Foreign invested enterprises in Vietnam. There are a large number of enterprises operating in the Vietnamese market that are foreign-invested enterprises. In essence, there is partial or complete investment participation of foreign investors. If fully invested, this is an enterprise with 100% foreign capital. These businesses operate in the market in many different industries and fields. These activities are governed by domestic law to ensure effective participation, purpose and significance of Vietnam’s development. So, what are the defining characteristics of foreign-invested enterprises? What are the conditions and procedures for establishing a foreign-invested enterprise? Please follow the following article with Quoc Bao Law.
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A foreign-invested enterprise is an enterprise established in the territory of another country by an investor of one country investing all or part of the capital to conduct business activities to earn profits.
“Many countries in the world do not distinguish between domestic investment capital and foreign investment capital and therefore, there is no concept of foreign-invested enterprises; they call enterprises established on the basis of capital contribution. of foreign investors according to their legal organization form, for example: limited liability company, joint stock company…
The term foreign-invested enterprise was officially used in the 1996 Law on Foreign Investment in Vietnam (previously called foreign-invested enterprise). Accordingly, foreign-invested enterprises have the following characteristics: 1) Enterprises are wholly or partly owned by foreign investors; 2) Established and operating under Vietnamese law on the basis of an investment license issued by the state management agency on foreign investment; 3) Have legal status according to Vietnamese law; 4) Organized as a limited liability company. Currently, Vietnam is piloting the conversion of a number of foreign-invested enterprises into joint stock companies.
The Investment Law 2020 does not directly mention this type of enterprise but only defines it in a general way in Clause 17, Article 3 as follows: “An economic organization with foreign investment capital is an economic organization with investors.” foreign countries are members or shareholders.”
Thus, according to this regulation, we can basically understand that FDI enterprises are enterprises with foreign direct investment capital, regardless of the proportion of capital contributed by foreign parties. Enterprises with foreign direct investment include:
– Enterprises with 100% foreign capital.
– Enterprises with individuals with foreign nationality or organizations established under foreign laws investing (contributing capital to establish, purchasing capital contributions).
2. Conditions for establishing a company with foreign capital
Schedule of specific commitments on trade and services of Vietnam in the WTO.
ASIAN Comprehensive Investment Agreement (ACIA)
ASEAN Framework Agreement on Services (AFAS)
Vietnam – Japan Economic Partnership Agreement (VJEPA)
Vietnam – Korea Free Trade Agreement (VKFTA)
Vietnam – EU Free Trade Agreement (EVFTA)
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
Based on the above legal bases, Quoc Bao Law will advise on principles for determining investment conditions for foreign investors as follows:
1/ Conditions on business lines
For the manufacturing sector: Requires investors to establish projects in planned industrial parks and industrial clusters that allow the production of goods that the investor intends to trade. See list of industrial parks here.
For the service provision sector: The capital contribution ratio of foreign investors in the service provision industry also needs to comply with the provisions of Vietnam’s Schedule of Specific Commitments on Trade and Services in the WTO and Agreements that Vietnam has signed.
– Industries that allow the establishment of 100% foreign-owned companies:
Computer services and related services (CPC 841-845, CPC 849)
Market research services (CPC 864, except 86402)
Management consulting services (CPC 865)
Services providing food (CPC 642) and beverages (CPC 643)
– Industries that limit the capital contribution ratio of foreign investors: For example: Road transport services: Requires the establishment of a joint venture to provide freight transport services, in which the capital contribution ratio is of the foreign side must not exceed 51%.
In cases where foreign investors want to invest in industries that have not yet committed to market access or want to own a higher capital contribution ratio as prescribed in Vietnam’s Schedule of Specific Commitments on Trade and Services in the WTO and the Agreements that Vietnam has signed, the investment registration authority will apply for approval from the ministerial-level agency in charge of managing that industry.
2/ Conditions on investor’s nationality
The investor’s nationality must be a member of the WTO or a member of the Agreements that Vietnam has signed. In cases not falling under the above regulations, investment approval must be obtained from the ministerial-level agency in charge of managing the proposed business line.
3/ Conditions on Investment Capital
The schedule of specific commitments on trade and services of Vietnam in the WTO and the Agreements that Vietnam has signed, as well as the provisions of Vietnamese law, do not have minimum or maximum capital requirements, but must be reasonable and ensure the business is profitable. Therefore, investors can register with a small capital of about 200 million to 1 billion for simple industries such as: Consulting, computer software… For more specific industries, a larger budget is required.
