The Vietnamese market is now considered to be a very potential market for economic development. Therefore, Vietnam is a very large foreign investment attraction. There are many foreign investors who want to establish a company in Vietnam but do not know about procedural or procedural issues? Therefore, Luat va Ke toan Viet My sends to readers the article Consulting for Establishing a foreign invested company in Vietnam. Let’s look at the article below to get to know more about it.

1. Legal basis

• Investment Law 2020
• Enterprise Law 2020

2. What are the forms of establishing a foreign invested company in Vietnam?

There are currently two main forms of establishment for foreign-invested companies in Viet Nam: Establishment of foreign-invested companies in Viet Nam in the form of capital contributors from the beginning and Establishment of foreign-invested companies in the form of capital contribution and share purchase:

Form of investors contributing capital from the beginning

With this form, foreign investors will prepare and contribute capital right from the beginning, that is, right when establishing a company in Vietnam. The capital contribution ratio will depend on the size and field of operation of the company. Capital contribution can range from 1% to 100% of the company’s charter capital.

Forms of capital contribution and share purchase

When establishing a capital-invested company in the form of capital contribution or share purchase, a foreign investor will contribute capital to a company in Vietnam that already has a Certificate of Enterprise Registration (i.e. previously established and operated). At this time, foreign investors will buy shares, capital contribution of the company established in Vietnam, and then the Vietnamese company will become a foreign-invested company. Foreign investors will contribute from 1%-100% of capital to Vietnamese companies depending on the field of operation.

In the following article we will advise on the form of foreign-invested companies whose investors have capital in the first place.

3. Procedures for establishment of a foreign-invested company in Vietnam

Procedures for establishing a company with foreign investment capital are contributed by foreign investors immediately upon establishment. This procedure is carried out according to the following steps:

Step 1: Apply for Investment Registration Certificate

When a foreign investor wishes to establish a company in Vietnam, a Certificate of Investment Registration is required. Therefore, the first step is to apply for an Investment Registration Certificate:

The dossier of requesting an Investment Registration Certificate shall include:

1. Request for implementation of an investment project.

2. Some documents to prove the legal status of the investor:

• If the investor is the entity: provide a copy of the GCN setting up the enterprise or document certifying legal status of the institutional investor.
• If the investor is an individual: Provide a copy of the CCCD or passport of the investor.

3. There must be an investment project proposal. This proposal will contain information such as: investor performance, size, target, capital, investment schedule, capital mobilization plan, location, time limit, labor demand and socio-economic performance assessment of the proposed investment incentives.

4. Document proving NPI financial capacity:

• Investors are organizations: BC Financial Group for the last two years of investors. Or other documents such as: Documentation that illustrates an investor’s financial capacity or commitment to financial support by a financial institution or guarantee of an investor’s financial capacity (NDI).
• For an individual investor, confirmation of an account balance, …

5. If the company’s headquarters is leased, it is necessary to provide some documents such as: Lease Contracts, Documents proving the leasing rights of the principal.

Step 2: Apply for an Investment Registration Certificate (GCN)

Investors (NTP) need to declare online investment project information on foreign investment on the National Information System (NTP). Before applying for an investment registration GCN, investors must declare online information on investment projects on foreign investment in the NTP. After 15 days (counting from the date of declaration of the online dossier), the NPI will submit the application for GCN investment registration to the Investment Registration Agency.

The investment registrar will receive the dossier and then give the investor an account to access the NTP on foreign investment to monitor the status of dossier processing.

The NTP on foreign investment will be a place to receive dossiers, process dossiers, return dossiers, update dossiers, and issue codes for investor projects.

Filing direct applications for an investment registration certificate

The NPI shall submit investment GCN-level dossiers to the investment registration agency in accordance with its authority as follows: :

The provincial Department of Planning and Investment (DPI) where the company is located:

• Investment projects outside industrial zones, export processing zones, economic zones, and high-tech zones;
• Investment projects to develop infrastructure of industrial zones, export processing zones, high-tech zones and investment projects in industrial zones, export processing zones, and high-tech zones in localities that have not yet established an industrial zone management board , export processing zones and high-tech zones;
• Investment projects implemented in many provinces and centrally run cities;
• Investment projects are implemented simultaneously inside and outside industrial parks, export processing zones, high-tech parks and economic zones.

Management Boards of Industrial parks, export processing zones, hi-tech parks and provincial economic zones where the company is located:

• Investment projects for infrastructure development in CNZ, export processing zones, high-tech zones;
• Investment projects implemented in industrial zones, export processing zones, hi-tech parks and economic zones.

Time to apply for investment registration certificate

Within 15 days from the date of receiving the full dossier, the GCN-level investment registration agency shall register the investment. In case of refusal, the competent authority shall notify the investor in writing and clearly state the reason.

