Establish a 100% foreign invested company in Vietnam. Established a 100 % foreign-owned company in Vietnam. Vietnam is attracting the attention of international investors as a country with promising potential for economic development. As the business market gradually opens up, establishing a company with 100 % foreign capital has become an attractive direction not only for domestic entrepreneurs but also for international investors.
Vietnam has proven to be more open and friendly in accepting and encouraging foreign investments, creating favorable conditions for international companies to participate in this market. Establishing a 100% foreign-owned company not only brings new business opportunities, but also contributes to the economic development of the country.
However, this company formation process still presents its own set of challenges, and investors need to be familiar with legal regulations, administrative procedures, capital and business management requirements. Understanding and implementing the right processes is a critical step in ensuring your company’s operations run efficiently and in accordance with regulations.
In this article, we will take a look at the process of setting up a 100 % foreign investment company in Vietnam, from understanding the types of companies that can be set up, to registration procedures, obtaining registration and licenses, and the benefits. Challenges in entering the Vietnam business market.
100% foreign-invested company in Vietnam and learn the key points to keep in mind to succeed in this opportunistic business environment.
Begin your journey of discovery regarding investment procedures in Vietnam, where opportunities await and success is not far away !
Do you need advice or support on what you are looking for ? For help setting up a business in Vietnam, investing, applying for temporary residence cards and visas, entry permits and work permits, please contact Vietnam Contact Luật Quốc Bảo .
Please contact hotline /zalo : 0763387788 .
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Mục lục
What is a foreign-affiliated company?
A foreign-invested company is a company established in the territory of another country by investors from one country investing all or part of its capital to conduct business activities aimed at profit.
“Many countries around the world do not distinguish between domestic investment capital and foreign investment capital, so there is no concept of foreign-invested enterprises, and enterprises established on the basis of capital investment are called foreign investors depending on their legal form. Organization, e.g. limited company, corporation …
The term foreign investment enterprise was officially used in the Vietnam Foreign Investment Law of 1996 (previously called foreign investment enterprise). Therefore, foreign-invested enterprises have the following characteristics: 1) Enterprises wholly or partially owned by foreign investors. 2) Established and operated under Vietnamese law under an investment license issued by the national management agency responsible for foreign investment. 3) Has legal status under Vietnamese law. 4) Organized as a limited company. Currently, Vietnam is trialling the demutualization of many foreign-invested companies.
2020 Investment Law does not directly refer to this type of enterprise, and states in Article 3, Paragraph 17 that “a foreign – invested economic organization is an economic organization that includes foreign investors, i.e., foreign members or shareholders. It is generally defined as “.”
FDI company can basically be understood to be a company with foreign direct investment capital, regardless of the foreign capital ownership ratio. Foreign direct investment enterprises include:
– 100% foreign company.
・Companies invested by foreign individuals or organizations established under foreign law (investment of establishment funds, purchase of investment).
Established a 100% foreign-owned company in Vietnam
What is a 100 % foreign owned company?
A 100% foreign-owned company is one that is established in Vietnam by foreign investors, is owned by foreign investors, is self-managed, and is self-responsible for its performance. A 100% foreign-owned company is established according to the type of limited liability company, has legal status under Vietnamese law, and is established and operated from the date of issuance of the investment registration license.
100 % foreign-owned company must be at least 30 % of the invested capital . In some special cases, the statutory capital may be less than 20% of the invested capital and requires approval from the Ministry of Planning and Investment.
In addition to the types of companies listed above, there are also a number of specific types of companies that are established and organized under specialized law, such as law firms, law firms, banks, and credit institutions.
In order to establish a company with 100 foreign capital employees, it is necessary to complete the procedures for establishing a company with 100 foreign capital employees by combining corporate law, investment law, and WTO commitments.
Simplified procedures and processes for investors, especially shorter licensing periods, are attracting many foreign investors to invest in Vietnam.
What are the characteristics of a 100 % foreign-owned company?
There are some differences between companies with 100 % foreign capital compared to ordinary companies, but what are the characteristics of companies with 100 % foreign capital? Some basic features are:
+ A 100% foreign-owned company is governed by Vietnamese laws and international treaties recognized by Vietnam.
+ A 100 % foreign-owned company is established with capital participation by one or more foreign investors (organizations or individuals) . The assets of a 100% foreign-owned company are owned by one or more organizations / individuals who are foreign investors .
+ A 100 % foreign-funded enterprise can be established in the form of a limited liability company, joint stock company, partnership or limited liability company, subject to the amount of capital invested in the business.
+ A 100% foreign-owned company is controlled by a foreign organization or individual and is responsible for its performance. (The Vietnamese state only issues investment licenses and inspects law enforcement, and does not intervene in the organization or management of 100 % foreign-owned enterprises.)