The law also requires investors to prove they have enough financial capacity to contribute capital after being licensed. For example: For individuals, they can provide confirmation of bank account balance with an amount equal to or greater than the registered investment capital; or documents proving that there is a guarantor to contribute the full amount of capital as registered.
Capital contributions by foreign investors need to be made through a bank account called direct investment account (“DICA”). That is, after being granted a business registration certificate and investment registration certificate, the investor needs to go to a bank in Vietnam to open an account and make capital contributions according to the deadline specified above. license.
4/ Conditions for project location planning
Depending on different industries and each locality’s planning, the licensing agency will agree to allow the investor to carry out the project at the registered location or not. Normally, for manufacturing industries, they will be planned into industrial parks and industrial clusters to ensure adequate environmental and fire protection conditions. If you want to locate a factory outside the industrial park, the investor needs to check the planning carefully and formally to ensure that after signing the lease contract or depositing the rent on the location, they will definitely be granted a license. permission. Don’t make mistakes and then when you submit your application, it gets rejected.
For the service industry, there will be a number of industries that need to pay attention to planning: Education centers, Sports centers, Food services, hotels…
Investors should hire a lawyer or expert to advise you on the legality of your business location before signing any contract or agreement with the landlord. Because even if you are not affected by state planning factors, you will still have trouble with landlord issues such as fire protection, personal income tax due to renting a house…
5/ Conditions of machinery and technology
Perhaps foreign investors will wonder why licensing agencies consider machinery and technology conditions when investing in Vietnam. Firstly, machinery that is too outdated will not ensure capacity, making it difficult to achieve expected revenue and tax payments to the state. Using workers to control outdated technological machinery will not make Vietnamese people upgrade their skills. High level of experience and skills, sometimes it is easy to cause unnecessary labor accidents. Second, if machinery and technology are outdated, it can cause environmental pollution, so licensing agencies often give priority to investors with more modern machinery and technology.
3. Forms of establishing foreign-invested enterprises/companies
Establish a foreign-invested company in the form of investors contributing capital from the beginning.
Accordingly, foreign investors will contribute capital right from the beginning of establishing a company in Vietnam. Accordingly, foreign investors’ capital contribution, depending on the field of activity, can range from 1% to 100% of the company’s charter capital.
Establishing a company with foreign investment capital in the form of capital contribution and share purchase.
With this form, foreign investors will contribute capital to a Vietnamese company that already has a Business Registration Certificate. Foreign investors, depending on the field of activity, can contribute capital from 1% to 100% of capital into Vietnamese companies. Foreign investors will carry out procedures for purchasing capital contributions and shares of Vietnamese companies. After that, the Vietnamese company became a foreign-invested company.
4. Characteristics of foreign-invested enterprise activities
4.1. About members, shareholders, business owners:
– Enterprises with foreign investment capital are also known as economic organizations with foreign investment capital. This requires the operation of enterprises with foreign investors as members or shareholders. They participate in investment to seek benefits and results of production and business activities.
– Foreign investors in foreign-invested enterprises are individuals with foreign nationality. That is, not activities carried out by domestic investors. Organizations established under foreign laws carrying out business investment activities in Vietnam. However, it must ensure compliance with basic activities according to Vietnamese law. Thereby ensuring management efficiency as well as positive impacts in the economy.
4.2. Organizational form of the business:
Pursuant to the Investment Law 2020, all types of domestic enterprises can participate in investment by foreign investors. Thereby obtaining capital to ensure effective mobilization and use of capital for production and business purposes.
Enterprises with foreign investment in Vietnam must be organized in corporate forms according to the provisions of Vietnamese law. This is a regulation to organize effective management. As well as determining the factors and investment characteristics of foreign investors. In addition, businesses must operate according to relevant regulations in our country’s market.
Foreign investors have the right to choose a type of enterprise that suits their needs to conduct business activities in Vietnam. Thereby, participate in investing if you see the potential and benefits found in business activities. Mobilizing foreign investment capital is sometimes more effective and faster in businesses. Forms of enterprises with the participation of foreign investors include:
*** Limited liability company with two or more members
A limited liability company with two or more members is an enterprise with from 02 to 50 members who are organizations and individuals. Members are responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except in the following cases:
In case there are members who have not contributed capital or have not contributed the full amount of capital as committed, the company must register to change charter capital, with the proportion of members’ capital contribution equal to the amount of capital contributed within 30 days from the date of registration. The last day to contribute the full capital contribution according to regulations (Capital contribution period is 90 days from the date of issuance of the Business Registration Certificate). Members who have not contributed capital or have not contributed the full amount of capital as committed must be responsible in proportion to the committed capital contribution ratio for the company’s financial obligations arising in the period before the date of company registration. Sign changes to charter capital and capital contribution ratio of members.
