Are you interested in the procedures for establishing a foreign invested company? Are you learning about the process of establishing a foreign-invested company and want to invest in Vietnam but don’t know where to start? Below is useful information about the process of establishing a company with foreign investment, combined from practical experience and sharing of Luat va Ke toan Viet My.

1. What is a foreign invested company?

Before learning about the process of establishing a foreign investment capital company, please learn more about the concept related to the term “Foreign Investment Capital Company”.

According to the 2020 Investment Law, there is no specific definition of the concept of “foreign-invested companies”, but it can be understood from the definitions below.

According to Clause 21 of Article 3 of the Investment Law, “Economic Organization” is defined as an organization established and operated in accordance with Vietnamese law, including enterprises, cooperatives, cooperatives, cooperatives and other organizations conducting business investment activities.

Similarly, according to Article 22 of the Investment Law, “Foreign-invested economic institution” means an economic institution with foreign investors as a member or shareholder.

In addition, pursuant to article 23 of Article 3 of the Investment Law, “Investment Equity” is defined as money and other assets in accordance with civil law and international treaties to which Vietnam is a party to conduct business investment.

Finally, according to Clause 19 of Article 3 of the Investment Law, “Foreign Investors” are individuals with foreign nationality or organizations established under foreign laws conducting business investment activities in Vietnam.

Based on the above definitions, it can be interpreted that a foreign-invested company is an enterprise established under Vietnamese law, has a foreign investor as a member or shareholder, and uses investment capital from an individual or a foreign organization to conduct business in Vietnam.

2. Conditions for establishing a foreign invested company

Before establishing a foreign-invested company in Vietnam, foreign investors need to comply with regulations and meet the following conditions:

• Market access conditions: Foreign investors must comply with regulations on the charter capital share in economic organizations, forms of investment, scope of investment activities, capabilities and partners involved in investment activities, as specified in the List of Market Access Restrictions.
• Other conditions: Foreign investors should comply with laws, resolutions of the National Assembly, ordinances and resolutions of the Standing Committee of the National Assembly, decrees of the Government and international treaties to which Viet Nam is a member.
• Conditions on defense and security guarantees.
• Land regulations: Foreign investors should comply with regulations on conditions for receiving land use rights and land use in special areas such as islands, communes, wards, border towns and coastal areas.

According to the 2020 Law on Investment, foreign-invested economic institutions are economic institutions with foreign investors as members or shareholders.

As defined in the 2020 Law on Investment, foreign investors are individuals with foreign nationality or organizations established under foreign laws and business activities in Vietnam.

Therefore, to establish a foreign investment capital company, you can be an individual with a foreign nationality or an organization established under foreign law and business investment in Vietnam.

3. Procedure for establishing a foreign invested company

Detailed procedures for applying to establish a foreign invested company are as follows:

3.1. For the form of foreign enterprises establishing economic organizations

To establish a foreign investment capital company in Vietnam, after receiving the Investment Certificate, you need to take the following steps:

Step 1: Apply for a Certificate of Enterprise Registration

Letter of request for establishment of enterprise: This is an application for establishment of a company, specifying information about the type of enterprise and other necessary information.

Draft company charter: Depending on the type of enterprise (one-member limited company, two-member or more-member limited company, joint stock company), you need to prepare a draft of the company charter in compliance with the 2020 Enterprise Law.

List of founding members or shareholders: For two or more members of the Company Limited, you need to provide a list of members. For the Joint Stock Company, you need to provide a list of founding shareholders.

Notary copy of personal certificate: Includes a notary copy of personal certificate (CMD/CCCD/ Passport) of the company’s legal representative, owner of a one-member limited company, members of two or more members limited company, founding shareholders of the Joint Stock Company, and authorized representatives.

Certificate of investment registration: If the partner or founding shareholder is a foreigner or a foreign company, you need to provide a copy of the certificate of investment registration.

Certificate of business registration and a certificate of authorization (if any): A copy of the certificate of business registration and a certificate of authorization for representatives in the name of capital contribution or share of a capital contribution organization.

Step 2: Declare the establishment of the business

Information on the establishment of a foreign investment capital company will be published on the National Portal for Enterprise Registration after completing the procedures and obtaining the Certificate of Enterprise Registration.

Step 3: Carve the business seal

After receiving the Certificate of Enterprise Registration, the company needs to carry out the procedures to engrave the seal and manage the seal in accordance with the Enterprise Law. The contents of the seal must include the company name, company code, and company headquarters address.