In this way, 100% foreign-funded enterprises not only have the common characteristics of Vietnamese enterprises, but also have the unique characteristics of foreign-funded enterprises.
100 % foreign company:
100 % foreign-owned company has its own characteristics, there are certain advantages and disadvantages to establishing and operating a 100 % foreign-owned company.
What are the advantages of being a 100 % foreign-owned company?
First, because foreign-affiliated companies are managed by foreign investors, their management methods are different from domestic companies, and they often have higher economic efficiency.
Second, all foreign-funded enterprises are founded and developed by foreign investors, so they bring many advantages in terms of technology and capital, and can attract many talents from home and abroad.
Third, the establishment of foreign-owned enterprises is in line with the current trend of international integration, and foreign investors can take advantage of it through extensive relationships.
What are the disadvantages of being a 100 % foreign-owned company?
100% foreign-owned company also has the following limitations:
First, foreign-invested companies expanding into Vietnam will encounter differences in business culture with domestic companies, which will affect their access to the Vietnamese market. It goes without saying that differences in business culture can cause disagreements between investors.
Second, although Vietnam’s laws have been extended to foreign investors, they still remain within a certain framework, with some parts aimed at protecting domestic investors. This manifests itself in two ways :
+ Investment rate may be limited in some special industries
+ It is necessary to go through investment registration procedures, which requires extremely complicated documents and procedures.
Process of establishing a company with 100% foreign capital :
Step 1: Investor applies for an investment registration certificate.
Depending on the type and size of the project, investors must register to apply for investment decisions and investment policies with the respective competent authorities. Decision-making authority rests with one of the institutions, including the National Assembly, the Prime Minister, and provincial People’s Committees.
The investor completes and submits a document containing the following components to the investment registrar:
+ A written request for the implementation of an investment project made in accordance with the form.
+ Copy of the individual investor’s identity document (ID card, CCCD , passport ) , certificate of incorporation, or equivalent document proving the investor’s status as an organization.
+ Propose an investment project that includes all the contents listed in Article 33 , Clause 1 c of the Investment Law .
+ Copies of documents proving the financial capacity of the investor ;
+ A copy of the land use request proposal or location lease agreement or other documents proving that the investor has the right to use the premises to implement the investment project (depending on the specific case) ).
+ Explanation of technology usage in projects that use technologies listed on the Transfer Restricted Technology List.
Step 2: Investor establishes a business at the Business Registry
Investors establishing a company must submit the following documents to the competent company registrar:
+ Application for business registration in the format published with Circular No. 02/TT-BKHDT .
+ Company Charter.
+ List of members ;
Copy of documents :
1) An identification document (ID card, CCCD , passport, or other legal document ) that proves that the member is an individual and that the authorized representative of the member is the organization .
2) A decision of incorporation, business registration certificate or equivalent document of the member as an organization and the written authorization of the personal representative.
3/ Investment registration certificate.
+ Additional documentation in specific cases.
Note : Some documents in the document must be legalized at the consulate according to the provisions of Vietnamese law.
(Note: For investment projects that have already started operation, the investor must submit documents in accordance with the above provisions. In this document, the investment project proposal shall be applied to the implementation of the investment project from the application date. (Refers to the time of application for investment registration certificate)
Step 3 : Post-establishment procedures
After receiving the investment certificate, the investor will establish a 100% foreign-funded company in accordance with the Enterprise Law of 2020 . It is basically the steps and procedures for establishing a 100% foreign-owned company. Country. Investors select the appropriate business type, prepare and submit documents corresponding to each business type to the competent authorities.
100% foreign-owned enterprises operate stably and legally in Vietnam, foreign investors should pay attention to the following procedures:
–Disclosure of business information, stamping, electronic signature registration, tax return.
– Sublicenses : licenses in case of business fields that require conditions to be met, registration certificates for products and barcode numbers at the time of product launch, etc.
– Intellectual property procedures : protection of a company’s intellectual property such as trademarks, designs, inventions, etc.
Foreign companies in Vietnam
Target of application for establishment of foreign-invested company
When establishing a foreign investment company, foreign investors must complete the following procedures for issuing an investment certificate.
–The company is invested by foreign investors from 1% to 100% immediately after its establishment.
– Foreign companies (granted investment registration certificates in Vietnam) continue to establish more economic entities. Investments, investments, stock purchases and contributions in economic organizations. Investments under a BCC contract require the issuance of an investment certificate in any of the following cases: New establishment or investment from 1% to 100% of the company’s charter capital .
・If a foreign investor invests in or purchases shares in a Vietnamese company that already has a business registration certificate (even if purchasing up to 100 % of the investment amount), no formalities are required. Except in the case of companies operating in the education and training sector, when a foreign investor purchases from 1 % of the invested capital, procedures for issuance of an investment registration certificate are also required. private.