Members’ capital contributions can only be transferred according to the following regulations:
Buyback of capital contribution: A company member has the right to request the company to buy back his or her capital contribution if that member has voted against the resolution or decision of the Board of Members on the following issues: :
Amending and supplementing contents in the Company’s Charter related to the rights and obligations of members and the Board of Members
Reorganize the company.
Other cases as prescribed in the Company’s Charter.
Transfer of capital contribution: Company members have the right to transfer capital contribution according to the following regulations:
Offer to sell that capital contribution to the remaining members in proportion to their capital contribution in the company with the same offering conditions
Transfer with the same offering conditions for the remaining members specified in Point a of this Clause to non-members if the remaining members of the company do not buy or do not buy all within 30 days from the date of purchase. from the date of offering.
In addition, a member’s capital contribution can be handled in some special cases such as inheritance, donation, debt repayment, member being detained or temporarily detained…
A limited liability company with two or more members has legal status from the date of issuance of the Business Registration Certificate.
A limited liability company with two or more members is not allowed to issue shares, except to convert into a joint stock company.
Limited liability companies with two or more members may issue bonds according to the provisions of this Law and other relevant laws; The issuance of individual bonds must comply with the provisions of law.
*** One-member limited liability company
A single-member limited liability company is an enterprise owned by an organization or individual (hereinafter referred to as the company owner). The company owner is responsible for the company’s debts and other property obligations within the company’s charter capital.
A one-member limited liability company has legal status from the date of issuance of the Business Registration Certificate.
A single-member limited liability company is not allowed to issue shares, except to convert into a joint stock company.
A one-member limited liability company may issue bonds according to the provisions of this Law and other relevant laws, issuance of individual bonds according to the provisions of law.
The charter capital of a one-member limited liability company when registering to establish a business is the total value of assets committed to contribute by the company owner and recorded in the company charter.
The company owner must contribute capital to the company with sufficient and correct types of assets as committed when registering to establish a business within 90 days from the date of issuance of the Business Registration Certificate, excluding operation time. Transfer and import capital contribution assets, carry out administrative procedures to transfer asset ownership. During this period, the company owner has rights and obligations corresponding to the committed capital contribution.
*** Joint stock company
A joint stock company is an enterprise in which:
Charter capital is divided into equal parts called shares.
Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number.
Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise
Shareholders have the right to freely transfer their shares to others, except in the following cases:
Within 03 years from the date the company is granted the Business Registration Certificate, common shares of founding shareholders are freely transferable to other founding shareholders and can only be transferred to persons who are not founding shareholders if approved by the General Meeting of Shareholders. In this case, the founding shareholders intending to transfer common shares do not have the right to vote on the transfer of those shares. (Clause 3, Article 120 of the Enterprise Law 2020)
Shares are freely transferable, except for the cases specified in Clause 3, Article 120 of the 2020 Enterprise Law and the Company Charter has regulations restricting the transfer of shares. In case the company charter has restrictions on the transfer of shares, these regulations are only effective when clearly stated in the shares of the corresponding shares. (Clause 1, Article 127 of the Enterprise Law 2020)
A joint stock company has legal status from the date of issuance of the Business Registration Certificate.
A joint stock company has the right to issue shares, bonds and other securities of the company.
A partnership is an enterprise in which:
There must be at least 02 members who are joint owners of the company, doing business together under a common name (hereinafter referred to as partnership members). In addition to general partners, the company may have additional capital contributing members
General partners must be individuals, responsible with all their assets for the company’s obligations.
Capital contributing members are organizations and individuals and are only responsible for the company’s debts within the amount of capital committed to contributing to the company.
A partnership company has legal status from the date of issuance of the Business Registration Certificate.
Partnership companies are not allowed to issue any type of securities.
Partnership members and capital contributing members must contribute the committed capital amount in full and on time.
A general partner who fails to contribute the committed capital in full and on time, causing damage to the company, must be responsible for compensating the company for damages.
In case a capital contributing member fails to contribute the committed capital amount in full and on time, the not yet fully contributed capital is considered that member’s debt to the company; In this case, the relevant capital contributing member may be expelled from the company according to the decision of the Board of Members.
*** Private enterprise
A private enterprise is a business owned by an individual who is solely responsible for all activities of the business with his or her entire assets.
Private enterprises are not allowed to issue any type of securities.
Each individual is only entitled to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a business household or a general partner of a partnership.
Private enterprises are not entitled to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies or joint stock companies.
