The Vietnamese market is currently attracting the establishment of many organizations and enterprises. In particular, the concept of joint ventures with foreign investors is no longer strange to Vietnamese investors. Foreign investors investing in Vietnam can do so in the form of 100% foreign capital contribution or joint ventures with organizations and individuals in Vietnam. In the case of foreign investors contributing capital with Vietnamese investors to establish an organization, it is often called establishing a joint venture with foreign countries. This is a form of cooperation between domestic and foreign organizations. So, is the procedure for establishing a joint venture with foreign countries simple or not? Let’s follow the article below by Viet My Law and Accounting.

1. What is a joint venture company?

Establishing a joint venture company is specifically understood as a company where two or more parties cooperate to establish a company in Vietnam. The company is established on the basis of a joint venture contract or a cooperation agreement between a foreign government and the Vietnamese government. Either by a foreign-invested enterprise with a Vietnamese enterprise or by a joint venture enterprise with a foreign investor on the basis of a joint venture contract.

A joint venture company is established in the form of a limited liability company. The characteristic of a joint venture company is that each party will be responsible within the scope of the capital committed to the legal capital. The company has legal status in accordance with the provisions of the law of the Vietnamese state. At the same time, it is established and operates from the date of being granted an investment license.

2. Necessary conditions for establishing a joint venture with foreign countries

2.1. Conditions on the capital contribution ratio of a joint venture between a foreign investor and a Vietnamese investor

In addition to the provisions in the WTO commitments, investors must also comply with legal documents related to the specialized fields of a number of investment sectors that are required to have a capital contribution ratio of foreign investors. In this case, foreign investors and Vietnamese investors will have to compromise on the capital contribution ratio in the joint venture. This is also one of the prerequisite conditions for establishing a foreign joint venture company.

Below are some fields that will be restricted in terms of the capital contribution ratio of foreign investors, specifically as follows:

• Not more than 51% for the road freight transport business sector;
• Not more than 49% for the road passenger transport business sector;
• Not more than 51% for the service sector related to agriculture;
• Not more than 65% for the telecommunications service sector without network infrastructure;

2.2. Conditions for foreign investors to establish joint venture companies in Vietnam

Not only requiring foreign investors to have financial capacity, but also having to meet a number of different conditions depending on the form and field in which they invest. If you need more information, please contact Viet My Law and Accounting for specific advice on the conditions for establishing a foreign joint venture company right away!

2.3. Conditions for Vietnamese investors in joint venture companies need to demonstrate financial capacity when contributing capital to the joint venture

In addition to foreign investors, Vietnamese investors must also contribute capital to the joint venture company. Therefore, Vietnamese investors also need to prepare complete documents to establish a joint venture company to have documents proving financial capacity when contributing capital to the joint venture.

3. Documents to establish a joint venture company with foreign countries in 2024

To establish a joint venture company with foreign countries, investors need to prepare documents in accordance with the provisions of law:

• A request for an investment certificate in accordance with the regulations of the competent authority.
• A document confirming the legal status of the investor.
• The investor’s financial statements for the last 2 years.
• A document confirming the legal capital with competent agencies and organizations.
• Certificates of practice of members and individuals for companies operating in industries and professions in accordance with the provisions of law.
• Company charter.

4. Procedures for establishing a joint venture company with foreign countries

Step 1: Prepare documents

In order for the process of establishing a joint venture company with a foreign country to proceed smoothly and quickly obtain an investment certificate for the joint venture company, the investor must complete step 1 in a transparent and accurate manner regarding the declaration of documents and papers (section 3).

Step 2: Submit documents to the Department of Planning and Investment

After carefully and fully preparing the documents, the investor submits the application for establishing a joint venture company to the Department of Planning and Investment where the enterprise is headquartered.

Step 3: Receive results and proceed to engrave the legal seal

The processing time and issuance of the investment registration certificate is from 05 to 15 days from the date of submission of the application, the Department will review the application.

If the results are not satisfactory, the investor will receive a written notice of amendment and supplementation, stating the reasons for failure.

If the results are satisfactory, the Department will proceed to issue a business registration certificate to the investor.

After that, the investor will publish the announcement on the National Business Registration Portal to be recognized by the State and mark the milestone of completing the procedures for establishing a foreign joint venture company in Vietnam. Legalization in transactions cannot be mentioned as the engraving of the seal, the content and quantity of which are arbitrarily decided by the investor or can authorize the Viet My service to design. Next, the investor will notify the Department of the seal sample for recognition.

5. Some notes when carrying out procedures for establishing a joint venture company with foreign countries

5.1. Regarding procedures for granting investment certificates

Unlike foreign investors who participate in establishing a company from the beginning with Vietnamese investors, whether they contribute 1% or 99.99% of the capital, they must request an Investment Certificate. On the contrary, foreign investors who contribute capital or buy shares in a Vietnamese company that already has a Certificate of Business Registration (including cases where they buy up to 100% of the company’s capital contribution) do not have to carry out procedures for granting an Investment Certificate (except for companies operating in the field of education and training, if foreign investors buy from 1% of the capital contribution, they also need to carry out procedures for granting an Investment Registration Certificate). Thus, when foreign investors choose to buy capital contributions or shares, they will save some on procedures for granting an Investment Certificate. In particular, if the company does not have an Investment Certificate, during the business process, if there is a change, the company will save the procedure of adjusting the investment certificate, reducing unnecessary costs, procedures and time for the business.

5.2. Proof of financial capacity when establishing a company, contributing capital, purchasing shares

If foreign investors participate in establishing a company with Vietnamese investors from the beginning, they must submit documents proving financial capacity, including a savings book or confirmation of bank account balance equivalent to the contributed capital in Vietnam. However, when foreign investors contribute capital or purchase shares in a Vietnamese company, they do not need to present procedures to prove financial capacity.

5.3. Regarding capital contribution to the investment capital account

A common feature is that most foreign investors contributing capital or investing in Vietnam must make capital contributions through an investment capital account in Vietnam.

Thus, Viet My Law and Accounting has briefly reviewed the procedures for establishing a joint venture company with a foreign country, as well as other useful related information. We hope that the above article will contribute to providing useful information for joint venture companies with foreign countries on the above issue. Viet My is proud to be the most professional company establishment service provider, with the most reasonable price and the fastest implementation time.