– For companies operating in the field of retailing goods to consumers or establishing retail establishments, it is necessary to apply for a business license, permit to establish a retail establishment.
– Regulations on foreign-invested enterprises enacted before July 1 , 2015 : Foreign- invested economic organizations already established in Vietnam may carry out business if there are new investment projects; Procedures for implementing the investment project without necessarily establishing a new economic entity.
Note : In 2021, if a foreign investor jointly provides capital with a Vietnamese person to form a company ( i.e. a joint venture between a Vietnamese party and a foreign investor ) , the optimal steps and steps are the minimum in the following order: must be kept to a minimum.
– Step 1: Establish a Vietnam company.
– Step 2: Apply for a qualified license for a conditional occupation.
–Step 3 : Transfer of contributed capital to foreign investors. Also known as the procedure for registering foreigners to purchase contributed capital.
– Step 4: Application for business license, retail store establishment permit ( the procedure for granting a business license only applies to companies operating in the field of actually retailing goods to consumers or establishing retail stores ) . ).
Established a 100% foreign-owned company in Vietnam
With this option, foreign-invested companies do not need to go through the procedures for issuing investment certificates even if they have foreign investors as members. If a company does not have an investment certificate, procedures will be eased if there is a change in the company’s registration with a state agency. in particular:
+ Easy change procedure: Companies such as Vietnamese companies that only have a business registration certificate only need to follow the same procedure when there is a change in company name, business address, owner information, etc. .
+ There is no reporting obligation regarding project implementation, investment supervision reports, etc.
+ No need to update investment information on the investment management system.
Procedures for issuing investment registration certificate
For investment projects that are subject to an investment policy decision, the investment registration authority shall issue an investment registration certificate to the investor within five business days from the date of receipt of the investment policy decision.
For investment projects that are not subject to investment policy decisions, the investor shall carry out the procedure for issuance of an investment registration certificate in accordance with the following provisions:
Implementation process :
– Before proceeding with the procedure for issuing an investment registration certificate, investors must declare information about their investment project online in the National Foreign Investment Information System. Within 15 days from the online filing date , investors must submit an application for an investment registration certificate to the Investment Registration Authority.
– After the Investment Registration Office receives the application, the investor will be given an account to access the National Foreign Investment Information System to monitor the processing of the application.
– Investment registration agencies use the National Foreign Investment Information System to receive investment registration documents, process them, return results, update application processing status, and issue codes to investment projects.
Documents for issuing investment certificate
Investor documents submitted to the investment registrar include:
– A written request for the implementation of an investment project.
– A copy of the individual investor’s identity card / identification card or passport ; a copy of the certificate of incorporation or other equivalent document proving the legal status of the investor as an organization.
– Investment project proposal, including : the investor implementing the project, investment objective, investment size, investment funds and capital mobilization plan, location, duration, investment schedule, investment, labor demand, investment incentive proposal, project Social evaluation – economic impact and efficiency.
– A copy of one of the following documents : Investor’s financial statements for the past two years. Parent company commitment to financial support. Financial institutions’ commitment to financial support. Guarantee the financial capacity of investors. A document that describes an investor’s financial ability.
–Headquarters rental contract, documents proving the lessor’s rental rights (land use right certificate, construction permit, lessor’s business registration certificate with real estate business functions, lease or equivalent documents).
– Suggestion of land use demand. If the project does not require permission from the state to allocate or lease land or change the purpose of land use, a copy of the site lease agreement or proof that the investor has the right to use the site for implementation. Other documents. ;
–For projects that use technologies listed on the list of restricted technologies based on the Technology Transfer Law, explanatory charts and diagrams regarding the use of technologies in investment projects, including company name, technology, origin of the technology, technological process, etc. Main technical parameters, usage of main machines, equipment and technology lines.
– BCC contracts for investment projects in the form of BCC contracts .
Application processing time limit :
+ Within 15 days from the date of receipt of the complete application , the investment registration authority must issue an investment registration certificate. In case of refusal, investors must be clearly informed in writing of the reasons.
Example of a 100 % foreign-owned company
100% foreign-invested company in Vietnam is a mobile phone manufacturing company. Imagine that a well-known Korean technology company decides to expand its operations in Vietnam by establishing a wholly owned subsidiary.
Company name: TechMobile Vietnam Co., Ltd.
Founder : TechGroup ( Korea )
TechMobile Vietnam operates in the field of manufacturing and trading of mobile phone products and related technical equipment. The company chose Vietnam as its headquarters to take advantage of the development of the information technology industry and cheap labor in the production process.
TechMobile Vietnam is as follows.