The investment capital of a private business owner is registered by the business owner himself. Private enterprise owners are obliged to accurately register the total investment capital, clearly stating the capital amount in Vietnam Dong, freely convertible foreign currencies, gold and other assets; For capital in other assets, the type of asset, quantity and remaining value of each type of asset must also be clearly stated.
All capital and assets, including loans and leased assets, used in the enterprise’s business activities must be fully recorded in the enterprise’s accounting books and financial reports according to the provisions of law.
4.3. Legal status:
Foreign-invested enterprises in Vietnam have legal status or do not have legal status depending on the type of enterprise they register to establish under Vietnamese law. Because legal status must be determined corresponding to the type of business. In there:
+ Foreign investors choose the type of private enterprise without legal status. Because an individual who owns a business must be a domestic investor according to the provisions of the Enterprise Law 2020.
+ Foreign-invested enterprises established in the form of limited liability companies, joint stock companies, and partnerships all have legal status. At that time, investors can be members contributing capital, buying shares, etc. in the enterprise.
4.4. Capital ownership ratio:
Foreign investors are allowed to own unlimited charter capital in economic organizations. Except for the following cases:
– Ownership ratio of foreign investors in listed companies, public companies, securities trading organizations and securities investment funds according to the provisions of securities law
– The ownership ratio of foreign investors in equitized state-owned enterprises or other forms of ownership conversion shall comply with the provisions of law on equitization and conversion of state-owned enterprises
– The ownership ratio of foreign investors not falling into the above two cases shall comply with other provisions of relevant laws and international treaties to which the Socialist Republic of Vietnam is a member.
4.5. Investment registration certificate:
Foreign investors must have an investment project and carry out procedures for granting an Investment Registration Certificate according to the provisions of Article 38 of the Investment Law 2020. Only then can they proceed to establish an enterprise with investment capital. foreign investment. To determine the right subjects to be managed and granted the right to establish businesses in Vietnam.
When foreign-invested enterprises change the business registration content and that content is also the investment registration content, they must adjust the investment registration content recorded in the Investment Registration Certificate. at a competent state agency. Implement the correct nature of investment, investment object and related rights and obligations.
Foreign-invested enterprises are not allowed to conduct business investment activities in the industries and professions specified in Article 6 and Appendices 1, 2 and 3 of the Investment Law. This is a regulation, as well as specific benefits determined for domestic investors. From there, it brings effective access and ensures economic activities of a number of specific industries in national activities.
For service sectors and sub-sectors that have not yet committed or are not specified in Vietnam’s Schedule of Commitments in the WTO and other international investment treaties for which Vietnamese law has regulations on investment conditions for For foreign investors, the provisions of Vietnamese law apply. Identify relevant rights and obligations for foreign-invested enterprises operating in our country’s market.
Foreign investors in territories that are not WTO members conducting investment activities in Vietnam are subject to the same investment conditions as prescribed for investors in countries and territories that are WTO members. Except where laws and international treaties between Vietnam and that country or territory have other provisions.
These regulations aim to clarify ways to resolve and access the rights of investors and foreign-invested enterprises. From there, they can stably participate in the market, as well as be proactive in their business.
5. Procedures for establishing foreign-invested enterprises
5.1 Procedures for establishing a foreign-invested company/enterprise when investors contribute capital from the beginning
Procedures for establishing a company with foreign investment from 1% to 100% of capital contributed by foreign investors immediately upon establishment are carried out according to the following steps:
Step 1: Prepare documents for Investment Registration Certificate
Step 2: Submit application for Investment Registration Certificate
Procedures for granting Investment Registration Certificates for investment projects that are not subject to the investor’s investment policy decision.
Step 3: Issue Investment Registration Certificate
Within 15 days from the date of receiving complete documents, the investment registration agency shall issue an Investment Registration Certificate. In case of refusal, the investor must be notified in writing and clearly state the reason.
Step 4: Prepare documents and submit application for Business Registration Certificate
After a foreign-invested company is granted an investment registration certificate, the investor carries out the procedures for granting a Business Registration Certificate similar to the procedures for establishing a Vietnamese capital company.
Step 5: Announce the content of business registration information.
After being granted a Business Registration Certificate, an enterprise must make a public announcement on the National Business Registration Portal. At the same time, the publication fee must be paid according to the provisions of law.
Step 6: Engrave the company seal.
Stamps include stamps made at a seal engraving facility or stamps in the form of digital signatures in accordance with the law on electronic transactions.
The enterprise decides the type of seal, quantity, form and content of the seal of the enterprise, branches, representative offices and other units of the enterprise.
