In recent years, foreign direct investment (FDI) into Vietnam has created new developments, gradually occupying an important role in the economic structure of Vietnam, thereby promoting strong growth. the socio-economic development of the country.
In the context that Vietnam is strongly entering the international market through bilateral and multilateral agreements and agreements, along with the domestic open-door policy, more and more foreign investors are interested in foreign investors. investment and business development in Vietnam.
Since then, the increasing demand for establishing foreign invested companies is inevitable. In order to help foreign investors as well as domestic partners to better understand this type of business and the legal policies and procedures related to foreign invested companies in Vietnam, We would like to answer these questions through this article.
1. Differentiate between foreign companies and foreign invested companies.
Currently, there are still some investors who do not fully understand the concept and there is confusion between foreign companies and foreign-invested companies, leading to failure to identify or incorrectly identify legal policies. Vietnamese laws apply to each type of enterprise.
A foreign company is a type of foreign organization and is defined in Clause 32, Article 3 of the Enterprise Law 2020 as follows:
“32. Foreign organization means an organization established in a foreign country under foreign law.
On the other hand, a foreign-invested company is a type of economic organization established and operating under Vietnamese law under the forms of enterprises, cooperatives, unions of cooperatives and unions of cooperativesss. other organizations conducting business investment activities and having foreign investors as members or shareholders.
From there, it can be seen that these two types of companies have major differences based on the law governing the establishment process of each type. Specifically, a foreign company is established according to the procedures and processes in accordance with foreign laws, while a foreign-invested company in Vietnam is a company established and operating in accordance with the law. Vietnam law.
In this article, we will delve into the current legal processes, procedures and policies for the establishment of a foreign-invested company in Vietnam.
2. Conditions for establishing a foreign-invested company in Vietnam
Foreign investors, including foreign individuals and organizations, are allowed to set up companies in Vietnam in accordance with the law. Before establishing a company, foreign investors must have an investment project and carry out an investment project in Vietnam. carry out procedures for granting investment registration certificates in accordance with the law. In addition, the investor must meet the following conditions:
To own unlimited charter capital, except for the following cases:
+ The percentage of foreign investors' ownership in listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities;
+ The percentage of foreign investors' ownership in state-owned enterprises equitized or converted into other forms shall comply with the law on equitization and transformation of state-owned enterprises;
+ The foreign investor's ownership ratio which does not fall 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 contracting party.
- Investment form, scope of activities, Vietnamese partners participating in the implementation of investment activities and other conditions under the provisions of international treaties to which the Socialist Republic of Vietnam is a signatory.
Thus, whether or not a foreign investor can establish a foreign-invested company will also depend on the industry in which the investor intends to do business in Vietnam. For example, with the business line of providing the service of sending workers to work abroad, investors are not allowed to set up a company with foreign capital to do this business because the current law stipulates only such business. Enterprises established and operating under the Law on Enterprises have 100% charter capital of Vietnamese organizations and individuals to be licensed to operate (according to Article 6 of Decree 38/2020/ND-CP). Or with the film production service business, foreign investors are only allowed to invest in the form of a business cooperation contract or a joint venture with a Vietnamese partner to establish a company and the investor's capital contribution. foreign investment must not exceed 51% of the charter capital of the company (according to point a Sub-sector D. Audiovisual services, Section 2. Information services, Commitment 318/WTO/CK services).
Completed dossiers shall be submitted at: Department of Planning and Investment of the province or centrally run city where the investor intends to establish the company.
4. The process of establishing a foreign-invested company in Vietnam.
The process of establishing a foreign-invested company is carried out by the Foreign Investment Department of Minh Khue Law Firm through the following steps:
Step 1: Prepare and submit the application for the Investment Registration Certificate
An application for an Investment Registration Certificate includes:
a. A written request for investment project implementation;
b. Investment project proposal;
c. A copy of the passport for the investor being an individual or a copy of the Certificate of Establishment or another equivalent document certifying the legal status of the investor being an organization;
d. A copy of one of the following documents: financial statements of the last 02 years of the investor; commitment to financial support of the parent company; financial institution's commitment to financial support; guarantee on the financial capacity of the investor; documents explaining the investor's financial capacity (can provide a Certificate of the investor's bank account balance issued by a foreign bank);
e. Contract to lease the location where the investor intends to locate the head office;
The investor prepares the documents in items c, d, e; Documents issued by foreign agencies and organizations must be consular legalized and notarized translation.
Step 2: Track the application and receive the Investment Registration Certificate
In case the application is not sufficient or is rejected, the investment registration agency will notify the investor in writing and clearly state the reason.
Within 15 days from the date of receipt of complete and valid dossiers, the investment registration agency will issue the Investment Registration Certificate.
Step 3: Prepare and submit the application for registration of the establishment of a foreign-invested company
A dossier for registration of establishment of a foreign-invested company includes:
a. Business registration application form;
b. Company rules;
c. A valid copy of one of the personal identification papers of the foreign investor being an individual, legal representative, capital contributors (for limited liability companies) or founding shareholders (for limited liability companies). with Joint Stock Company);
d. A copy of the Certificate of Establishment or other equivalent document certifying the legal status of the investor being an organization;
>> See more: Advice on the collection of land use fees of the project? Conditions for transferring the entire new urban area project?
e. List of company members, for limited liability companies with two or more members, or List of founding shareholders and list of shareholders being foreign investors, for joint-stock companies;
f. Copy of Investment Registration Certificate (issued in Step 2);
g. A document appointing an individual to act as an authorized representative of the owner, member or shareholder being an organization (if any);
H. Power of attorney for Minh Khue Law Firm to implement and submit documents at the competent authority.
Investor prepares the documents in item c; Documents issued by foreign agencies and organizations must be consular legalized and notarized translation.
Step 4: Receive the result as the Certificate of Business Registration
For complete and valid documents, the Business Registration Office will issue the Certificate of Business Registration within 03 working days from the date of receipt of the valid application.
Investment registration certificate
When implementing an investment project in Vietnam, investors are required to have an Investment Certificate, which will help the State manage well the activities of enterprises and foreign investment capital in Vietnam.
Business establishment license
After the registration procedure for the Investment Registration Certificate is completed, the foreign investor will continue to apply for a license to establish an enterprise based on current legal policies, the company will be established and operated. according to the regulations and laws of Vietnam
Fire prevention license
The pccc license is one of the mandatory conditions of the investor when carrying out administrative procedures related to the form of construction. The licensing authority belongs to the Fire Prevention and Fighting Police Department or the provincial and city police.
Environmental impact assessment (EIA) report
It is the basis for enterprises to understand the current state of environmental quality of the enterprise, thereby proposing effective pollution reduction measures to achieve the prescribed environmental standards. At the same time, the results of environmental quality monitoring will be the basis for the State management agency in charge of environmental protection to evaluate the environmental protection work of the Company.
Appraisal of basic design documents
The basic design needs to be appraised by a specialized construction agency. Examination and assessment of the expertise of enterprises that fully meet the conditions for construction operation capability and construction practice capacity for necessary contents in the process of preparing and implementing construction investment projects. basis for the assessment.
The investor must have a construction permit issued by a competent state agency in accordance with the law, for the purpose of ensuring the construction order in the urban area, ensuring the planned construction according to the standards. certain of the country and ensure urban management issues.