3.2. For the form of enterprises contributing capital and buying shares in Vietnamese companies

In order to own a company in Vietnam, the popular method chosen by many Investors is through capital contribution or share purchase of companies established in Vietnam, thereby becoming a foreign-invested company or 100% foreign-invested company.

Step 1: Register for capital contribution and share purchase:

An economic organization with foreign investors shall make capital contribution and purchase of shares by submitting registration documents to the local investment registrar.

The authority to approve the registration of capital contribution and share purchase is usually under the Department of Foreign Economy – Department of Planning and Investment.

The period of implementation of procedures for notification of registration of capital contribution and purchase of shares shall be within 15 working days from the date of receipt of applications.

Step 2: Membership change, company shareholders:

Investors who contribute capital and buy shares need to carry out procedures to change members and shareholders in accordance with law, usually at the business registration office – Department of Planning and Investment.

The duration of this procedure shall be three working days from the date of receipt of a valid dossier.

Step 3: Changing the legal representative of the company:

In the event of a change in the legal representative of the company due to a change of members/shareholders, procedures for change of representatives shall be implemented in accordance with the regulations.

Step 4: Declare the payment of the TCN tax for the purchase and sale of shares, capital contribution:

When transferring shares or capital contribution activities, individuals must submit a tax return to the management tax agency, the deadline for payment is before the procedure for changing the list of members/shareholders is implemented.

4. Forms to establishing a foreign invested company

There are 2 common forms when establishing a foreign invested company as follows:

4.1. For the form of foreign enterprises establishing economic organizations

Foreign investors often choose the capital contribution method from the beginning when establishing a company in Vietnam. According to this method, the capital contribution ratio of foreign investors depends on the company’s field of operation, and can contribute from 1% to 100% of the company’s charter capital. Investors make capital contributions or purchase shares of Vietnamese companies.

In this case, the foreign investor will contribute capital to a Vietnamese company that already has a Business Registration Certificate. Depending on the specific field of activity, investors can contribute from 1% to 100% of capital into the company. To do this, foreign investors will carry out procedures to purchase capital contributions or shares of the company. At that time, the Vietnamese company will become a foreign-invested company.

4.2. For the form of enterprises contributing capital and buying shares in Vietnamese companies

The second way for foreign investors to own a company in Vietnam is through capital contribution/share purchase of a company already established in Vietnam, to become a foreign-invested company or companies with 100% foreign capital. This is the method chosen by many investors because it is simple and saves time.

In the case of establishing a foreign invested company where the investor does not carry out an investment project in Vietnam but wants to invest in business by contributing capital/buying shares of an enterprise already established in Vietnam Nam, there are three cases where it is necessary to notify the competent authority before repurchasing capital contribution/share purchase:

• In case of capital contribution, share purchase, or capital contribution purchase, the ownership ratio of foreign investors in economic organizations with conditional business lines increases for foreign investors.
• In case of capital contribution, share purchase, or capital contribution purchase, foreign investors or economic organizations with foreign investors hold more than 50% of charter capital. For example: increasing the charter capital ownership ratio of foreign investors from below or equal to 50% to above 50%; Increase the charter capital ownership ratio of foreign investors when foreign investors own more than 50% of the charter capital in economic organizations.
• In cases where foreign investors contribute capital, buy shares, or purchase capital contributions from economic organizations that have land use rights certificates in border islands, communes, wards, and towns; coastal communes, wards and towns; Other areas that affect national defense.

5. Luat va Ke toan Viet My supports consulting on establishing foreign invested companies

Luat va Ke toan Viet My providing consulting services on establishing foreign invested companies, including the following stages:

• Consultation on legal provisions relating to the establishment of foreign-invested companies.
• To examine and evaluate the satisfaction of conditions necessary for establishing a foreign-invested company.
• To instruct customers to prepare all necessary information and documents to apply for a license to establish a foreign-invested company.
• Assessment and examination of the legality of the documents provided by the client.
• Prepare registration documents and instruct customers to take the necessary steps to establish a foreign investment capital company.
• Monitor the processing of records, notify and receive the results of records from the authorities, and then hand them over to the client.
• Support and answer questions and problems arising after completing the procedures for establishing a company.

Luat va Ke Toan Viet My have shared with you information regarding the establishing a foreign invested company. If you have any questions or questions, please contact our hotline immediately. We’ll be happy to answer any questions you may have.

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