Foreign Invested Company In Vietnam, what are they most interested in (when meet a lawyer)? Core requirements, Enterprise Structure ☛ LLc or JSc, the required procedures, processes for foreign investors when starting a business in Vietnam and “INDIAN SET-UP COMPANY IN VIETNAM” →
A foreign invested company defined by the Law on Enterprise and the Law on Investment is a company established by foreign investors in order to carry out investment activities in Vietnam or a Vietnamese company purchased the shares, merged, repurchased by foreign investors (India's investments in Vietnam)
# 1 Foreign ownership ratio is allowed from 1% to 100% in Vietnam
# 2 Minimum capital requirement is 20,000 USD or higher
# 3 There must be a legal lease agreement for a registered address
# 4 The resident Director could be a foreigner or a Vietnamese individual
# 5 Investment Registration Certificate (IRC) is obligated
# 6 Enterprise Registration Certificate (ERC) is issued as Vietnamese companies
# 7 Registering for taxes and paying taxes as Vietnamese companies
# 8 Contributing capital properly in terms of the agreement within 90 days from the day on which the capital account is issued.
Understand & Implement
(i) The essence of establishing a foreign invested company is in the investors’ initial "CONCEPT"
(ii) When investing in Vietnam, they want to approach quickly or slowly
☝ APPROACHING QUICKLY: The investors should prepare a capital budget, line of business (idea), staff, and headquater location ==> CONTACTING THE PRESTIGIOUS LAWYERS IMMEDIATELY
☋ APPROACHING SLOWLY: Asking or investing by "OPENING REP OFFICE" after that, considering the result to make a final decision whether they should invest or not
NO MATTER WHAT THE INVESTORS DO, THEY NEED TO READ IN ORDER TO UNDERSTAND AND FIND THE RIGHT APPROACH (BECAUSE THESE ARE PROVISIONS OF LAWS AND PRACTICE)
→ PREPARE THE INVESTED BUSINESS LINES, CAPITAL AND COMPANY ADDRESS IN ORDER.
(i) GET TO KNOW THE LAW
(ii) GET TO KNOW THE TYPES OF INVESTMENTS
(iii) GET TO KNOW WHEN THE PROJECT’S DOCUMENTS ARE COMPLETED
(iv) GET TO KNOW THE EXPERIENCE OF THE CONSULTING AGENCIES
1. WTO commitments
2. The Law on Enterprise 2014
3. The Law on Investment 2014
- The investor has to select the business lines of investment because all each business line is regulated differently in WTO commitment. After that, he or she has to do research on the Law regulating those business lines (for example: the charter capital of a company doing business in real estate must be at least 20 billion VND) for the investment requirements and the accuracy of the selected business.
- After choosing the business lines, the next step is selecting the types of investment
- The popular type of investment is to establish a Limited Liability Company (1 member or 2 to 50 members LLC) or a Corporation.
Chapter III, Article 47. Limited liability companies with two or more members
1. A limited liability company with two or more members is an enterprise in which
a/ Members may be organizations or individuals; the number of members must not exceed 50;
b/ Members must be liable for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except the case specified in Clause 4, Article 48 of this Law;
c/ The contributed capital amount of each member may only be transferred in accordance with Articles 52, 53 and 54 of this Law.
Section 2, Chapter III, Article 73. Single-member limited liability companies
2. A single-member limited liability company has legal entity status from
the date it is granted an enterprise registration certificate.
3. Single-member limited liability companies may not issue shares.
# A 100% foreign owned Joint Stock Company
Chapter V, Article 110. Joint stock companies (The Law on Enterprise 2014 takes effect on July 1, 2015).
a/ The charter capital is divided into equal portions called shares;
b/ Shareholders may be organizations or individuals; the minimum number of shareholders is three and there is no restriction on the maximum number;
c/ Shareholders are liable for debts and other property obligations of the enterprise only within their amounts of capital contributed to the enterprise;
d/ Shareholders may freely assign their shares to other persons, expect the cases specified in Clause 3, Article 119, and Clause 1, Article 126, of this Law.
2. A joint stock company has legal entity status from the date of grant of the enterprise registration certificate.
3. A joint stock company may issue all types of shares to raise funds.
→ What types of licenses are required when establish a foreign invested company
- Investment Registration Certificate (IRC)
- Enterprise Registration Certificate (ERC)
- Business License
☖ Regarding the Business License (BL), LHD Law Firm would like to give some guidelines on the required documents
1 #. The applications for Business License.
