What are the procedures for establishing joint venture companies with foreign country? In an integrated economy, the form of joint venture cooperation is no longer strange to domestic and foreign investors. However, not all investors clearly understand the legal requirements related to documents and procedures necessary to establish a joint venture company. Viet My provides some basic information about regulations so that investors can clearly understand the legal regulations related to the establishment of joint venture companies and understand how to operate business effectively. See below for reference.

1. What is establishing a joint venture company?

Foreign investors investing in Vietnam can invest 100% foreign capital or in the form of joint ventures with Vietnamese organizations and individuals. In Vietnam, people often call it “establishing a joint venture” when a foreign investor brings an investment fund together with a successful Vietnamese investor to establish a company. However, the Investment Law 2020 has no concept or regulations on establishing joint venture companies. However, the procedures for establishing a joint venture company are the same as the procedures for establishing a 100% foreign-owned company.

1.1 What is a joint venture company?

A joint venture company is a company established in Vietnam by two or more parties working together under a joint venture contract or agreement signed between the government of the Socialist Republic of Vietnam and the company. Cooperate in holding investment capital with Vietnamese companies or foreign investors under a joint venture agreement.

A joint venture company is not a type of company because the Enterprise Law 2020 recognizes four types of companies: public companies, limited liability companies, partnerships and private companies. Joint venture here is understood as merger and mutual cooperation.

1.2 Establishing a joint venture company

Before knowing the procedures for establishing a joint venture company with a foreign country, you need to understand what a joint venture company is. Joint venture companies are regulated under Vietnam’s Foreign Investment Law as follows:

“A joint venture company is a company established in Vietnam by two or more parties working together under a joint venture contract or agreement signed between the government of the Socialist Republic of Vietnam and a foreign government. , or foreign government means the company.” Investment enterprises cooperate with Vietnamese enterprises or joint venture enterprises cooperate with foreign investors according to joint venture agreements. ”

Currently, there are two forms of establishing a joint venture company:

• The company was established from the beginning with capital contributions from foreign and Vietnamese investors.
• First, a Vietnamese company is established, then other investors buy the investment and receive shares transfer from the Vietnamese investor.

2. Conditions for establishing a joint venture company

About the investor

Individual: Must have full civil litigation capacity but must not be serving a prison sentence or administrative penalty as prescribed.
Legal entity: Legally established and operating at the time of investment.

Regarding the costs of establishing a joint venture company with a foreign country

• The investor’s financial capacity needs to correspond to the amount of capital provided to invest in the project. That means the investor must be able to pay with the committed capital
• The bank holding the investment in the company is a legal bank and licensed to operate in Vietnam
• The legal capital of the joint venture must meet the requirements of Vietnamese law on joint ventures
• The registration dossier to establish a joint venture must comply with the provisions of Vietnamese law (Enterprise Law, Investment Law, WTO obligations, etc.).
• The company operates in business areas permitted by Vietnamese law and does not operate in areas prohibited by law.

3. Documents and procedures for establishing joint venture companies with foreign country

Branches are not a recognized form of business under the Enterprise Law 2020. Joint venture companies can be established in the form of limited liability companies or public companies. The parties are responsible for the amount of capital they contribute to the company’s charter capital.

3.1 Documents for establishing a joint venture company with a foreign country

Application for business investment certificate

• Application file/application document for investment certificate.
• Reports on the investor’s financial situation.
• Business registration documents for each type of enterprise.

Documents related to the establishment of a joint venture company with a foreign country

• Business registration documents are submitted according to the form of the competent business registration agency.
• Drafting company charter.
• Copy of member list, ID card, passport or other valid identification documents of each member.
• Document proving legal capital issued by a competent agency or organization for companies operating in business fields that must have legal capital.
• Practicing certificates of members and other people for companies registered in conditional business areas.

3.2 Procedures for establishing joint venture companies with foreign countries

When establishing a new business organization in the form of a limited liability company or joint stock company invested by foreign investors or Vietnamese investors.

Step 1: Apply for an investment registration certificate at the investment agency of the Department of Planning and Investment where the joint venture will be established.

A company must apply for an investment license if:

A joint venture is established by a foreign investor holding at least 50% of the initial capital, or when the majority of the general partners are foreigners.

50% of registered capital for companies and joint ventures (companies in which foreign investors hold 50% or more of the registered capital or companies in which the majority of partners are foreigners) established with business organizations.

Step 2: After being granted the Investment Registration Certificate, the enterprise submits an application for a Business Registration Certificate to the Business Registration Office of the Ministry of Planning and Investment where the joint venture will be established. joint.

Depending on the activities of the joint venture, we will apply for a company registration certificate.

