Establish a company in Vietnam providing telecommunications services

After joining major international trade organizations, Vietnam’s economy is growing strongly. After joining, our country has many preferential policies in many different industries to attract foreign investors. For the purpose of providing legal support and advice to businesses, Viet An Law Firm would like to guide businesses to carry out the procedures for establishing a foreign-invested company dealing in value-added telecommunications services.

Legal basis

• International treaties: WTO, FTAs, AFAS
• Law on Investment 2020:
• Law on Enterprise 2020;
• Law on Telecommunications 2009;
• Decree 25/2011/ND-CP dated 06/04/2011;
• Decree 81/2016/ND-CP dated July 1, 2016 amending Decree 25/2011/ND-CP;
• Decree 49/2017/ND-CP dated April 24, 2017 amending Decree 25/2011/ND-CP;

Conditions for investment in establishing a foreign-invested company providing telecommunications services:

The international treaties that Vietnam is a member of stipulates:

Range of value-added telecommunications services:

• Email
• Voicemail
• Online information and access to information from databases
• Electronic Data Interchange (EDI)
• Value-added facsimile services, including storage and transfer, storage and recovery
• Code and protocol conversion

Online information and data processing (including transaction processing)

• Other services: Internet Access Service

Rate of ownership of charter capital of foreign investors in economic organizations:

• Services without network infrastructure: Not more than 65%. For foreign investors from ASEAN member countries, this rate is 70%.
• Services with network infrastructure: not more than 50%

Investment form and conditions:

• Joint venture, business cooperation contract
• Vietnamese partners participating in investment: A telecommunications service provider licensed in Vietnam for economic organizations providing services with network infrastructure.
• Other conditions: 51% are controlling in the management of economic organizations providing services with network infrastructure.

In the telecommunications industry, foreign investors participating in a business cooperation contract can either sign a new agreement or switch to another form of presence with conditions no less favorable than those currently enjoyed by them. .

 Vietnamese Law

• Investment form: Joint venture or business cooperation contract. For telecommunications services with network infrastructure, the Vietnamese partner must be a telecommunications enterprise that has been granted a license to establish a telecommunications network in Vietnam.
• An organization or individual that already owns more than 20% of the charter capital or shares in a telecommunications enterprise may not own more than 20% of the charter capital or shares of another telecommunications enterprise also doing business in the same market. telecommunications service schools on the List of telecommunications services regulated by the Ministry of Information and Communications.

To make an investment in the telecommunications service business in Vietnam, foreign investors have two options:

• Establishing a company with foreign capital;
• Contributing capital, purchasing shares and stakes to economic organizations.

Method 1: Establishing a company with foreign capital:

Note:  Foreign investors are not allowed to own 100% of contributed capital, so they must cooperate with Vietnamese partners.

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 identity card or identity 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);
• An investment project proposal includes the following contents: investor implementing the project, objectives, scale and investment capital, capital mobilization plan, location, time limit, investment schedule, labor demand, proposal for investment incentives, impact assessment, socio-economic efficiency of the project;
• 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;
• An investment project proposal includes the following main contents: investor or investor selection form, investment objective, investment scale, investment capital and capital mobilization plan, location, duration, implementation progress, information on the current land use status at the project site, and proposed land use demand (if any), labor demand, economic impact, environmental impact assessment of the project, and initial evaluation of the project’s economic and social impact yes) 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 collection of opinions 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 Law Viet An.

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 : Establish a company in Vietnam with foreign capital

Apply for a Enterprise Registration Certificate:

Business establishment dossier includes:

• Application for enterprise 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 two-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 Enterprise 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: Contributing capital, purchasing shares or stakes to economic organizations

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, purchasing shares, and stakes to economic organizations

Dossier include:

• A written registration for capital contribution, share purchase, or stakes  purchase includes the following contents: information on business registration of the economic organization to which the foreign investor intends to contribute capital, purchase shares, or purchase capital shares. contribution; business; 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, purchase of capital contribution to economic organizations; expected transaction value of the contract of capital contribution, share purchase, purchase of contributed capital; information on investment projects of economic organizations (if any);
• Copies of legal papers of individuals and organizations contributing capital, purchasing shares, and stakes and economic organizations with foreign investors contributing capital, purchasing shares, and stakes: Passport (as an individual); Business license or equivalent document and Passport of the person authorized to manage the capital portion in Vietnam (as an organization);
• Written agreement in principle on capital contribution, share purchase, purchase of capital contributions between foreign investors and economic organizations in which foreign investors contribute capital, purchase shares, stakes 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 stakes, 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 parks and economic zones established under the Government’s regulations. .
• Power of Attorney for Law Viet An.

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  the procedures for transferring shares, contributed capital and changing shareholders, members, and owners .

Apply for a business license for value-added telecommunications services

Conditions for being granted a telecommunications license:

• Having a enterprise registration certificate or a certificate of investment in telecommunications services;
• Having sufficient financial capacity, organizational apparatus and human resources suitable to the scale of the project;
• Having a feasible technical and business plan in line with the national telecommunications development strategy and planning, regulations on telecommunications resources, connections, charges, standards and technical regulations, quality of telecommunications networks and services;
• Take measures to ensure safety of telecommunications infrastructure and information security.

Dossier include:

• Application for a license
• A valid copy includes a copy issued from the original book or a certified copy of the enterprise registration certificate or investment registration certificate for foreign investors.
• A valid copy of the charter of the enterprise and certified by the enterprise;
• Business plan for the first 5 years from the date of licensing
• The technical plan corresponds to the business plan for the first 5 years from the date of issuance of the license

Service to establish a company in Vietnam providing telecommunications services of Viet An Law

• 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.