The management and storage of seals is carried out in accordance with the provisions of the company charter or regulations issued by the enterprise, branch, representative office or other unit of the enterprise with the seal. Enterprises use seals in transactions according to the provisions of law.
Step 7: Issue a business license or operating license.
Business License issuance only applies to companies doing business in the field of retailing goods to consumers or setting up retail establishments.
Step 8: Open a foreign direct investment capital account.
After completing the procedures for establishing a foreign-invested company, the investor opens a foreign direct investment capital account. The investor transfers capital to this capital account according to the capital contribution period recorded in the Investment Certificate.
In addition, companies with foreign investment capital need to open additional transaction accounts to receive money from the investment capital account to carry out revenue and expenditure procedures in Vietnam. (Refer to the article: Opening a foreign direct investment capital account – Viet An Law (luatvietan.vn)).
Step 9: The foreign-invested company carries out the following procedures for establishing the company.
After the company is established, investors need to follow the same post-establishment procedures as a Vietnamese company. Specifically:
Hang signs at headquarters.
Register for a digital signature to pay taxes electronically and report taxes via the Internet.
Buy electronic digital signatures to make electronic tax payments.
Proposal to issue electronic invoices.
Report on project implementation status according to regulations in the Investment Registration Certificate.
Declare and pay taxes according to regulations.
5.2 Procedures for establishing a foreign-invested company in the form of capital contribution and share purchase
Step 1: Establish a company with Vietnamese capital. Foreign investors can only contribute capital to buy shares when there is a Vietnamese company. In case the company establishment procedures have not yet been completed, the Vietnamese partner must proceed with establishing a company with 100% Vietnamese capital. Step 2: Prepare documents to register to purchase capital contributions and shares from foreign investors. Application for registration of capital contribution, purchase of capital contribution, purchase of shares of foreign investors in Vietnamese enterprises Document to register capital contribution, share purchase, capital contribution. The registration document for capital contribution, share purchase, or capital contribution includes the following contents: information about the economic organization to which the foreign investor intends to contribute capital, buy shares, or contribute capital. Charter capital ownership ratio of foreign investors after contributing capital, purchasing shares, or capital contributions to economic organizations. Copy of ID card, ID card or passport for individual investors. Copy of Certificate of Establishment or other equivalent document certifying legal status for institutional investors. Written agreement on capital contribution, share purchase, capital contribution purchase between the foreign investor and the economic organization receiving capital contribution, stock purchase, capital contribution. Declaration document (attached with a copy) of the Certificate of land use rights of the economic organization receiving capital contributions, shares, or capital contributions from foreign investors. Step 3: Submit application to register to purchase capital contributions and shares from foreign investors. Foreign investors submit applications at the Investment Registration Office – Department of Accounting and Investment where the enterprise is headquartered. Within 15 working days from the date of receipt of valid documents, the Department of Accounting and Investment shall issue a Notice of meeting the conditions for capital contribution, share purchase, capital contribution and Vietnamese enterprises. Step 4: Foreign investors contribute capital, buy shares, capital contributions and Vietnamese enterprises. In case the foreign investor contributes more than 51% of capital, the Vietnamese Company will open a direct investment capital account. Investors make capital contributions and transfer capital through direct investment capital accounts. Members and shareholders transferring capital must declare and pay taxes upon transfer according to the law on personal income tax and corporate income tax (if any). Step 5: Change the business registration certificate. After the foreign investor completes the capital contribution, the company carries out procedures to change business registration. Changing business registration to record capital contribution and share purchase by foreign investors in business registration documents at competent state agencies. Application for change of business registration certificate Notice of change in business registration content Deciding on company changes Minutes of meetings about changing companies Transfer contract and documents certifying that the transfer has been completed, certified by the company’s legal representative. List of capital contributing members or List of foreign shareholders Notarized copy of investor’s passport/Business registration certificate. Authority to issue changes to the Business Registration Certificate: Department of Planning and Investment of the province where the company’s headquarters is located. Step 6: Issue Business License and Operating License Similar to step 7 above.
6. Records and documents need to be prepared when establishing a foreign-invested enterprise
6.1 Application for Investment Registration Certificate
For investment projects subject to investment policy decision, the investment registration agency shall issue an Investment Registration Certificate to the investor within 05 working days from the date of receipt of the policy decision document. invest.
For investment projects not subject to investment policy decisions, investors shall carry out procedures for issuance of Investment Registration Certificates according to the following regulations:
*** Implementation process:
– Before carrying out the procedures for granting the Investment Registration Certificate, the investor declares information about the investment project online on the National Information System on Foreign Investment. Within 15 days from the date of online declaration, the investor submits the application for an Investment Registration Certificate to the Investment Registration Authority.
