Complete Guide to Setting Up a Trading Company in Vietnam: Vietnam joined the TPP after wave of investment into the distribution sector and export, trading companies in Vietnam maps at AC after the agreement is signed. Car, food, retail, electronics will be very attractive for foreign retailers.
For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firm throughout the process shall mostly be needed.
The legal basis for a foreign company to setting up a trading company in Vietnam is stated in pursuance with clause 1, article 13 of the 2005 Enterprise Law of Vietnam: foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions. The establishment of a 100% investor-owned company is governed in Article 7 of the Decree 108/2006/ND-CP, based on which foreign investors may invest in the form of 100% foreign- owned capital to establish limited liability companies, joint-stock companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.
In the event that the domestic investment projects and foreign investment projects capitalized at 300 billion VND or more each, and those on the list of conditional investment projects, the examination of investment projects procedures must be taken in order for the foreign company to be granted the investment certificates.
Beside all the papers referred to in Clauses 1 and 2 of Article 45 of this Decree, the dossier for the examination shall also include the exposition on the capability to satisfy the market entry conditions required for investment projects in conditional investment domains defined in Article 29 of the Investment Law and Appendix III to this Decree. The company also has to register with the Vietnam customs or others competent authorities before they can import-export goods as a part of their trading.
Pursuant to Clause 4, Article 8 of the Enterprise Law, companies have the right to conduct import and export to support its operation in Vietnam without clearly stating what they import-export. However, if the enterprise is expected to import into Vietnam for trading purpose, such business line is conditional business line. Different from other types of company, trading company acts as a middle company, connect buyers with sellers in different countries. Therefore, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam. In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor needs to explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.
Our lawyers of foreign investment practice at LHD Law Firm are available to advise and provide client with service and representation in Vietnam.
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