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Set up a company in Vietnam engaged in sea transportation business

Vietnam with more than 3000 km of coastline along with the central geographical position of Southeast Asia is a bright spot for the shipping service business. The Investment Law 2020 promulgated together with the signing and joining of free trade agreements not only helps Vietnam’s economy go up, but also opens up investment opportunities for foreign investors. Conditions for providing sea transportation services are specified in Decree 160/2016/ND-CP dated November 29, 2016 whereby a foreign investor can provide sea transportation services with the following: Conditions and procedures are as follows:

Legal basis

  • According to WTO,FTAs, AFAS, CPTPP;
  • Maritime Code 2015;
  • Law on Foreign Investment in 2020;
  • Law on Enterprise 2020;
  • Decree 160/2016/ND-CP on conditions for sea transportation business, shipping agency services, and towage services, as amemded and supplemented by Decree 147/2018/ND-CP.

Conditions for sea transportation business

Shipping business includes:

  • Business transportation of goods by sea;
  • Business passenger transport by sea.

According to international treaties

For sea freight business

  • To establish an economic organization operating a fleet of ships flying the Vietnamese flag to provide sea freight services, excluding domestic transportation, and to establish a 100% foreign -invested enterprise to provide provide international freight services.

In case of establishing an economic organization operating a fleet of ships flying the Vietnamese flag, the foreign investor must satisfy the following conditions:

  • Capital ownership ratio: Foreign investors are allowed to own capital not more than 49%. For foreign investors in ASEAN, this ratio does not exceed 70%.
  • Investment form: joint venture
  • Foreign seafarers are allowed to work on board ships flying the Vietnamese flag (or registered in Vietnam) owned by a foreign-invested economic organization in Vietnam, but the total number does not exceed one third of ship’s demarcation. The captain or first mate must be a Vietnamese citizen.
  • Operation scope:
    • Selling and marketing ocean freight services through direct dealings with customers, from listing prices to preparing documents;
    • Representing the goods owner;
    • Provide business information upon request;
    • Prepare transport documents or documents including customs and other documents relating to the origin and character of the goods to be transported.
    • Providing sea transportation services including internal transportation services by ships under Vietnamese flag to provide transportation services throughout.
    • On behalf of the company to organize for ships to enter the port or receive goods when required;
    • Negotiate and sign contracts for road, rail, and inland water transportation related to goods transported by the company.

For passenger transport business by sea

To establish an economic organization operating a fleet of ships flying the Vietnamese flag to provide passenger transport services by sea, from domestic transport and must satisfy the following conditions:

  • Capital ownership ratio: cannot own more than 49% of capital in economic organizations.
  • Investment form: joint venture.
  • Foreign seafarers are allowed to work on board ships flying the Vietnamese flag (or registered in Vietnam) owned by a foreign-invested economic organization in Vietnam, but the total number does not exceed one third. ship’s demarcation. The captain or first mate must be a Vietnamese citizen.

Within the scope of CPTPP

Foreign investment to supply maritime passenger and freight transportation services under the national flag of Viet Nam may not be supplied except through a joint venture or the purchase of shares in a Vietnamese enterprise, with foreign equity not exceeding 49%. In addition, foreign seafarers may not exceed 1/3 of total employees of the ships. The Master or first chief executive must be a Vietnamese citizen.

According to Vietnamese law

Being an enterprise or cooperative engaged in shipping business established in accordance with law;

To be granted a Certificate of eligibility for sea transportation business when satisfying the conditions prescribed by law as follows:

  • Financial conditions: Must have a guarantee in accordance with the law with a minimum amount of 05 (five) billion Vietnam Dong or buy insurance to ensure the obligations of the ship owner to the crew according to regulations.
  • Conditions on vessels: Having the legal right to use at least 01 seagoing vessel; if a seagoing vessel flies the Vietnamese flag, it must conform to the national technical regulations promulgated by the Minister of Transport.
  • During its operation, an enterprise must set up or hire an organizational apparatus and human resources as follows:
    • Regarding the organizational structure, including: Safety management department according to the provisions of the International Code of Safety Management (ISM Code); the maritime security management department according to the provisions of the International Code on Security of Ships and Ports (ISPS Code);
    • Regarding human resources: Persons assigned to be in charge of maritime safety and security management must be trained, trained and granted certificates according to regulations of the Minister of Transport.

