Establish a 100% foreign-invested company in Vietnam

A 100% foreign-invested company is a juridical person and has 100% of the capital contributed by the investor to do business in Vietnam. 100% foreign-invested company is established and operates by the Law on Investment, the Law on Enterprises and related legal documents.

Some business lines can be registered to set up a 100% foreign-invested company

 The process of establishing a 100% foreign-invested company

The process of establishing a 100% foreign-invested company is carried out in the following steps:

Step 1: Register investment policy at a competent authority to establish a 100% foreign-invested company 

Foreign investors entering Vietnam to invest in the project must apply for investment registration certificates. However, before applying for investment registration certificates, in some cases, investors must register investment policies under the competence of the Prime Minister or provincial-level People’s Committee Agencies.

Only projects after investors must register provincial investment policies

• Projects allocated land by the State, leased land, not through auction, bidding, or receiving transfer; the project requires the transfer of land use purposes;
• The project uses technology on the list of technologies restricted from transfer by the law on technology transfer.

The application for approval of investment policy of the provincial-level People’s Committee includes:

• A written request for the implementation of an investment project;
• For investors who are individuals: Copies of identity cards, IDs, or passports
• For institutional investors: copies of establishment certificates or other equivalent documents confirming legal status;
• The investment project proposal includes the following contents: the investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment progress, labor demand, proposal for enjoying investment incentives, impact assessment,  socio-economic efficiency of the project;
• A copy of one of the following documents: The investor’s latest 02-year financial statements; Commitment to the financial support of the parent company; Commitment to the financial support of financial institutions; Guarantee of the investor’s financial capacity; Documents explaining the financial capacity of investors;
• Proposing land use needs; in case the project does not request the State to assign land, lease land, allow the transfer of land use purposes, it shall submit a copy of the land use agreement or other document confirming that the investor has the right to use the place to implement the investment project;
• Explanations of technology use include the following contents: technology name, technology origin, technology process diagram; key specifications, use status of machinery, equipment, and main technology lines for projects using technologies on the List of technologies restricted from transfer
• BCC contracts for investment projects in the form of BCC contracts.

In case of a decision on the investment policy of the Prime Minister

In case, projects of foreign investors in the fields of the shipping business, telecommunication services business with network infrastructure, reforestation, publishing, press, the establishment of scientific and technological organizations, scientific and technological enterprises 100% foreign capital. Accordingly, in case of the establishment of a company with 100% foreign capital related to the above issues, it is required to register the investment policy with the Prime Minister by the Law on Investment in 2020.

The Prime Minister’s application for approval of investment policy includes:

• Documents are like registering investment policies of provincial-level People’s Committees
• Plans for land clearance, migration, resettlement (if any);
• Preliminary assessment of environmental impact, environmental protection solutions;
• Assess the socio-economic impact and effectiveness of investment projects.

In case of a decision on the investment policy of the National Assembly

• Nuclear power plant;
• The investment project requires the change of purpose of using special-use forest land, headstream protection forest, border protection forest of 50 hectares or more; wind protection forests, flying sand shields and wave protection forests, encroaching on the sea of 500 hectares or more; forest production of 1,000 hectares or more;
• The investment project requires migrants to resettle 20,000 or more people in mountainous areas, 50,000 or more in other regions;
• The investment project requires migrants to resettle 20,000 or more people in mountainous areas, 50,000 or more in other regions.

Applications for approval of the Investment Policy of the National Assembly include:

• Plans for land clearance, migration, resettlement (if any);
• Preliminary assessment of environmental impact and environmental protection solutions;
• Assess the economic, social, and affective impact of the project;
• Propose specific mechanisms and policies (if any).

Step 02: Apply for an investment registration certificate for a 100% foreign-invested company 

If projects without land use (in other words, land lease directly from the state) do not use technology on the list of transfer restrictions), the above-mentioned step 1 must not be implemented).

In the following cases, the investor must carry out the procedure for applying for an investment registration certificate.

• Investment projects of foreign investors;

Investment projects of the following economic organizations:

• Having foreign investors holding 50% or more of charter capital or having a majority of partnership members who are foreign individuals for economic organizations that are partnerships;
• Having the above-prescribed economic organization holds 50% or more of charter capital;
• There are foreign investors and economic organizations prescribed above holding 50% or more of charter capital.