– After the Investment Registration Authority receives the application, the investor will be granted an account to access the National Information System on Foreign Investment to monitor the application processing status.
– The investment registration agency uses the National Information System on foreign investment to receive, process, and return results of investment registration documents, update the status of application processing and issue codes to investment projects.
*** Application for investment certificate
Investor documents submitted to the investment registration agency include:
– Document requesting implementation of investment project
– Copy of ID card/ID card or passport for individual investors; Copy of Certificate of Establishment or other equivalent document certifying legal status for institutional investors
– Investment project proposal includes the following contents: investor implementing the project, investment objective, investment scale, investment capital and capital mobilization plan, location, term, investment progress investment, labor needs, proposals for investment incentives, assessment of the impact and socio-economic efficiency of the project
– Copy of one of the following documents: the investor’s 02 most recent financial statements; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; Documents explaining the investor’s financial capacity
– Head office lease contract, Documents proving the lessor’s leasing rights (Certificate of land use rights, Construction permit, Business registration certificate with real estate business function of the lessor lease or equivalent documents).
– Propose land use needs; In case the project does not request the State to allocate land, lease land, or allow change of land use purpose, submit a copy of the location lease agreement or other documents certifying that the investor has the right to use the location for implementation. current investment project;
– Explanation on the use of technology for investment projects for projects using technology on the List of technologies restricted from transfer according to the provisions of law on technology transfer, including the following contents: name of the company. technology, technology origin, technology process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines;
– BCC contract for investment projects in the form of BCC contract.
Time limit for processing documents:
+ Within 15 days from the date of receiving complete documents, the investment registration agency shall issue an Investment Registration Certificate; In case of refusal, the investor must be notified in writing and clearly state the reason.
*** Content of Investment Registration Certificate
– Investment project code.
– Name and address of the investor.
– Name of investment project.
– Objectives and scale of investment projects.
– Location of investment project implementation; used land area.
– Investment capital of the project (including investor’s capital contribution and mobilized capital), capital contribution progress and mobilization of capital sources.
– Operational duration of the project.
– Investment project implementation progress: basic construction progress and putting the project into operation (if any); Progress in implementing operational objectives and main items of the project. In case the project is implemented in each phase, the objectives, deadlines, and activity content of each phase must be specified.
– Incentives, investment support and grounds and conditions for application (if any).
– Regulations for investors implementing projects.
– Conditions for investors implementing the project (if any).
*** Authority to issue Investment Certificates Pursuant to Article 39 of the Investment Law 2020, the authority to issue Investment Registration Certificates is as follows: 1. The Management Board of industrial parks, export processing zones, high-tech zones, and economic zones issues, adjusts, and revokes Investment Registration Certificates for investment projects in industrial parks, export processing zones, high-tech zones and economic zones, except for the cases specified in Clause 3 of this Article. 2. The Department of Planning and Investment issues, adjusts, and revokes Investment Registration Certificates for investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones, except for cases prescribed specified in Clause 3 of this Article. 3. The investment registration agency where the investor implements the investment project, places or plans to locate an executive office to implement the investment project shall issue, adjust and revoke the Investment Registration Certificate for with the following investment projects: a) Investment projects implemented in 02 or more provincial administrative units. b) Real-life investment projects inside and outside industrial parks, export processing zones, high-tech parks and economic zones c) Investment projects in industrial parks, export processing zones, high-tech zones, economic zones where the Management Board of industrial parks, export processing zones, high-tech zones, economic zones have not been established or is not within the scope of management of the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones. 4. The agency receiving investment project documents is the agency competent to issue the Investment Registration Certificate, except for the cases specified in Article 34 and Article 35 of this Law.
6.2. Procedures established companies
*** Procedures for establishing a company to issue a Business Registration Certificate after the investor has issued an Investment Registration Certificate
For limited companies:
– Application for business registration.
– Company rules.
– List of members (for limited liability companies with two or more members).
– Copies of the following documents: Citizen identification card, ID card, passport or other legal personal identification of individual members;
– Establishment decision, Business registration certificate or other equivalent documents of the organization and authorization document; Citizen identification card, ID card, passport or other legal personal identification of the authorized representative of the organizational member
– For members that are foreign organizations, a copy of the Business Registration Certificate or equivalent document must be consularly legalized;
– Decide on capital contribution and manager appointment; List of authorized representatives (for organizational members);
– Investment registration certificate for investors has been issued.