To set up a company in Vietnam engaged in sea transportation business, foreign investors have two options:

  • Establishment of a foreign-invested sea transportation service business company;
  • Contributing capital, buying shares or capital contributions to economic organizations engaged in the business of shipping shipping services.

Method 1: Establishment of a foreign-owned shipping service company

Step 1: The investor applies for an Investment Registration Certificate

Dossier include:

  • A written request for implementation of an investment project;
  • Documents on investor’s legal status: copy of citizen identification card or ID card or passport (if individual); a copy of the certificate of incorporation or equivalent document and the passport of the capital manager (if an organization);
  • The investment project proposal includes the following contents: investor implementing the project, objectives, scale and investment capital, capital mobilization plan, location, duration, investment schedule, labor demand activities, proposals for investment incentives, assessment of the project’s socio-economic impacts and efficiency;
  • Documents proving the financial capacity of the investor include at least one of the following documents: financial statements of the last 2 years of the investor; commitment to financial support of the parent company; financial institution’s commitment to financial support; guarantee on the financial capacity of the investor; other documents proving the investor’s financial capacity;
  • Investment project proposal includes the following main contents: investor or investor selection form, investment objective, investment scale, investment capital and capital mobilization plan, location, time deadline, implementation progress, information on the current status of land use at the project site and proposed land use demand (if any), labor demand, proposal for investment incentives, impact activities, socio-economic efficiency of the project, preliminary assessment of environmental impacts (if any) in accordance with the law on environmental protection.

If the construction law provides for the preparation of a pre-feasibility study report, the investor may submit a pre-feasibility study report instead of the investment project proposal;

  • In case the investment project does not request the State to allocate or lease land or permit the change of land use purpose, a copy of the paper on land use rights or other documents determining the right to use the site shall be submitted for implementation. current investment project;
  • The explanation of the technology used in the investment project, for the project subject to appraisal and consultation on technology in accordance with the law on technology transfer;
  • Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any);
  • Power of Attorney for Viet An Law.

Place of application: Department of Planning and Investment where the head office is expected to be located.

Processing order: Within 15 days from the date of receiving the complete and valid dossier, the Department of Planning and Investment will issue the Investment Registration Certificate to the foreign investor. In case of refusal, the Department of Planning and Investment will reply in writing and clearly state the reason.

Step 2: Establishing a foreign-owned shipping company in Vietnam

Apply for a Enterprise Registration Certificate:

Business establishment dossier includes:

  • Application for business registration;
  • Company charter;
  • List of founding shareholders and shareholders being foreign investors (if it is a joint stock company); List of members (if it is a multiple-member limited liability company);
  • Certified copy of identity card or citizen identification card or passport (if an individual); establishment decision, business registration certificate or equivalent document and citizen identification card or identity card or passport with written authorization for capital manager in Vietnam (if an organization) ;
  • A certified copy of the issued Investment Registration Certificate;
  • Power of attorney for Viet An Law;

Place of application: Department of Planning and Investment where the enterprise’s head office is located.

Duration: 03 – 06 working days.

Disclosure of business registration information:

  • After being granted an enterprise registration certificate, an enterprise must make a public announcement on the National Business Registration Portal and pay fees as prescribed by law. The content to be announced includes the contents of the Business Registration Certificate and the following information:
  • Business lines;
  • List of founding shareholders; list of shareholders being foreign investors in the case of a joint-stock company (if any).
  • Publication fee: The request for announcement of enterprise registration contents and payment of the fee for announcement of enterprise registration contents shall be made at the time the enterprise submits the enterprise registration dossier. In case the enterprise is not granted business registration, the enterprise will be refunded the fee for announcing the business registration content.

