Foreigners investing in Vietnam must comply with the provisions of Vietnamese law. However, foreign investors will face difficulties when carrying out business registration procedures in Vietnam due to many reasons such as different procedures in each country.
Vietnamese law does not prohibit foreigners from doing business in Vietnam. However, in order to meet the operating conditions, foreigners must register their business in the form of establishing a company or contributing capital or receiving the transfer of contributed capital. The following article provides the legal factors related to the registration of a business certificate in Vietnam.
Article 80, paragraph 1, of Decree No. 01/2021/ND-CP establishes the following rights to establish a business:
According to the Civil Code, individuals and family members of Vietnamese citizens with full civil capacity have the right to establish a business household.
According to the above regulations, the mandatory condition for the establishment of a business household is that the individuals or members of the business household must be Vietnamese citizens.
To set up a business, foreigners must meet the conditions stipulated in Article 2 of the 2008 Nationality Law and apply for Vietnamese nationality.
Vietnamese law does not prohibit foreigners from setting up private enterprises, but there are no specific regulations guiding foreigners to set up private enterprises.
According to the Investment Law, foreigners can invest through foreign-invested economic organizations (which can be private enterprises). However, the Investment Law also stipulates that a foreign-invested economic organization is an economic organization of which foreign investors are members or shareholders. Therefore, foreigners investing in Vietnam can only establish limited companies or joint stock companies.
Foreigners are not allowed to set up business households in Vietnam
Foreign entrepreneurs who want to start a company in Vietnam need to apply for an investment license. The procedure for applying for an investment license includes:
- Application for investment license.
– ID cards, passports, identity cards and documents proving legal status and consular receipts.
– Report on the financial capacity of foreigners who want to open a company in Vietnam. The content of the report must clearly indicate the source of investment funds used by foreigners for investment and that the investor has sufficient financial capacity to do so. Investors can attach the following two documents to prove their financial ability: financial statements (for corporate investors) and confirmation of bank account balances (for corporate investors).
- Proposals for investment projects.
– Proposal of land use requirements for companies using leased land in Vietnam.
You must have an investment license to register your business in Vietnam
Before carrying out the procedures for issuance of the "Investment Registration Certificate", the investor declares online information about the investment project on the National Foreign Investment Information System.
The investor submits 01 applications at the Investment Registration Authority.
The investment registration authority shall grant the Investment Registration Certificate to the investor within 15 days from the date of receipt of a valid application.
The investor himself or through the national industrial and commercial registration public service portal shall submit the 01 application to the industrial and commercial registration authority.
The enterprise registration authority shall receive and issue the enterprise registration certificate within 3 days from the date of receipt of the valid application.
Steps for business registration in Vietnam
If a foreign investor conducts business in a conditional investment field and needs to apply for a business license, the investor needs to apply for a business license before starting the business.
Certain industries require a license to qualify for business, such as: retail services; logistics services; e-commerce services; postal services; educational services…
Foreign investors must meet business conditions when carrying out business registration procedures in Vietnam. For each investment field, there will be different conditions on procedures, investment proportions, investment funds and investment forms.
When setting up a company in Vietnam, foreigners must prove their financial ability. Foreigners confirm the corresponding investment amount in Vietnam by confirming the bank account balance or savings book printed with the investor's name;
Foreign investors must ensure that there is a location for the project implementation: there is a lease contract, office lease in Vietnam to register the company's headquarters. Please note that the address cannot be an apartment building or a boarding house.
Business licenses are granted to the following foreign-invested economic organizations:
Exercising the right to retail goods, except for goods specified in Article 9, Clause 4, Point c of Decree No. 09/2018/ND-CP;
Exercising the right to import and distribute wholesale goods specified in Article 9, Clause 4, Point c, Decree No. 09/2018/ND-CP;
Exercising the right to retail goods specified in Article 9, Article 4, Point c of Decree No. 09/2018 / ND-CP;
Provide logistics services; except for the logistics service sub-sector to which Vietnam has committed to open the market in the international treaties to which Vietnam is a contracting party;
Leasing of goods, excluding financial leasing; except for the case of leasing construction equipment to the operator;
Providing trade promotion services, excluding advertising services;
providing commercial intermediary services;
providing e-commerce services;
Providing services of organizing tenders for goods and services.
In addition to activities licensed for business, foreign-invested economic organizations and economic organizations in the above cases.
In case the foreign investor is not a member of a country or region that is a member of an international treaty to which Vietnam is a contracting party, commits to opening the market, registers for goods business and related activities, directly buys and sells specific goods.
Investors should find out if they need a business license in their business case
Business registration procedures for foreign investors
Step 1: Economic organization wishing to send the dossier to the licensing agency in person or by mail or electronically (if applicable). Records include:
Business license application (filed in accordance with Form 01);
No overdue tax certificate issued by the tax authority;
Photocopies: business registration certificate; investment registration certificate (if any) for goods trade and activities directly related to the sale of goods;
Power of Attorney from a Vietnamese law firm to carry out the procedure.
