The process of establishing a foreign-invested company in Vietnam

At the present time, the Vietnamese government implements a lot of open policies for foreign investors. They can invest in many types in the territory of Vietnam. In those types, investors often establish economic organizations, namely companies operating in the Vietnamese market. In this article, LSX legal firm would like to give you a guidance regarding: “The process of establishing a foreign-invested company in Vietnam”

Legal ground

• Law on Investment 2020

Investment in establishing a company

Foreign-investor establish a business entity in accordance with the following regulations:

• A foreign investor that establishes a business entity shall satisfy market access conditions applied to foreign investors specified in Article 9 of the Law on Investment 2020:

Article 9. Business lines allowed in market with conditions and market access conditions applied to foreign investors

Market access conditions applied to foreign investors are the same as those applied to domestic investors, except for the case specified in Clause 2 of this Article.
Pursuant to Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government, and international agreements to which the Socialist Republic of Vietnam is a signatory, the Government shall promulgate a List of business lines restricted to foreign investors, including:
a) Business lines not allowed in market access;
b) Business lines allowed in market with conditions.
Market access conditions applied to foreign investors specified in the List of business lines restricted to foreign investors include:
a) Ratio of the foreign investor’s charter capital in a business entity;
b) Investment method;
c) Scope of investment;
d) Capacity of the investor; partners participating in the investment activities;
dd) Other conditions specified in the Laws and Resolutions of the National Assembly, Ordinances and Resolutions of the Standing Committee of the National Assembly, Decrees of the Government, and international agreements to which the Socialist Republic of Vietnam is a signatory.
The Government shall elaborate this Article.

• Before establishing a business entity, the foreign investor must have an investment project and follow the procedures for issuance or adjustment of an investment registration certificate, except for establishment of a small and medium-sized start-up enterprise and a startup investment fund following regulations of the Law on Small and Medium-sized Enterprises.

Cases requiring investment guideline approval

Projects requiring investment guideline approval: large, important projects, often related to national defense, security, economic, political issues…

In Vietnam, The National Assembly, The Prime Minister, and the provincial People’s Committees have the competent to approve investment guidelines.
Articles 30, 31, and 32 of the Law on Investment 2020 respectively stipulate the investment projects fall under the jurisdiction of The National Assembly, The Prime Minister, and the provincial People’s Committees to approve investment guidelines.
If the investment project falls under cases of Articles 30, 31, and 32 of the Law on Investment 2020, the investor must apply for investment guideline approval.

Application for approval for investment guidelines of an investment project proposed by an investor

• An application form for execution of the investment project, including a commitment to incur all costs and risks if the project is not approved;
• A document concerning the legal status of the investor;
• Document(s) proving the financial capacity of the investor including at least one of the following documents: the investor’s financial statements for the last two years; commitment of a parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for the investor’s financial capacity; other document proving the investor’s financial capacity;
• Proposal for the investment project including the following main contents: investor or method of investor selection, investment objectives, investment scale, investment capital and plan for raising capital, location, duration and schedule of the investment project, information about the current use of land in the location of the project and proposed demand for land use (if any), demand for labor, a proposal for investment incentives, impact and socio–economic efficiency of the project and preliminary assessment of environmental impact (if any);
• If the law on construction requires formulation of a pre-feasibility study report, the investor is entitled to submit the pre-feasibility study report instead of a proposal for the investment project;
• If the project does not require the State to allocate or lease out land or to permit land repurposing, a copy of the document regarding the land use rights or other document identifying the right to use the location for execution of the investment project is required to be submitted;
• Contents of the explanation for the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology;
• Other documents relating to the investment project, and requirements on the eligibility and capacity of the investor (if any).

Cases requiring the investment registration certificate

The Law requires investment registration certificate in the following cases:

• Investment projects of foreign investors.
• Investment projects of the business entities mentioned in Clause 1 Article 23 of the Law on Investment 2020.

Accordingly:

Article 23. Conduct of investment activities by foreign-invested business entities

When establishing a business entity, when making investment by contributing capital, purchasing shares or purchasing stakes of a business entity or when making investment under a business cooperation contract in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:
a) Over 50% of its charter capital or more is held by a foreign investor(s) or the majority of the general partners are foreigners if the business entity is a partnership;
b) Over 50% of its charter capital or more is held by a business entity(ies) mentioned in Point a of this Clause;
c) Over 50% of its charter capital or more is held by a foreign investor(s) and a business entity(ies) mentioned in Point a of this Clause.

Thus, if the foreign investor or foreign-invested entity falls into the cases above (owns more than 50% of the charter capital), they have to apply for an investment registration certificate.

The process of establishing a foreign-invested company in Vietnam

The process of establishing a foreign-invested company in Vietnam includes:

• Firstly, apply for investment guideline approval if the project falls under cases Article 30, 31, and 32 of the Law on Investment 2020.
• Secondly, apply for an investment registration certificate. In case the foreign investor or foreign-invested entity owns 50% or less of the new company’s charter capital as specified in Clause 1, Article 23 of the Law on Investment 2020, they do not have to apply for this kind of certificate.
• Thirdly, apply for a business registration certificate.

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 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.

Contact LSX

The above content details information regarding “The process of establishing a foreign-invested company in Vietnam”. LSX Legal Firm has provided effective legal guidance to businesses and individuals with reasonable prices as well as efficient outcomes in recent years. Following legal principles, we always update and keep our operations and services on track with the law. If you need any further information from the firm’s solicitors, please contact  LSX Law firm: +84846175333 or Email: [email protected]

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Frequently asked questions

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