- **Research and Planning**: TechGroup conducts market research and business opportunity analysis in Vietnam. Next, plan and strategize your new subsidiary .
- **Company Registration**: TechGroup will register as a company with the Vietnam Enterprise Administration Authority. During the process, you will be provided with information about your company name, business activities, and legal representatives .
- **Investment funds**: TechGroup will transfer investment funds to the subsidiary’s accounts in banks in Vietnam in accordance with the law .
- **Procedure for Granting Foreign Investment License**: TechGroup will submit the foreign investment documentation and await review and approval from the relevant government agencies .
- **Completing the registration process**: TechMobile Vietnam will complete the business registration, taxes and other necessary documents .
- **Operational Setup**: TechMobile Vietnam will open offices and manufacturing plants, hire and train employees, and start production and sales activities .
TechMobile Vietnam will utilize TechGroup ‘s experience and technology to develop high-quality products, provide employment to local workers, and contribute to Vietnam’s social and economic development.
Questions regarding foreign-invested companies
- What types of foreign investors are investing in Vietnam ?
- Established a company with 100% foreign capital .
- We provide funds to set up a company with Vietnamese investors .
- Purchase of invested capital of Vietnamese companies .
- The investment will be made based on the BCC business partnership agreement .
- Are foreign-invested enterprises eligible for investment incentives?
Motsu. However, foreign-invested companies can only receive the same investment incentives as Vietnamese companies.
- What taxes must foreign-invested companies pay?
Similar to Vietnamese-owned enterprises, foreign-invested enterprises are also required to pay basic taxes such as: value added tax, license tax, corporate income tax, import/export tax (if applicable for import/export activities) …
- When is it necessary to issue an investment certificate when establishing a foreign-invested company?
an investor establishes a company by investing 1 % to 100 % of the capital from the beginning, or when a foreign investor purchases investment, it is necessary to purchase shares of a Vietnamese company operating in the education sector. To do.
- What types of foreign companies can I establish?
- Establishment of a one-person limited liability company
- Establish a limited company consisting of two or more employees .
- Established a corporation .
- Can foreign companies establish representative offices, branches, or sales offices?
WTO Schedule of Commitments and Vietnamese law, foreign-invested enterprises have the right to establish their own branches, representative offices and sales offices. Previously, some industries had limited market access, but in the years since Vietnam joined the WTO, companies have been established to set up businesses such as branches, representative offices, and sales offices . There was a limit to the number of years since.
- What are the conditions for foreign companies to trade and distribute goods in Vietnam?
Foreign companies carrying out commercial activities and distribution of goods in Vietnam are subject to the following conditions:
- Investors from countries and regions participating in international treaties to which the Socialist Republic of Vietnam is a party commit to opening their markets for commodity trading activities .
- Goods in circulation are not on the list of prohibited goods and are not allowed to be distributed under international treaties, but if they are on the list of goods with distribution channels, they are subject to the agreed schedule of international treaties. must be distributed accordingly .
- Distribution scope: wholesale and retail .
- Business license issued by the competent state agency .
- Can foreign investors set up a household business?
According to Vietnamese law, foreign investors are not allowed to establish a business household.
Quoc Bao Law Office’s foreign company establishment services
- We advise investors on the conditions for establishing a foreign investment company, depending on the specific business sector and the investor’s nationality .
- Negotiate the ownership percentage of foreign investors in Vietnam in accordance with Vietnamese law and WTO commitments .
- Advice for investors on choosing the appropriate company type: limited liability company or joint stock company, address of head office, capital, business activities, opening of capital transfer accounts, deadlines for contributions .
- We advise on the conditions and guide investors in preparing the necessary documents to establish a foreign investment company .
- Consulting for investors and preparation of company establishment documents .
- Cooperate with the Vietnamese competent authorities on behalf of investors in company establishment procedures for investors (application for investment registration certificate, business registration certificate, corporate seal, public seal sample, procedures after company establishment, taxation/ accounting ) Consulting services, overseas transfer of profits) , labor insurance, issues related to the wisdom of owners…;
- Apply for a foreign loan from your parent company or foreign organization for your business .
- We provide investors with comprehensive advice on activities that occur in the course of doing business in Vietnam .
For more information on the procedures for establishing a foreign investment company, please contact us for detailed guidance on related legal issues.
Begin your journey of discovery regarding investment procedures in Vietnam, where opportunities await and success is not far away !
Do you need advice or support on what you are looking for ? For help setting up a business in Vietnam, investing, applying for temporary residence cards and visas, entry permits and work permits, please contact Vietnam Contact Luật Quốc Bảo .
Please contact hotline /zalo : 0763387788 .
Address : 528 Le Van Sy , District 14 , District 3 , Ho Chi Minh City
Facebook fan page : https://www.facebook.com