For joint stock companies:
– Application for business registration.
– Company rules.
– List of founding shareholders and shareholders who are foreign investors (list of authorized representatives if there are institutional shareholders).
– Copies of the following documents: Citizen identification card, ID card, passport or other legal personal identification of individual members.
– Establishment decision, Business registration certificate or other equivalent documents of the organization and authorization document; Citizen identification card, ID card, passport or other legal personal identification of the authorized representative of the organizational member.
– For members that are foreign organizations, a copy of the Business Registration Certificate or equivalent document must be consular legalized.
– Decide on capital contribution and manager appointment; List of authorized representatives (for organizational members)
– Investment registration certificate for investors has been issued.
Engrave the seal and announce the seal sample, publish information after establishing the company.
The company engraves the seal and announces the use of the seal sample on the National Business Registration Portal.
The company has the right to decide the seal model and number of seals.
Receiving agency: Business registration office – Department of Planning and Investment where the enterprise is headquartered.
Processing time: about 5-8 working days.
6.3 Procedures for issuance of Business License
(Only applicable to companies doing business in the field of retailing goods to consumers or setting up retail establishments)
Conditions for issuance of Business License
– In cases where foreign investors belong to countries or territories participating in international treaties to which Vietnam is a member, they commit to open the market for goods purchase and sale activities and activities directly related to purchase. sell goods.
– Meets market access conditions in international treaties to which Vietnam is a member
– Have a financial plan to carry out the activities requested for a Business License
– No overdue tax debt in case it has been established in Vietnam for 1 year or more.
– In case the foreign investor does not belong to a country or territory participating in an international treaty to which Vietnam is a member
– Meets market access conditions in international treaties to which Vietnam is a member
– Have a financial plan to carry out the activities requested for a Business License
– No overdue tax debt in case it has been established in Vietnam for 1 year or more.
Meet the following criteria:
In accordance with specialized legal regulations
Consistent with the level of competition of domestic enterprises in the same field of operation
Ability to create jobs for domestic workers
Ability and level of contribution to the state budget.
*** Application for Business License
– Application for Business License (Form No. 01 in the Appendix issued with Decree 09/2018/ND-CP).
The explanation contains:
Explanation of the conditions for granting the corresponding Business License according to the provisions of Article 9 of Decree 09/2018/ND-CP
Business plan: Describes the content and methods of implementing business activities; present business plans and market development; labor needs; Evaluate the socio-economic impact and efficiency of the business plan.
Financial plan: Report on business performance results on the basis of audited financial statements of the most recent year in case established in Vietnam for 01 year or more; explanation of capital, capital sources and capital mobilization plans; Attached are financial documents.
Business situation of buying and selling goods and activities directly related to buying and selling goods; The financial situation of the foreign-invested economic organization up to the time of application for a Business License.
Tax authority documents proving no overdue tax debt.
Copy: Business registration certificate; Investment registration certificate for projects selling and buying goods and activities directly related to buying and selling goods (if any).
Receiving agency: Department of Industry and Trade where the enterprise is headquartered.
Processing time: about 30-45 working days.
7. Some notes before establishing a foreign-invested company in Vietnam
Foreign investors, including foreign individuals and foreign companies, can establish companies in Vietnam with capital ownership from 1 to 100% capital depending on the investment field.
Conditions for establishing a foreign-invested company depend on the field in which the investor is establishing: According to WTO commitments and Vietnamese law, some fields can be easily established in Vietnam such as: trade, import-export, investment consulting, management consulting, software, real estate, construction, restaurants, tourism, manufacturing (needs a factory in an industrial park),…
Except for industries requiring legal capital, the capital contributed by investors does not have a minimum level but must be consistent with the scale of operation of the registered company. However, the amount of capital contributed affects the application for a work permit and temporary residence card for the investor, accordingly the investor and the representative managing the capital contribution are only exempted from the work permit and issued a card. For temporary residence, if the capital contribution is 3 billion VND or more, and the investor contributes a high capital contribution, the temporary residence card period will also be granted longer.
If foreign investors contribute capital right after establishment, they need to prove their finances through: savings book, deposit balance, etc. For individuals, deposit balances, tax reports, profitable financial reports, etc. for companies. But if a foreign investor contributes capital to buy shares, it is not necessary to provide these documents.
For procedures to establish a foreign-invested company, it is necessary to provide a house or office rental contract or loan contract and real estate documents of the rented house or office to submit with the establishment documents. Meanwhile, for Vietnamese companies or capital contribution purchase procedures, this condition is not required.