Changing or adding the new business activities means modifying the enterprise’s goals or missions, which needs the following documents:
2 #. The applications for investment project examination according to Decree 108/2006/NĐ-CP dated September 22nd 2006 by the Government giving guidelines on implementing some articles of Law on Investment
The application for Business License according to Circular Number 09/2007/TT-BTM includes:
a) Application for Business License in the template of MĐ-1 accompanied by Circular number 09/2007/TT-BTM
b) An account of the satisfaction of business requirements. The content is about how your project meets the business requirements listed in the appendix of the circular;
c) The application of resisting the business activities of goods trading and those directly related: specify whether the trading is wholesale, retails, establishing retail agency of groups of goods; commercial advertising, commercial inspection…
In case the project is not associated with the investment in construction of facilities (like construction of workshops, installation of machinery and equipment’s for production), it is recommended to supplement the trading of goods and related activities, in addition to the records mentioned in Items 1 and 2 above, with documents about legal entities or relevant papers to prove the investor’s competence and experience.
Note the licensing agency
- Investment Registration Certificate issued by the Department of Investment - Department of Planning and Investment
- Enterprise Registration Certificate issue by the Department of Domestic Enterprise - Department of Planning and Investment
- Business License issued by the Department of Industry and Trade
Foreign investors entering Vietnam to implement a project must apply for an Investment Registration Certificate. However, before carrying out the application for an Investment Registration Certificate, in some cases, the investor must register the investment objectives statement with the People's Committee of the province (the first step of foreign-invested company establishment)
☑ Application for foreign-invested (Viet Nam)
Documents for FOREIGN-INVESTED ENTERPRISE REGISTRATION for individuals and organizations are the followings:
For individuals, there are 3 important documents:
# Vietnam’s office leasing contract
# Banks’ confirmation of same amount of capital with the invested capital in Vietnam
For organizations, there are 5 documents as follows:
# Business Registration Certificate
# Foreign-invested company operating charter (m&a)
Note: the 2 above documents must be consular legalized for use in Vietnam
# Financial statements with profits or banks’ confirmation of same amount of money invested in Vietnam.
# Vietnam’s office leasing contract
# The decision of appointing the Company’s legal representative in Vietnam
Above is the basic conditions for establishing companies with foreign members
☑ Time for establishing foreign-invested company in Vietnam
For projects that do not need approved investment objective statements: 15 – 20 working days since the date of receiving complete documents
For projects that need approved investment objective statements: 5 – 10 working days since the date of receiving the improvement of the investment objectives statement
After the issuing of decision of investment objectives by the Provincial People’s Committee.
This step includes APPLYING FOR ENTERPRISE REGISTRATION CERTIFICATION ⇒ THE YELLOW PAPER (ERC)
Application for Enterprise Registration
The list of founding shareholders and shareholders being foreign investors (the list of the authorized representative if any)
The copies of the following documents:
The people’s identity card, passport or other lawful personal certification, for shareholders being individuals;
Enterprise Registration Certificate (ERC)
The copies of the business registration certificate or similar documents of the shareholder being a foreign organization must be consular legalized.
This is a really important step for getting the certificate called (IRC) INVESTMENT REGISTRATION CERTIFICATE
After the date of receiving the Enterprise Registration Certificate, the enterprise must publish enterprise registration content on the national business registration information portal in accordance with the processes and procedures of the Enterprise Law and pay the fee for such publication.
The public contents including the content of Enterprise Registration Certificate and the following information:
☑ Business lines;
☑ The list of founding shareholders and shareholders being foreign investors for the Joint Stock Company
Implementing agency: Department of Publication - Enterprise Registration Office
After the date of receiving the Enterprise Registration Certificate and publishing the establishing of foreign invested company, the enterprise must get the enterprise’s seal at the authorized units. The enterprise could independently decide the quantity and the form of seal in accordance to the provisions of law.
After getting the seal, the enterprise must publish the design and content of the seal in the National Business Registration Portal and the Department of Planning and Investment will issue a 01 certification letter regarding having published the design and content of the seal
The implementing agency: Department of Publication - Enterprise Registration Office
The progress of work: 03 working days from the date of receiving sufficiently valid documents
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# OTHER SERVICES SHOULD USE AFTER ESTABLISHING THE FOREIGN INVESTED COMPANY (India's investments in Vietnam)
Personal Income Tax, Company Income Tax and Tax report monthly, quarterly, yearly consulting
Social Insurance, payroll consulting
Trademark registration and protection, industrial designs, patents consulting
Labor, Tax, Contract consulting
Virtual Office for rent, used for putting the foreign invested companies headquarter, commit to buy invoices.