Establishing a company with foreign capital is the first step to help foreign investors establish a commercial presence with full legal status to conduct investment and business activities in Vietnam. Most investors who come to invest in the Vietnamese market more or less encounter problems with legal documents and types of licenses to legalize business activities. In order to reduce the problems that foreign businesses often encounter. Below, Luat va Ke toan Viet My will provide specific instructions on the order of implementation, as well as the documents that traders need to prepare in advance.

1. Legal basis

• WTO Commitment Schedule;
• Multilateral trade agreements have investment commitments;
• Investment Law 2020, amended and supplemented in 2022 and implementation guidance documents;
• Enterprise Law 2020, amended and supplemented in 2022 and implementation guidance documents;
• Trade agreements with foreign investors’ nationalities.

2. What are the conditions for establishing a foreign owned company?

According to the provisions of Vietnamese law as well as the WTO Commitment Schedule and related international treaties, the general conditions for foreign investors to establish companies in Vietnam are as follows:

2.1. Conditions on the subject and nationality of foreign investors

Individuals over the age of 18, organizations and enterprises with WTO nationality or a bilateral agreement on investment with Vietnam. However, in Vietnam there will be a number of industries that only allow foreign investors who are legal entities to invest in Vietnam. Currently, for individual investors carrying “cow’s tongue” passports, they will not be able to contribute capital investment in Vietnam or in the name of the organization’s management representative and legal representative of the company established in Vietnam.

2.2. Conditions on the financial capacity of foreign investors

Have sufficient financial capacity to invest and demonstrate investment financing capacity in Vietnam.

2.3. Conditions on the company’s headquarters intended to be registered and the location of project implementation

There is a place to implement an investment project in Vietnam through a lease contract, a lease contract, a lease of land, and a legal lease of land and housing documents of the lessor to serve as the company’s headquarters and implementation location.

Investment projects in the manufacturing sector of investors must prove to be eligible for plant leasing and have plant leasing contracts in clusters and industrial zones.

2.4. Conditions on experience capacity and specific conditions by investment field

Satisfy specific conditions for conditional business sectors for foreign investors.

For some other areas such as trade and wholesale and retail sale of goods, investors need to demonstrate their experience in the investment sector.

3. Form of establishing a company with foreign capital

• Establishing a company with foreign capital from the beginning, the capital contribution ratio of foreign investors accounts for from 1% to 100% of the company’s capital.
• Foreign investors contribute capital and buy shares in Vietnamese companies that have a Business Registration Certificate.
• Foreign-invested companies continue to contribute capital to establish new companies in Vietnam.
• Business investment in the form of business cooperation contract (BCC).
• Business investment in the form of PPP contracts.

4. Procedures for establishing a company with foreign capital when investors contribute capital from the beginning

Procedures for establishing a company with foreign investment from 1% to 100% of capital contributed by foreign investors right from the establishment of the enterprise are carried out according to the following steps:

Step 1: Prepare documents for Investment Registration Certificate

Dossier to request an Investment Registration Certificate includes the following documents:

– Document requesting implementation of business investment project.

– Documents proving legal status:

• For institutional investors: copy of the Certificate of Establishment or other equivalent document certifying the legal status of the institutional investor.
• For individual investors: Copy of ID card/ID card or passport for individual investors.

– Investment project proposal includes the following contents: investor implementing the project, investment objective, investment scale, investment capital. and capital mobilization plan, location, deadline, investment progress, labor needs, proposals for investment incentives, and assessment of the project’s socio-economic impact and efficiency.

– Documents proving the investor’s financial capacity:

• For institutional investors: the investor’s 02 most recent financial statements. Or commit to financial support from the parent company. Or commit to financial support from a financial institution. Or guarantee the investor’s financial capacity. Or documents explaining the investor’s financial capacity.
• For individual investors: confirm account balance, savings book;

– Head office lease contract, Documents proving the lessor’s leasing rights (Certificate of land use rights, Construction permit, Business registration certificate with real estate business function of the lessor lease or equivalent documents).

– Propose land use needs; In case the project does not request the State to allocate land, lease land, or allow change of land use purpose, submit a copy of the location lease agreement or other documents certifying that the investor has the right to use the location for implementation. current investment project;

– Explanation on the use of technology in investment projects for projects using technology on the List of technologies restricted from transfer according to the provisions of law on technology transfer including the following contents: technology name, technology origin, technology process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines.

Step 2: Submit application for Investment Registration Certificate

Procedures for issuance of Investment Registration Certificates for investment projects that are not subject to the investor’s investment policy decision are carried out as follows:

– Online declaration of information about investment projects on the National Foreign Investment Information Portal System

• Before carrying out the procedures for granting the Investment Registration Certificate, the investor declares information about the investment project online on the website.
• National information system on foreign investment. Within 15 days from the date of online declaration, the investor submits the application for an Investment Registration Certificate to the Investment Registration Authority.
• After the Investment Registration Authority receives the application, the investor will be granted an account to access the National Foreign Investment Information Portal System to monitor the application processing status.
• The investment registration agency uses the National Information System on Foreign Investment to receive, process, and return results of investment registration dossiers, update dossier processing status, and issue project codes. investment project.