The publication fee is 100,000 VND according to the provisions of Circular 47/2019/TT-BCT.

Corporate seal:

  • 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.
  • The management and keeping of the seal shall comply with the provisions of the company’s charter or regulations issued by the enterprise, branch, representative office or other unit of the enterprise with the seal. Enterprises use seals in transactions as prescribed by law.

Option 2: Contribute capital, buy shares, contribute capital to economic organizations providing sea transportation services

This method will help investors save more time and costs because they do not have to apply for an Investment Registration Certificate. However, investors must ensure the proportion of capital contribution of foreign investors in accordance with regulations. If choosing this method, investors only need to carry out the procedures for registration of capital contribution, purchase of shares and contributed capital at the Department of Planning and Investment. In addition, for activities that foreign investors are not allowed to carry out, it is necessary to consider and implement procedures to reduce industries.

Step 1: Foreign investors register to contribute capital, buy shares, and contribute capital to economic organizations

Dossier include:

  • A written registration for capital contribution, share purchase or stake purchase includes the following contents: information on enterprise registration of the economic organization to which the foreign investor intends to contribute capital, purchase shares, or purchase stakes; list of owners, members, founding shareholders, list of owners, members, shareholders being foreign investors (if any); rate of ownership of charter capital of foreign investors before and after capital contribution, share purchase or stake purchase to economic organizations; expected transaction value of the contract of capital contribution, share purchase or stake purchase includes; information on investment projects of economic organizations (if any);
  • Copies of legal papers of individuals and organizations contributing capital, share purchase or stake purchase and economic organizations with foreign investors contributing capital, share purchase or stake purchase: Passport (as an individual); Business license or equivalent document and Passport of the person authorized to manage the capital portion in Vietnam (if an organization);
  • Written agreement in principle on capital contribution, share purchase or stake purchase between foreign investors and economic organizations in which foreign investors contribute capital, share purchase or stake purchase or between investors foreign investment with shareholders or members of that economic organization;
  • A copy of the certificate of land use rights of an economic organization in which foreign investors contribute capital, purchase shares or purchase capital contributions, if such economic organization has a certificate of land use right in the island, commune, border wards and towns and coastal communes, wards and towns; Other areas affecting national defense and security, except for economic organizations implementing investment projects in industrial parks, export processing zones, hi-tech zones and economic zones established under the Government’s regulations. .
  • Power of Attorney for Viet An Law.

Place of application: Department of Planning and Investment where the economic organization’s head office is located.

Order and procedures: If the foreign investor’s capital contribution, share purchase or capital contribution meets the conditions on ownership ratio and investment form in accordance with the Schedule of Commitments and Vietnamese law, Within 15 days from the date of receipt of complete dossiers, the Department of Planning and Investment will notify in writing. In case the application does not meet the conditions, the Department of Planning and Investment will notify in writing and clearly state the reason.

Step 2: Carry out procedures for transferring shares, contributed capital and changing shareholders, members, and owners.

Service of setting up a company in Vietnam engaged in sea transportation business of Viet An law firm

  • Consulting on the conditions for establishing a foreign-invested company: capital contribution ratio of foreign investors in Vietnam; conditions for business lines; project implementation location; pay attention to the procedures before and after the establishment of a foreign-invested company;
  • Consulting to choose the right type of company for investors: Limited Company or Joint Stock Company;
  • Advice on opening a capital transfer account, capital contribution term;
  • Consulting and guiding investors to prepare necessary documents to establish a foreign-invested company;
  • Consulting, drafting company establishment documents for investors;
  • Representing investors to work with competent Vietnamese state agencies in the process of carrying out the procedures for establishing a company for investors (apply for Investment Registration Certificate, Enterprise Registration Certificate, Business Licenses, Licenses according to specialized requirements, making seals of legal entities, procedures after company establishment,…);
  • Comprehensive, regular advice, accounting services, tax law package of activities arising in the process of doing business in Vietnam for investors.

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