Step 2: State agencies consider applications
Within 3 working days from the date of receipt of the dossier, the licensing authority shall examine and request supplements and corrections if the dossier is not sufficiently valid.
Within 10 working days from the date of receipt of complete and valid materials, the licensing agency shall verify the satisfaction of the corresponding conditions. If the prescribed conditions are met, the license-issuing agency shall issue a business license to the applicant.
If it is necessary to consult the Ministry of Industry and Trade, the license-issuing authority shall send the materials together with the written request for comments to the Ministry of Industry and Trade and the directly affiliated management department. Within 15 days from the date of receipt of the application, the Ministry of Industry and Trade and the directly affiliated management department shall issue a written approval for the issuance of a business license.
Dossier to get a business license in Vietnam
Within 3 working days from the date of receiving the written approval from the Ministry of Industry and Trade and various ministries and commissions, the issuing agency shall issue a business license.
Obtaining a business license is a mandatory first step when conducting business activities in order to legitimize open, transparent and entrepreneurial business in a socially beneficial industry. rather than a malicious industry.
It is one of the foundations to build customers' images and beliefs about the company and products. It is the most authentic proof of legitimate business that ensures the safety of customers.
A commercial entity is registered with the industry and commerce, legally established and operated in accordance with the Commercial Law, and has legal rights or recognition. At that time, all commercial activities will be legalized in an open and transparent manner, which will help your company to open up the market and expand legal business.
Registered companies/enterprises all have an Enterprise Number, also known as a business registration number. This ensures the legitimacy of the legal entity doing business as a legal and taxable activity. Furthermore, it ensures compliance with legal standards of bookkeeping and accounting. This determines that the business is paying taxes, the employees are fully insured, and the business is reporting income to the state.
The business registration certificate is the legal responsibility of the investor
As can be seen, the business registration certificate is a meaningful legal institution for the country of Vietnam and the business itself. Please carry out the business license registration procedure in accordance with Vietnamese law, wish you success with your business choice.
Limited Liability Company
Limited Liability Company (LLC) is the most common form of investment for foreign investors cause the member is responsible for the debts and liabilities of the company to the extent of the amount of capital that he has contributed or committed to contribute to the company. LLCs constitute a new legal entity but are not allowed to issue shares.
LLCs can be broken down into single member LLCs, where there will only be one owner, and multiple member LLCs, where there will be more than one stakeholder. A LLC with one member can be converted into a LLC with two members or more, by adding new capital from other investors, or the investor transferring part of its capital to others. These owners can be private individuals or companies. LLCs can generally be 100% owned by foreign investors, except in some business lines where a Vietnamese stakeholder is required (advertising services, telecommunication services, travel agencies and tour operator services, etc.).
Joint Stock Company
A Joint Stock Company (JSC) constitute a new legal entity established through a subscription for shares in the company. The charter capital of a JSC is divided into shares and each shareholder holds shares corresponding to the amount of capital the shareholder has contributed to the company. Shareholders are responsible for the debts and liabilities of the company to extent of the amount of their contributed capital.
A JSC is required to have at least three shareholders. There is no limit on the maximum number of shareholders in JSC. Under Vietnamese law, this is the only type of corporate structure that can issue shares.
A Representative Office (RO) offers a low-cost entry for companies with business relations or investment projects in Vietnam. It is a common option among newcomers to the Vietnamese Market and it usually prepares for a future commercial implantation. ROs are prohibited to conduct commercial or revenue-generating activities, and it does not constitute an independent legal entity.
A Branch Office (BO) can conduct business activities in Vietnam, but it does not constitute an independent legal entity. To set up a BO, a parent company must have conducted business in its home country for at least five years. BOs are limited to certain types of service businesses, such as foreign law firms, finance, banking, etc.
Please note that any foreign documents or supporting information provided to complete these steps will need to be notarized, legalized by consular officials, and translated into Vietnamese by competent authorities.
Step 1 - Investment registration certificate application
The first step in the Vietnamese corporate establishment process is an application for an Investment Registration Certificate (IRC). This is required for all projects seeking to set up new entities in Vietnam (regardless of foreign ownership percentage) and establishes the right of the foreign company to invest within Vietnam.
It usually takes at least 15 days to issue the IRC from the date when documents are submitted
Step 2 - Enterprise registration certificate application
The Enterprise Registration Certificate (ERC) is required for all projects that seek to set up new entities within Vietnam. The ERC is delivered by the Provincial Department of Planning and Investment.
From the completion of this step, the entity legally exists. It usually takes at least 3 days to issue the ERC from the date when documents are submitted.
Step 3 - Post licensing procedures
Once the IRC and ERC have been issued, additional steps must be taken to complete the procedure and start business operations. This includes:
For BOs and Ros which does not constitute an independent legal entity, IRC and ERC are not required to set up. Thus, the process is different. The foreign investors will need to apply for a specific RO/BO license from the Provincial Department of Industry and Trade before completing post licensing procedures. It usually takes at least 7 days.