– Submit application directly for issuance of Investment Registration Certificate: Investors submit application for Investment Certificate at the investment registration agency according to the following authority: Department of Planning and Investment of the province where the company is located. Head office location:

• Investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones;
• Investment projects to develop infrastructure of industrial parks, export processing zones, high-tech zones and investment projects in industrial parks, export processing zones, and high-tech zones in localities that have not yet established a Management Board industrial parks, 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, high-tech zones and economic zones of the province where the company is headquartered:

• Investment projects to develop infrastructure of industrial parks, export processing zones, and high-tech zones;
• Investment projects implemented in industrial parks, export processing zones, high-tech zones, and economic zones.

Step 3: Issue Investment Registration Certificate

Within 15 days from the date of receiving the full dossier, the investment registration agency shall issue an Investment Registration Certificate. In case of refusal, it shall be notified in writing to the investor and clearly state the reason.

Step 4: Prepare documents and submit application for Business Registration Certificate

After the foreign-invested company is granted an investment registration certificate, the investor shall perform the same procedure as the procedures for establishing a capital company in Vietnam.

The dossier of requesting an Enterprise Registration Certificate shall include:

• Request for enterprise registration.
• The company charter.
• List of members (for two or more members) or List of founding shareholders and foreign investors (list of authorized representatives if any shareholder is an institution).
• Copies of the following documents: Citizen’s identification card, identity card, passport or other legal personal certification of individual members;
• Decisions on establishment, Certificate of registration of enterprises or other equivalent documents of the organization and authorization documents; Citizen’s identification card, identity card, passport or other legal personal certification of the authorized representative of the organization;
• A copy of the Certificate of Enterprise Registration or equivalent document must be legalized for members of a foreign organization;
• Deciding on capital contribution and appointment of managers; List of authorized representatives (for members who are organizations);
• Certificate of investment registration for investors who have been issued;

Authorization for Certificate of Enterprise Registration: Provincial Department of Planning and Investment where the company is located.

Step 5: Disclosure of corporate registration information

Enterprises must be publicly notified on the National Portal of Enterprise Registration after being issued a Certificate of Enterprise Registration. At the same time, the publication fee must be paid in accordance with the law. The disclosures include the contents of the Certificate of Enterprise Registration and the following information:

• Business sectors and occupations;
• List of founding shareholders; list of foreign investors for joint stock companies (if any).

Fees for announcing the contents of enterprise registration: The request for disclosure of the contents of enterprise registration and the payment of fees for announcing the contents of enterprise registration shall be made at the time the enterprise submits the application for enterprise registration.

Step 6: Stamp the company’s seal

• Marks shall include marks made at the facility for engraving marks or marks in the form of digital signatures in accordance with the law on electronic transactions.
• The enterprise determines the type, quantity, form and contents of the enterprise, branches, representative offices and other units of the enterprise.
• The management and retention of stamps shall be carried out in accordance with the charter of the company or regulations issued by enterprises, branches, representative offices or other units of enterprises bearing the stamp. Enterprises use seals in transactions as stipulated by law.

Step 7: Granting a Business License or Eligible License

The business license is only applicable to companies operating in the field of retail sales of goods to consumers or setting up retail sales of goods.

For some industries, after completing the procedures for establishing a foreign investor company, licenses related to operating conditions must be obtained. For example, the food business applies for a license for food safety and environmental hygiene. Education business: Training license. Travel business: Travel permit…

General requirements for obtaining a business license in the retail sector of goods for foreign investors:

• Where a foreign investor belongs to a country or territory participating in the Treaty in which Viet Nam is a party, he/she shall have a commitment to open the market for goods trading and activities directly related to each other’s purchases and sales.
• Satisfy the conditions of market access in the treaties to which Viet Nam is a Member State.
• There is a financial plan for carrying out the business license request activity.
• No more overdue tax liabilities in cases established in Vietnam for 1 year or more.

Industry-specific conditions for obtaining a license to conduct retail sales of goods:

• In accordance with the provisions of specialized laws.
• In line with the level of competitiveness of domestic enterprises in the same area of operation.
• Ability to create jobs for domestic workers.
• Capacity and level of contribution to the state budget.

Dossiers of granting business licenses for retail sales of goods to foreign-invested enterprises:

• Application for business license (Form No. 01 in Appendix issued in accordance with Decree 09/2018/ND-CP).
• The explanation reads:
  • Explanation of the conditions for granting the respective Business License as stipulated in Article 9 of Decree 09/2018/ND-CP.
  • 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).

Authority to issue a certificate of business of retail sale of goods to foreign-invested enterprises: Department of Industry and Trade where the enterprise is located.

Processing time: approximately 30-45 business days.

Step 8: Opening the Foreign Direct Investment Account

• 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.

Step 9: A foreign-invested company performs the following procedures to establish a company

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.

Luat va Ke toan Viet My has provided complete information related to the issue of “establishing a company with foreign capital”. In addition, we at Viet My also support other legal services. Please pick up the phone and call us via hotline 0981 345 339 to receive advice, support, and useful answers from our team of experienced lawyers and jurists.

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