return the results of the investment registration dossier; update the application processing status, and issue the project code.
Related article: An application for an Investment Registration Certificate
Step 3: Apply for a certificate of enterprise registration to establish a company with 100% foreign capital
Accordingly, after obtaining the investment registration certificate, the next step in the process of establishing a company with 100% foreign capital is the company establishment procedure.
Related article: Service of applying for an investment license for foreign investors
Enterprise with 100% foreign investment capital in Vietnam
The dossier of investment guidelines registration
An application for an Investment Registration Certificate in Vietnam
Step 4: Announce the content of 100% foreign owned enterprise registration
Accordingly, after completing the company registration procedure at the Department of Planning and Investment; then the next step in the process of establishing a 100-percent foreign-owned company is to disclose the contents of business registration. the law publicized information on business registration on the National Portal within 30 days from the date of issuance of the Business Registration Certificate.
Step 5: Engrave company seal for 100% foreign owned enterprises
Accordingly, the company engraves its corporate seal in accordance with regulations. This is the final step in the process of setting up a 100% foreign owned company.
Related article: Service of applying for an investment license for foreign investors
Step 6: Carry out the procedures for opening a bank account, electronic tax registration, initial tax declaration, accounting services:
Then, the steps of opening a bank account, registering for electronic tax payment; and making initial tax declarations require an experienced accountant to perform the above complicated tasks.
Related questions about “Procedures for establishing a 100% foreign-owned company”
The licensing agency continues to be decentralized to the people of the province. The management committee and the management board of industrial parks, export processing zones and high-tech zones. For some important or sensitive business areas, the issuance of investment certificates by the provincial People’s Committee or the Board of Directors must be based on the investment policy or economic plan approved by the Prime Minister.
Investment certificates also serve as business registration certificates. An investment certificate will be issued as part of the investment registration and/or evaluation process based on the type of project, the size of the investment capital, and whether the project is in the sector. conditional investment or not.
In addition, Investment certificates for foreign investment projects will have a fixed term of not more than 50 years, which can be extended by law for up to 70 years with the approval of the Government.
The investment certificate will set out the specific scope of business activities that the foreign investor is allowed to conduct in Vietnam, the amount of investment capital, the location and area of land to be used, and related incentives. (if any).
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