HOW TO ESTABLISH A JOINT VENTURE COMPANY IN VIETNAM?

Vietnam is an attractive economy for investors and more and more investors from the United States and Europe are pouring capital into projects in Vietnam. Thanks to its strategic business location, setting up a company, branch or representative office can make it easier for investors or business owners to understand the market and build a local team. In this article, Doanh Tri will provide you with information about the joint venture company and the steps to set up a joint venture company in Vietnam.

I. Legal Basis

- Law on enterprise 2020;

- Law on investment 2020.

II. General provisions

1. What is a joint venture?

A joint venture is a business arrangement in which 2 or more parties agree to pool their resources to establish the business. Each participant is responsible for profits, losses, and costs associated with it.

There are two types of joint venture contracts. The first one is the cooperation between a foreign-invested enterprise and a Vietnamese enterprise. The second one is 100% foreign-invested capital cooperating with a foreign investor on a joint venture contract.

2. Why form a joint venture in Vietnam?

A joint venture is a business entity established with a partner.  There are two main reasons to form a joint venture in Vietnam. The first is to create a mutually beneficial partnership between two parties.

Another reason foreign investors set up this type of company is to comply with foreign ownership regulations in Vietnam. In business lines that limit foreign ownership, you will need a local partner.

3. Who can set up a joint venture in Vietnam?

Note that a joint venture requires the participation of two business entities. For some business lines, the local partner must be a 100% Vietnamese-owned company in Vietnam. Note, however, that in some cases, individuals may also establish this type of business structure.

4. Limited business fields

Vietnam creates a favorable investment climate for foreign investors. Nevertheless, some business fields are limited to invest for investors:

- Advertising services

- Services incidental to agriculture, hunting, and forestry

- Telecommunication services

- Travel agencies and tour operator services

- Entertainment services

- Electronic game business

- Container handling services

- Customs clearance services

- Internal waterways transport, rail, and road transport services

- Services auxiliary to all modes of transport

5. The minimum capital requirement in Vietnam

There is no official minimum capital requirement in Vietnam for most businesses. However, there are some business lines with a set minimum capital requirement.

III. Establishing a Joint Venture in Vietnam

In order to establish a joint venture company, you must obtain the Investment Certificate issued by the Department of Planning and Investment approved by the People's Committee.

Step 1: Dossier preparation

Documents to Prove Lawful Source of Investor:

* For company investors:

- A copy of the company's license (or any equivalent document)

- Financial Statements (Audited)

- Audited Company Accounts

 - Charter of company/ Memorandum of Association of Company

- Authenticated Copy of the representative's passport.

Note: These documents from overseas must be consular legalized and translate into Vietnam

* For investor as an individual:

- Authenticated Copy of the investor passport.

- Audited Company Accounts

Capacity profile:

In addition to legal documents, a Capacity Profile of Investor is essential to demonstrate the capability of the investor when performing these operations.

Documents to Prove the company headquarter and the place of implementing the projects

Step 2: Submit an application for a license at a competent authority

The application will be submitted to the Department of Investment Planning

Step 3: Granted Investment Certificate and Business Registration Certificate.

The above information is about the ‘How to establish a joint venture company in Vietnam?' 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: [email protected]

Doanh Tri Law Firm is pleased to accompany our Customers!