Procedures to establish security company with foreign capital in Vietnam
In modern society, the economy grows day by day, resulting in an increase in demand to establish a company. With a favorable investment environment, security service considered a delicious pizza that many foreign investors aspire to share. So, when a foreign investor establishes a company in Vietnam, what procedures and conditions do they have to satisfy? In this article LSX legal firm provides: “Procedures to establish security company with foreign capital in Vietnam”
Legal grounds
- Law on Investment 2020
- Law on Enterprise 2020
Foreign-invested company
Foreign-invested company means a type of company that receives financial support and uses money from investment activities supported by foreign countries.
Briefly, an investment from an individual or organization with economic potential that voluntarily pays for business activities to earn profits in the future:
- A company established by a foreign investor to carry out investment activities in Vietnam.
- Vietnamese companies merged or acquired by foreign investors.
Besides, the Law on Investment 2020 defines:
“Article 3:
- Business organization means an organization established and run in accordance with Vietnam’s laws. Business organizations include companies, cooperatives, cooperative associations, and other organizations that make business investments.
- Foreign-invested business organization means a business whose members or shareholders are foreign investors.”
Also, Clause 5 of Article 3 also mentioned: “Business investment means an investor’s investing capital to do business by establishing a business organization; making capital contribution, buying shares or capital contributions to a business organization; making investments in the form of contracts or execution of investment projects.”
So, Vietnamese enterprises only need to have one foreign investor who own shares to be considered foreign-invested enterprises. Of course, these enterprises will have to bear the investment conditions for the foreign-invested enterprise sector.
Forms of foreign-invested in Vietnam
Contribute capital to establish a 100% foreign-invested enterprise in Vietnam.
100% foreign-invested enterprises owned by foreign investors, established in Vietnam by foreign investors. Assets of such enterprises owned by one or more foreign organizations and individuals. When contributing capital to establish this enterprise, foreign organizations and individuals will self-manage and take responsibility for business results. The Vietnamese state only manages through the issuance of the investment registration certificate and checks whether they comply with the law, but does not interfere in the organization and management of enterprises.
Advantages: The enterprise directly or indirectly managed by foreign investors with a different management method compared to domestic enterprises, often brings better business results. Besides, businesses will have better investments in technology, capital, and human resources. Furthermore, the host country will avoid business risks and have the right to collect land rent and tax as well as create jobs for citizens.
On the other hand, the risks appeared obvious when investors decide to contribute capital to establish a business in Vietnam. Firstly, enterprises with 100% foreign investment when entering Vietnam will encounter differences in business culture from domestic enterprises. This affects their access to the Vietnamese market. Then, there are certain limitations of Vietnamese law for this type of business for the purpose of protecting domestic investors.
Joint venture with Vietnamese enterprises.
Joint venture enterprises means enterprises established in Vietnam on the basis of a joint venture contract signed between two or more parties to conduct investment and business in Vietnam.
The advantage of this form is that it contributes to solving the shortage of capital, the host country can take advantage of large capital sources for economic development and share risks with the foreign businesses. Besides, there are opportunities to innovate technology and diversify products. For investors, this form works as a tool to legally and effectively penetrate foreign markets, create new markets, and contribute to creating favorable conditions for host countries to come into the international economy.
However, similar to the investment form mentioned above, enterprises with 100% foreign investment when entering Vietnam will encounter differences in business culture from domestic enterprises. Moreover, the host country is often at a disadvantage due to its low capital contribution ratio and weak management capacity compared to foreign investors.
Forms of foreign-invested security company in Vietnam
To carry out the procedures for establishing a foreign-invested company in general, investors must meet a number of conditions as follows:
- The investor’s industries must belong to the industries that Vietnam has committed to allow investment in the WTO Commitments Schedule or specifically provided for by Vietnamese law;
- Must have an investment project;
- Carry out procedures to apply for a certificate of investment registration.
Security services (CPC 87305) are not included in the schedule of commitments of WTO and FTAs but are regulated in Decree 96/2016/ND-CP on security and order. From those regulations on business and investment, foreign-invested organizations and individuals who want to do business in the line of security services have two forms of investment:
- Firstly, foreign businesses contribute capital to purchase machinery and technique serving security operations.
- Secondly, in case it is necessary to invest in machinery and technical means to serve the security work. Foreign businesses can go into a joint venture with a Vietnamese enterprise that has registered for the security industry and operating business in this field.
Procedures to establish security company with foreign capital
Step 1: Establishing a Vietnamese security service company;
Dossiers including:
- The application form submits to the business registration office requesting the certificate to establish a security company.
- Draft of company charter.
- List of founders as well as members.
- Authenticated legal papers of members.
- Valid identification papers of the authorized representative and the legal representative.
- Legal capital confirmation document.
- Certificate of business registration (for organizations).
- Investment registration certificate for foreign investors.
Step 2: Apply for issuance of new certificates of satisfaction of security and order conditions
Because this is a conditional business lines, the businesses that want to operate security service must satisfy the prescribed conditions.
Businesses have to prepare dossiers and submit application for the issuance of certificates of satisfaction of security and order conditions.
Step 3: Transfer the contributed capital to foreign investors
Dossiers to carry out the procedure include:
- Capital contribution registration document.
- Copy of identity card or passport for individual investors. Copy of Certificate of business registration or other equivalent document certifying legal status for investors as organizations.
- Notarized copy of current business registration certificate.
- Minutes of the meeting and the company’s decision on approval for members to transfer capital contributions to foreigners.
- Transfer of capital contribution Contract.
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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Article 17. The rights to establish, contribute capital, buy shares/stakes and manage enterprises
1. Organizations and individuals have the right to establish and manage enterprises in Vietnam in accordance with this Law, except for the cases specified in Clause 2 of this Article.
2. Minors; people with limited civil act capacity; incapable of civil acts; people with difficulties in cognitive-behavioral control; organizations without legal status;
Thus, individuals who reach the age of 18 have the right to establish and manage a company.
Contact LSX
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