Application for issuance of investment registration certificate for 100% foreign-invested company

• A written request for the implementation of an investment project;
• Documents on the legal status of investors
• For investors who are individuals: Copies of identity cards, IDs, or passports
• For institutional investors: copies of establishment certificates or other equivalent documents confirming legal status;
• The investment project proposal includes the following contents: the investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment progress, labor demand, proposal for enjoying investment incentives, impact assessment,  socio-economic efficiency of the project;
• A copy of one of the following documents:
• Financial statements of the last 02 years of investors;
• Commitment to the financial support of the parent company;
• Commitment to the financial support of financial institutions;
• Guarantee of the investor’s financial capacity;
• Documents explaining the financial capacity of investors;
• Proposing land use needs; in case the project does not request the State to assign land, lease land, allow the transfer of land use purposes, it shall submit a copy of the land use agreement or other document confirming that the investor has the right to use the place to implement the investment project;
• Explanations of technology use include the following contents: technology name, technology origin, technology process diagram; key specifications, use status of machinery, equipment, and main technology lines for projects using technologies on the List of technologies restricted from transfer
• BCC contracts for investment projects in the form of BCC contracts.

The agency applied for an investment registration certificate for the company with 100% foreign capital at the investment registration agency

• If the company is based in the industrial park, it is the Management Board of industrial parks.
• If the company is headquartered outside the industrial park is the Department of External Economics – Provincial Department of Planning and Investment.

Time for issuance of investment registration certificates for 100% foreign-invested companies

• For investment projects not subject to investment policy decisions: 15-20 working days from the date of receipt of sufficient dossiers
• For investment projects subject to investment policy decisions: 05-10 working days from the date of receipt of the written decision on investment policy.

Step 03: Establish an enterprise to issue a business registration certificate for a 100% foreign-invested company 

After obtaining the investor registration certificate, it is necessary to prepare documents to establish a business.

Dossier of the establishment of 100% foreign-invested limited company

• Business registration request;
• Company charter;
• List of members;
• Copies of the following documents: Id cards, identity cards, passports, or other legal personal certificates of individual members;
• Establishment decisions, enterprise registration certificates or other equivalent documents of organizations and documents of authorization; Id card, ID card, passport, or another legal personal certificate of the representative authorized by the organization;
• For members who are foreign organizations, copies of business registration certificates or equivalent documents must be consular legalized;
• Investment registration certificates for foreign investors by the Law on Investment.

Dossier of the establishment of a 100% foreign-invested joint-stock company

• Business registration request;
• Company charter;
• List of founding shareholders and shareholders who are foreign investors (list of authorized representatives if any);
• Copies of the following documents: Id cards, identity cards, passports, or other legal personal certificates of individual members;
• Establishment decisions, enterprise registration certificates or other equivalent documents of organizations and documents of authorization; Id card, ID card, passport, or another legal personal certificate of the representative authorized by the organization;
• For members who are foreign organizations, copies of business registration certificates or equivalent documents must be consular legalized;
• Investment registration certificates for foreign investors by the Law on Investment.

The agency applied for an enterprise registration certificate to the company with 100% foreign capital

Business Registration Agency – Provincial Department of Planning and Investment.

Time for issuance of enterprise registration certificates for 100% foreign-invested companies

05 working days from the date of receipt of sufficient valid documents

Step 04: Post a statement on the establishment of a 100% foreign-invested company 

After being granted the Enterprise Registration Certificate, it must be publicly notified on the National Portal on enterprise registration in order and procedures and pay fees as prescribed.

The contents of the announcement include the contents of the Business Registration Certificate and the following information:

• Business lines and professions;
• The list of founding shareholders and shareholders who are foreign investors for joint-stock companies.

Implementation agency: The reporting department of the Business Registration Agency – Provincial Department of Planning and Investment.

Step 05: Engrave the mark of the company 100% foreign capital 

• After obtaining the Enterprise Registration Certificate and having posted the enterprise establishment statement. The enterprise shall engrave at one of the licensed marking units. Enterprises decide the number and form of marks within the permitted legal scope.
• According to the Provisions of the Law on Enterprises 2020 effective from January 1, 2021, enterprises carve their marks and take responsibility for the use of legal marks of the company. Therefore, the 100% foreign-invested company, as well as the Vietnamese capital company, do not have to post the notice of the mark as before. This is also a very new point of the Enterprise Law 2020 and a point of concern for many enterprises in the self-management and use of the mark of enterprises without supervision from state management agencies related to the mark.

Questions related to the establishment of a 100% foreign-invested company

In what form do foreign investors invest in Vietnam? 

According to the provisions of the investment law, foreign investors invest in Vietnam in the following forms:

• Invest in establishing a new company;
• Invest in capital contribution, share purchase, purchase of contributed capital;
• Implementation of investment projects;
• Investment in the form of BCC contracts;
• New forms of investment and types of economic organizations as prescribed by the Government;

Can foreign investors contribute 100% capital? 

Depending on the industry in which the investor conducts business in Vietnam, the law will likely regulate the investor’s capital ownership rate. Some foreign investors are 100% invested capital such as construction, trade, management consultancy,… but there are some areas where foreign investors can contribute only a certain percentage of capital or joint ventures: advertising, tourism, logistics, transportation,…

Customers wishing to set up a 100% foreign-invested company please contact Viet An Law Firm for the best and fastest support at the most reasonable cost!