Step 3: Apply for Certificate of Business Registration (Certificate of Business Registration)

After the GCN-issued foreign-invested company performs the GCN-registered procedures similar to the procedures for establishing a Vietnamese capital company.

Applications for GCN (Certificate of business registration) include:

• Application for business registration; Company rules
• List of members of the company (for LLCs with two or more members) or List of founding shareholders of the company and shareholders who are foreign investors.
• Copies of the following documents: CCCD, Passport or other legal personal identification of individual members;
• Establishment decision, business registration certificate or other equivalent documents of the organization and authorization document;
• For members that are foreign organizations, a copy of the business registration certificate or equivalent document must be consularly legalized;
• Decide to contribute capital and appoint managers; List of authorized representatives (for organizational members);
  Investment registration certificate for investors has been issued.

Authority to issue business registration certificate: Provincial Department of Planning and Investment (MPI) where the company is headquartered.

Step 4: Announce the content of business registration information

Enterprises must be publicly notified on the National Portal of Enterprise Registration after being granted GCN registration. And the disclosure fee must be paid in accordance with the regulations, the contents of the disclosure include the contents of the GCN registration of the enterprise and the following information:

• Business;
• List of founding shareholders; List of shareholders who are foreign investors for joint stock companies (if any).

The request for disclosure of the contents of the registration of the enterprise and the payment of the fee for disclosure of the contents of the registration of the enterprise shall be made at time of application for registration.

Step 5: Engrave the company seal

The company seal is a seal made at a stamp-engraving facility or seal in the form of a digital signature as stipulated by the law on electronic transactions.

The enterprise shall make its own decisions on the type and quantity of the seal and the form and content of the enterprise seal.

The management and retention of seals shall be in accordance with the company charter or regulations issued by enterprises bearing seals. Enterprises use seals in transactions as stipulated by law.

Step 6: Apply for a Business License or Eligible License

After completing the procedures for establishing a company, foreign investors must obtain licenses related to the operating conditions of the company.

General requirements for obtaining a Business License (GPKD) in retail sales of goods to foreign investors:

• In the case of foreign investors belonging to the country and territories participating in the Convention on International Convention in which Vietnam is a member, it is a commitment to open the market for trading goods and activities directly related to buying and selling goods.
• Satisfy the conditions of market access in the treaties to which Viet Nam participates
• There is a financial plan for carrying out the business license request activity.
• There is no overdue tax debt in cases that have been established in Vietnam for 1 year or more.
• In the case of non-state and territorial foreign investors participating in the treaties to which Viet Nam is a party.
• Satisfy the conditions for market access in the International Treaty (IQT) to which Viet Nam is a member.
• There is a financial plan for carrying out the business license request activity.
• No overdue tax liabilities in cases established in Vietnam for 1 year or more.

Applications for a license to conduct retail sales of goods for foreign-invested enterprises in Vietnam include:

• Application for Business License (GPKD) as prescribed
• The explanation reads:
  • Explanation of the conditions under which the respective Business License is granted as prescribed
  • Business plan: Description of the contents and methods of business operation; presentation of business plan and market development; need for labor; assessment of the socio-economic impact and effectiveness of the business plan.
  • Financial plan: Statement of business performance on the basis of audited financial statements of the last year in cases established in Viet Nam for one year or more; explanation of capital, capital resources and financing plans; and financial documentation.
  • Business conditions of purchasing and selling goods and activities directly related to purchasing and selling goods. Financial situation of foreign-invested economic institutions up to the time of requesting business licenses.
• Tax agency documents prove that there is no longer overdue tax liabilities.
• Copy: Certificate of business registration; Certificate of investment registration of projects for purchasing and selling goods and activities directly related to purchasing and selling goods (if any).

The Department of Industry and Trade where the enterprise is headquartered is the competent authority to grant retail business licenses to foreign-invested enterprises.

Step 7: Open the foreign direct investment capital account and follow the following procedures to establish the company

• After completing the procedures for establishing a foreign-invested company, the investor shall open the foreign direct investment capital account. The investor shall transfer capital to this capital account in accordance with the capital contribution period recorded in the Investment Certificate.
• In addition, foreign-invested companies need to open transaction accounts to receive money from investment capital accounts to carry out procedures for revenue and expenditure in Vietnam.

After an investor is established, the following procedures should be carried out in the same way as the Vietnamese company. Specifically:

• Post a sign at headquarters.
• Digital signature registration for electronic tax payment and tax return via the Internet
• Purchase electronic number signatures to perform electronic tax payment
• Electronic invoice issue request.
• To make a report on project performance as stipulated in the Certificate of Investment Registration.
• To declare the payment of taxes in accordance with the regulations.

The article in Luat va Ke toan Viet My has provided you with information on “Establishing a foreign invested company in Vietnam“. If you have any questions or problems regarding the establishment of a foreign-invested company in Vietnam, please contact us at your earliest convenience.

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