Are you a foreign investor or partner looking to learn the process of establishing a foreign-invested company? You want to invest in business in Vietnam but don’t know where to start? Are you wondering how to establish a foreign invested company? Let Viet My help you find the answer with the analysis below based on practical experience!

1. Regulations on establishing foreign-invested companies

Establishing a company with 100% foreign capital is a special type of business organization with part or all of the capital contributed by foreign investors, established and operating in accordance with the provisions of Vietnamese law as well as many laws. international agreements and law. Procedures for establishing a foreign-invested company in Vietnam must meet a number of specific conditions specified in the Enterprise Law 2020 and Investment Law 2020.

1.1 Subjects can establish foreign-invested companies

• The company has held from 1% to 100% capital from foreign investors since its establishment.
• Foreign-invested enterprises (companies that have been granted Investment Registration Certificates in Vietnam) continue to establish other economic organizations. Invest in business groups, buy back shares and invest
• If a foreign investor invests or buys shares in a Vietnamese company that already has a company registration certificate (even up to 100% contributed capital), there is no need to go through the registration certificate procedure. invest
• Enterprises that retail goods to consumers or establish retail establishments must apply for a business license or a license to establish a retail establishment.

1.2 Forms of establishing foreign-invested enterprises/companies

Establish a foreign-invested company from the beginning

Therefore, foreign investors provide capital at the first stage of establishing a business in Vietnam. Therefore, foreign investors’ shares can range from 1% to 100% of the company’s equity capital, depending on the field of activity.

Establish a foreign-invested company by investment or share purchase

Foreign investors use this form to donate capital to a Vietnamese company that already has a Company Registration Certificate. Foreign investors can put from 1% to 100% of capital into Vietnamese companies, depending on the field of activity. Foreign investors carry out procedures to purchase capital contributions and shares of Vietnamese companies. After that, Vietnamese companies became foreign companies.

Enterprises that retail goods to consumers or establish retail establishments must apply for a business license or a license to establish a retail establishment.

2. Conditions for establishing a foreign-invested company

Conditions for establishing a foreign-invested company must meet a number of regulations, including the Enterprise Law 2020 and the Investment Law 2020.

a. Subjects with the right to establish foreign companies according to Article 17 of the Company Law 2020 include organizations and individuals, except the following cases:

• State agencies and units of the people’s armed forces use state capital to establish profitable enterprises for their agencies and units.
• Cadres, public employees and civil servants comply with the provisions of the Law on Cadres and Civil Servants and the Law on Public Employees.
• Officers, non-commissioned officers, professional soldiers, defense workers and officers of agencies and units of the Vietnam People’s Army. People’s Public Security officers, Vietnamese defense units, professional non-commissioned officers, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises or manage their business activities. state enterprises; Police.
• Directors and professional managers of state-owned enterprises specified in Article 88, Clause 1, Clause a of this Law. However, this does not include the person appointed as the authorized representative to manage the State’s investment capital in the enterprise.
• People under the age of majority, people with limited civil act capacity, people who have lost civil act capacity. People with difficulties with cognition and behavioral control; The organization does not have legal status.
• People who have been criminally prosecuted, sentenced to prison, are serving a prison sentence, are being subjected to administrative measures in compulsory detoxification facilities, compulsory education establishments, or are banned from working by the court ; banned from doing certain occupations and jobs. carry out certain activities; Other cases according to the provisions of bankruptcy law and bankruptcy law.
• At the request of the business registration agency, the trader must submit a criminal record extract to the business registration agency.
• According to the provisions of the Penal Code, organizations are commercial legal entities prohibited from doing business or operating in certain fields.

b. Investors who wish to establish foreign-invested companies (FDI) in Vietnam must meet the following conditions:

Foreign investors establishing economic organizations must meet the market access requirements of foreign investors. In particular, the following limited industries for foreign investors should be considered:

• Sectors and occupations that do not have access to the market and those that do not have access to the market. For example, when providing services to send workers to work abroad, the applicable law only requires companies to be established and operated under the Companies Act, the company charter 100%, unable to establish foreign-invested companies for business purposes. Having capital of Vietnamese organizations and individuals must obtain permission to operate (based on Article 6 of Decree 38/2020/ND-CP).
• Before establishing an economic organization, investors must have an investment project, issue an Investment Registration Certificate, and perform adjustment procedures. The only exception is for start-up SMEs. Establishment and renewal of start-up investment funds on the basis of supporting the advancement of small and medium enterprises.

c. In case a foreign investor contributes capital or purchases shares (FPI), he/she will receive unlimited capital contribution, except in the following cases:

Percentage of foreign investors in listed companies, public companies, stock trading organizations and securities investment funds. The ownership ratio of foreign investors in state-owned enterprises or conversion to other forms shall comply with the law on equitization and ownership conversion of state-owned enterprises. In case the ownership ratio of state-owned enterprises is If the investment does not fall into the above two cases, the foreign investor must comply with other provisions of relevant laws and international treaties to which Vietnam is a member.

3. Documents for establishing a foreign-invested company

a. For investors who are foreign individuals

Foreigners investing directly in Vietnam to establish foreign-invested companies need to prepare:

• Notarized copy of the foreigner’s passport.
• Lease contract for the company’s headquarters/location to carry out investment projects.
• Statement of legal bank account balance at least equal to the amount invested in the company.

b. For foreign investors are foreign organizations

• Notarized copy of company registration license, consular legalization
• Last year’s financial statements were confirmed or approved by the tax authority and consularly legalized
• Notarized copy of ID card or passport of the representative
• Terms of association of the receiving company
• Power of attorney for capital investment representative of a company established in Vietnam
• Documents proving the experience and financial capacity of the foreign investor

4. Process of establishing a foreign-invested company

The establishment of foreign invested companies and joint venture companies with foreign elements is carried out as follows:

• Step 1: Procedures for applying for investment certificates and enterprise investment projects in Vietnam
• Step 2: Complete the procedure for applying for a business registration certificate
• Step 3: Declare tax finalization and monthly/quarterly/yearly tax declaration.

In addition, after establishing a foreign-invested company, if you want to change or supplement related content during its operation, you must carry out procedures to renew the investment certificate.

5. Common question about establishing a foreign-invested company

5.1 What is the difference between foreign-invested enterprises and foreign-invested enterprises?

Foreign companies are established in accordance with procedures and procedures in accordance with foreign laws.

A foreign-invested company located in Vietnam is a company established and operated in accordance with Vietnamese law.

5.2 Does a foreign-invested company receive investment incentives?

Foreign companies enjoy the same investment incentives as Vietnamese companies. To receive incentives, companies must meet the conditions stipulated by Vietnamese law.

5.3 What taxes do foreign-invested companies have to pay according to regulations?

As a Vietnamese-owned company, a foreign-invested company has to pay several basic taxes: VAT, subject tax, corporate income tax, import-export tax (if there is an import-export tax), etc.

5.4 When must an investment certificate be issued to establish a company with foreign capital?

Cases where procedures for granting an Investment Registration Certificate must be carried out are as follows:

• Investment projects of foreign investors;
• Investment projects of economic organizations: Foreign investors (economic organizations with foreign investors) own more than 50% of the equity capital or the majority of partners are foreign individuals and organizations economics is corporate;

5.5 Can foreign-invested companies establish representative offices, branches, or business locations?

According to the list of obligations of the WTO and Vietnamese law, foreign-invested enterprises are allowed to establish their own subsidiaries, representative offices and offices. Although previously some industries had limited market access, Vietnam’s accession to the WTO had limitations. A few years after its establishment, companies were able to establish branches, representative offices, and agencies.

Viet My, with many years of experience in applying for a license to establish a foreign investment company in Vietnam, is committed to helping you best understand the procedures, legal regulations and investment environment of Vietnam. If you have difficulty getting acquainted with the procedures for establishing a foreign-invested company, please contact VIET MY LAW AND ACCOUNTING for support and advice. Thank!