Step 3: Request a license

Some conditional businesses require companies to meet certain statutory conditions and be registered with relevant authorities in order to be licensed to operate.

Foreign investors introduce capital or buy shares or invest in existing Vietnamese companies

Step 1: For capital contribution, purchase of capital contribution, purchase of shares of a Vietnamese company, register with the Department of Planning and Investment, Department of Investment where the joint venture company will be established.

A company must apply for an investment license if:

• Capital contributions, stock purchases, and capital contributions in Vietnamese companies by foreign investors will increase the proportion of foreign investors in companies operating in industries with market access. High. Conditions for foreign investors.
• Foreign investors will own over 50% of the seed capital of a Vietnamese company through capital contribution, share purchase, or capital contribution in a Vietnamese company.
• Foreign investors bring capital contributions from Vietnamese companies with land use rights certificates for districts, island towns, and border areas to buy shares and capital contributions. Coastal areas, districts and cities. Other fields related to national defense and security.

Step 2: After receiving written approval for foreign investors to invest, buy shares or make investments, the company continues to carry out procedures for changing shareholders and members according to the provisions of the Enterprise Law. Vietnam. Registered office of the Department of Planning and Investment where the joint venture company is expected to be established.

Step 3: Request a child license

Some conditional business sectors require companies to meet certain statutory conditions and register with relevant authorities to be licensed to operate.

4. Experiences when establishing a joint venture company

a. Name of the joint venture company with the foreign country

The joint venture name must be unique and must not be identical or identical to the registered company name. Abbreviations or English names can be used. The company name should be fully structured, including categories and proper nouns. Please note that you cannot use the name of a government agency, federal military, or law enforcement agency in your company name. To avoid duplicate names, your business cannot be registered. Right from the beginning, you need to look up the company name on the national electronic information portal system.

b. Search for addresses for joint venture companies with foreign countries

The joint venture company must have a business headquarters and a specific business registration address. The company address must be located within the territory of Vietnam, the house number, street number, district, city… must be clear and accurate. Do not use a fake address as your company address. The headquarters is not an apartment complex or housing complex. You can also register your company at your home address.

c. Prepare and declare charter capital

• When establishing a company, you need to pay attention to declaring the amount of capital established. The law does not regulate a company’s capital at the time of establishment, so companies can normally declare their equity capital depending on their wishes and financial capabilities. That means the company can declare initial capital as 10 million, 100 million, 1 billion…
• The company should not declare its equity capital too low because this will somewhat affect the company’s reputation in the eyes of customers and partners. However, when registering to establish a company in a business field that requires capital, such as a company requiring legal capital or deposit capital, it must register a minimum charter capital equal to the legal capital. How to register a company.

d. Prepare business type

• A company must register the areas of business that are relevant to the activities in which the company intends to conduct business. In addition, to clearly state the industry code on the business license, it is necessary to conduct a lookup for the industry code in accordance with Vietnam’s latest level 4 economic industry system.
• If you choose a profession that does not require regulation, once you have a business license, you can start doing business immediately without needing to prepare regulations or apply for a business license.
• If you choose a profession that requires conditions, you must ensure the necessary prerequisites and then apply for a business license before starting your business.

5. Frequently asked questions about procedures for establishing joint venture companies with foreign countries

5.1 Does the joint venture company with a foreign country have an investment registration certificate?

Investment registration certificates are issued to new joint venture companies from the beginning. Investment registration certificates are not available for foreign investors to register to provide capital to Vietnamese companies.

5.2 How long does a foreign joint venture company operate?

If the joint venture is established from scratch, the term of the joint venture will be recorded in the investment registration certificate. For foreign investors registering to invest in a Vietnamese company, the deadline is specified in the Charter of the registered company. In this case, company registration is usually allowed indefinitely.

5.3 A company with how much foreign capital is considered a joint venture with a foreign country?

The law does not regulate joint venture companies. However, if a foreign investor contributes capital to a Vietnamese investor, it will be considered a joint venture regardless of the ratio.

5.4 Is it possible to establish a joint venture company with a foreign country from the beginning or must it be through capital contribution, capital contribution, or shares?

A joint venture company can be established by direct investment by a 100% foreign-owned company or by investing in a company already established in Vietnam.

5.5 Do Vietnamese investors in joint venture companies have to prove their finances when contributing capital to joint ventures?

Vietnamese investors sponsoring joint ventures must prepare the same documents as foreign investors. Therefore, when investing in a joint venture company, you need to prepare documents proving financial sources.

This article on consulting on Procedures for establishing joint venture companies with foreign country from VIET MY LAW AND ACCOUNTING is very useful for domestic and foreign investors wishing to cooperate in business. If you are still unclear or have any questions about related documents and procedures, please do not hesitate to call Viet My hotline for free advice and answers from experts.