The director, legal representative, and capital contribution manager of a foreign-invested company can be a foreigner or Vietnamese.
Foreign-invested companies are also granted Enterprise Registration Certificates (ERC) by the Business Registration Office – Department of Planning and Investment where the company is headquartered as Vietnamese capital companies.
For companies with foreign investors contributing capital from the beginning from 1% and foreign-invested companies operating in the field of education, the procedure for issuance of an Investment Registration Certificate (IRC) must be carried out.
The biggest difference between a foreign-invested company and a Vietnamese-invested company is that the company needs to open an investment capital account to contribute capital and transfer profits back to the country later.
Unlike Vietnamese-invested companies, which are responsible for their own capital contributions, foreign-invested companies are required to make capital contributions to their capital account and are supervised on capital contributions through investment reports. capital contribution period.
The capital contribution period of a foreign-invested company is clearly recorded in the Investment Registration Certificate. Accordingly, if the investor has not yet contributed capital by the due date, the bank opening the investment capital account will not accept late capital contributions. To be able to carry out capital contribution procedures as committed, the company needs to make adjustments to the Investment Registration Certificate to extend the capital contribution deadline.
Tax declaration procedures, VAT rates, and Corporate Income Tax of foreign-invested companies are similar to those of Vietnamese-invested companies. However, foreign-invested companies must audit their year-end financial statements.
In addition, foreign-invested companies that are granted Investment Registration Certificates must annually carry out investment reporting procedures, investment monitoring and evaluation reports, and report on project implementation status to the public. investment registration agency.
8. Advantages of procedures for foreign investors to contribute capital and buy shares into Vietnamese companies
Advantages of procedures for foreign investors to contribute capital and buy shares into Vietnamese companies compared to establishing a foreign-invested company where foreign investors contribute capital from the beginning are as follows:
Even if a foreign-invested company has members who are foreign investors, it is not required to carry out procedures for issuance of an Investment Certificate. When an enterprise does not have an Investment Certificate, procedures will be minimized when there is a change in the contents of business registration with state agencies.
Simple change procedures: When a business only has a Business Registration Certificate, it only has to be done when there is a change in company name, company address, owner information, etc., follow the same procedures as Vietnamese company;
You do not have to carry out procedures to update investment information on the investment management system.
Procedures for proving financial capacity are also simpler and easier.
In cases where foreign investors contribute capital or buy shares in a Vietnamese company that already has a Business Registration Certificate (including cases of purchasing up to 100% of the company’s capital contribution), they do not have to carry out procedures. issuance of an Investment Registration Certificate, except in the case of a company doing business in the field of education and training, if a foreign investor purchases from 1% of the capital contribution, it is also necessary to carry out procedures for issuance of an Investment Registration Certificate. .
9. Capital ratio of foreign investors when establishing a company in Vietnam
Field in which investors establish companies: according to the WTO Commitment Schedule, Vietnam commits to the ratio of foreign investor capital when establishing a business according to field. Accordingly, there are many industries in Vietnam that do not limit the capital contribution ratio of foreign investors such as trade, construction, manufacturing, healthcare, education… but many fields limit the capital contribution ratio the most. with investors such as: advertising, tourism, transportation, logistics, …
The investor’s nationality will also affect the capital contribution ratio when establishing a company.
10. Cost of establishing a company with foreign capital in Vietnam
The price list of establishing a foreign-invested company accounts for 50-100% of charter capital.
Trade – Import export
Projects over 300 billion
Price list for establishment of a foreign-owned company is less than 50% of charter capital.
Service industry, Trade – Import and export, Manufacturing industry.
Projects over 300 billion
Price list for establishment of branches, representative offices and dependent establishments of foreign-invested companies
Establishment of branches of independent accounting foreign-invested companies.
Establishment of branches of foreign-invested companies with dependent accounting.
Establishment of representative offices of foreign-invested companies.
Establishment of establishments under foreign-invested companies.
11. Services for establishing foreign invested companies of Quoc Bao law?
Establishing a foreign-invested enterprise is a complex issue, involving many steps and requiring a lot of specialized legal knowledge to avoid confusion between procedures. Especially for foreign investors, it is even more difficult to carry out these procedures themselves. Therefore, to reduce time and effort but still get good results, you should choose consulting services for establishing foreign-invested companies at reputable law units such as Quoc Bao Law to carry out the implementation. presently.
Above is detailed information about the conditions and procedures for establishing a foreign-invested company. Hopefully this article will provide a lot of useful information for investors. Besides, if you need further support regarding this content, please contact Quoc Bao Law immediately using the following information.
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