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HOW TO ESTABLISH A 100% FOREIGN CAPITAL COMPANY IN VIET NAM

Currently, in the context of international market integration, Vietnam has been signing many trade agreements, making multinational business easier. The Vietnamese market is considered to be prospective in potential that can attract a lot of investors. Therefore, there are many foreign investors setting up companies in Vietnam. However, the process of setting up a foreign-owned company is extremely complicated. In order to solve the difficulties that foreign investors often face, Doanh Tri Law will provide specific instructions on the process of establishing a company with 100% foreign capital in accordance with the law.

1. Legal basis

- Law on Investment 2020

- Law on Enterprise 2020

- Decree No.115/2018/NĐ-CP

- Circular No.81/2018/TT-BTC

2. Investment policy approval registration

The process of setting up a company with 100% foreign capital in Vietnam is extremely complicated. Depending on what kind of project the investor plans to implement, they may prepare an application dossier for project investment policy approval which is the Ministry of Planning and Investment or the Investment Registration Authority of the Provincial People's Committee level.

Investors who do not implement the following projects can completely skip in this Section 2:

(i) The project is allocated or leased land by the State without auction, bidding or transfer; projects requiring change of land use purpose;

(ii) The project uses technology on the List of technologies restricted from transfer in accordance with the law on technology transfer.

Step 1: Prepare documents for investment policy approval

(i) A written request for implementation of the investment project;

(ii) A copy of the identity card or passport certified by law for individual investors; a copy of the Certificate of Establishment or other documents other equivalent certification of legal status for the organization;

(iii) Investment project proposal (Name of investors; Investment objective; Investment scale; Investment capital; Capital mobilization plan; Location, duration, and progress of investment; demand for labor, Proposal for investment incentives, Assessment of the project's socio-economic impacts and efficiency)

(iv) Copy of one of the documents:

Financial statements of the last 2 years

Financial support commitment of financial institutions

Financial support commitment of the main company

Documents explaining the investor's financial capacity

Guarantee of investor's financial capacity

Land using demand propotion;

Explanation of using technology (Name; process diagram; origin; main technical parameters; Equipment and lines; State of use of machinery; Process diagram. technological process; condition of use of machinery, equipment, etc. if necessary according to regulations)

BCC contract for investment projects in the form of BCC contract.

Step 2: Application process

(i) The investor or a competent state agency shall submit an investment policy approval application as prescribed in Clauses 1 or 2, Article 33 of the Law on Investment, and Clauses 2 and 3, Article 31 of the Decree No.31/2021/ND-CP for the Department of Planning and Investment where the project is expected to be implemented.

(ii) The Provincial People's Committee considers approving the investment policy for the project, including the contents specified in Clause 7 Article 32 of Decree No.31/2021/ND-CP.

Application submit location

After completing the necessary documents for the application, the investor based on the location of the company's headquarters to submit the application at the following locations:

- Management board of industrial area.

- Department of External Economic Relations - Provincial Department of Planning and Investment.

For investment projects not subject to decision on investment policies, 15-20 working days from the date of receipt of complete dossiers. As for the investment project subject to the decision on investment policy: 05 - 10 working days from the date of receipt of the written decision on investment policy.

3. Investment registration certificate proposal

Step 1: Declare online information about investment projects on the National Foreign Investment Information System

Before carrying out the procedures for issuance of the Investment Registration Certificate, the investor shall declare online information about the investment project on the National Foreign Investment Information System.

Within 15 days from the date of online declaration, the investor shall submit the application for the Investment Registration Certificate to the Investment Registration Authority.

Step 2: Prepare dossier for the Investment Registration Certificate

The dossier for Investment Registration Certificate includes the following papers:

If the investor is an organization:

(i) A written request for implementation of the investment project;

(ii) A copy of the Certificate of Incorporation or an equivalent document certifying the investor's legal status

(iii) A copy of one of the following documents: investor's financial statement, guarantee of investor's financial capacity, finalcial support commitment of main company, financial support commitment to of a financial institution, confirming the investor's bank account balance corresponding to the expected investment capital in Vietnam.

(iv) Notarized passport of the legal representative of the company; consular legalized at the Vietnamese diplomatic mission abroad.

(v) Charter of the company with 100% foreign capital

(vi) Head office lease contract, document proving the lessor's right to lease

(vii) If the project uses technology, it is necessary to attach an explanation on the use of technology for the project as prescribed;

In case the investor is an individual:

(i) Copy of ID card or copy of passport

(ii) Confirm the investor's bank account balance corresponding to the expected investment capital in Vietnam

(iii) Head office lease contract, Certificate of land use right in accordance with regulations.

The investor shall submit the application for the Investment Certificate at the investment registration agency according to its competence. Within 15 days from the day on which the complete application is received, the investment registration agency shall issue the Investment Registration Certificate. In case of refusal, the investor must be notified in writing and clearly state the reasons therefor.

3. Establishment of a 100% foreign owned limited company:

After being granted an investment registration certificate, the investor is now eligible to carry out the process of establishing a company. Starting from this process, the procedure for establishing a foreign-owned company is similar to the procedure for establishing a Vietnamese-owned company.

Step 1: Prepare the application for the business registration certificate:

(i) An enterprise registration application;

(ii) Charter of the company;

(iii) List of members (for limited liability companies with two or more members); List of founding shareholders and shareholders being foreign investors (list of authorized representatives if there are institutional shareholders).

(iv) Copies of the following papers: Identity cards, Passports or other lawful personal identification of individual members;

(v) Establishment decision, Certificate of enterprise registration or other equivalent documents of the organization and power of attorney; Identity card, passport or other lawful personal identification of the authorized representative of the member being an organization (those document must be consularly legalized);

(ii) The investment registration certificate for the investor has been granted.

Step 2: Submit application for business registration certificate

Once the application completed. The investor submits the application at the Business Registration Office – Provincial Department of Planning and Investment where the company's head office is located. The time to issue the certificate is usually 05 working days from the date of receiving the complete and valid dossier.

Step 3: Engrave the company's seal

After obtaining the Certificate of Business Registration and having posted the enterprise establishment statement. The enterprise conducts seal engraving at one of the licensed seal engraving units. Enterprises decide on their own the number and form of seals within the scope permitted by law.

A seal includes a seal made at a seal engraving establishment or a seal in the form of a digital signature in accordance with the law on electronic transactions.

The enterprise shall decide on the type, quantity, form and content of the seal of the enterprise, its branches, representative offices and other units. Seals are used in transactions in accordance with the law.

Step 4: Carry out the following procedures for company establishment:

(i) Signboard at headquarters.

(ii) Register and buy digital signature for electronic tax payment and tax report online

(iii) Proposal to issue e-invoices.

(iv) Reports on project implementation according to the provisions of the Investment Registration Certificate.

(v) Declare and pay tax according to regulations.

The above article is our firm's perspective towards how to establish a 100% foreign capital company in Viet Nam. For more information and advice on this issue, please contact Doanh Tri Law Firm directly via:
Hotline: (+84) 911.233.955 - (024) 6293 8326
Email: contact@luatdoanhtri.vn
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