Conditions for foreign individuals to establish a company in Vietnam

Currently, Vietnam is one of the potential markets where many foreign individuals and organizations plan to establish companies. So, how are foreign individuals who want to establish a company in Vietnam regulated? In the following article, Viet An Law will summarize the regulations on conditions for foreign individuals to establish a company in Vietnam.

Legal basis

• Law on Investment 2020.
• Decree 31/2021/ND-CP issued by the Government details and guides the implementation of a number of articles of the Investment Law.

Are foreign individuals considered foreign investors?

Pursuant to Clause 19, Article 3 of the Investment Law 2020, regulations on foreign investors. Accordingly, foreign investors include both foreign individuals and foreign organizations conducting business investment activities in Vietnam.

Therefore, foreign individuals can still open a company in Vietnam without establishing or joining an organization.

Market access conditions for foreign individuals when establishing economic organizations

In Article 9 of the Investment Law 2020, it regulates market access conditions for foreign investors. Foreign investors need to rely on the List of industries and occupations with limited market access for foreign investors, including:

• Industries and occupations that have not yet accessed the market;
• Sectors and occupations have conditional market access.

Foreign investors specified in the List of industries and occupations with limited market access for foreign investors include:

• Charter capital ownership ratio of foreign investors in economic organizations;
• Investment form;
• Scope of investment activities;
• Investor capacity; partners participating in investment activities;
• Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties to which Vietnam is a member.

Accordingly, there are 3 cases of market access for foreign individuals when opening a company in Vietnam as follows:

• Foreign individuals are not allowed to open companies in Vietnam for industries and professions that do not have market access;
• When a foreign individual opens a company in Vietnam operating in a business line that limits market access for foreign investors, he or she must meet the conditions in Clause 2 above.
• For the remaining business lines, foreign investors are subject to market access conditions as prescribed for domestic investors.

The list of industries and occupations that are not allowed and have limited market access for foreign investors is published in Appendix I issued with Decree 31/2021/ND-CP.

And since the issuance of the Enterprise Registration Certificate or other documents of equivalent legal value, the company established by the foreign investor shall carry out the investment project according to the Investment Registration Certificate.

In addition, foreign investors must have an investment project and carry out procedures for granting and adjusting the Investment Registration Certificate, except in the case of establishing innovative small and medium-sized startups and startup investment funds creative enterprises under the law on supporting small and medium-sized enterprises.

Do foreigners establishing a company in Vietnam need an investment certificate?

Pursuant to Clause 1, Article 22 of the Investment Law 2020, foreign investors must meet the following regulations before establishing an economic organization:

• Meet market access conditions for foreign investors specified in Article 9 of the Investment Law 2020;
• Have an investment project, then carry out procedures for granting and adjusting the Investment Registration Certificate, except for cases where small and medium-sized innovative start-up companies and investment funds for creative startups will be established according to regulations on supporting small and medium-sized enterprises.

Thus, when foreigners want to establish a company in Vietnam, they must apply for an Investment Registration Certificate, except in the case of establishing a small and medium-sized creative startup company and an investment fund to start a business creative industry.

How are investment forms in Vietnam regulated?

Pursuant to the Investment Law 2020, types of investment in Vietnam include the following forms:

• Investing in establishing economic organizations;
• Investing in capital contribution, buying shares, purchasing capital contributions;
• Implement investment projects;
• Investment in the form of a business cooperation contract – BCC;
• New forms of investment and types of economic organizations according to Government regulations.

Thus, when participating in investment activities in Vietnam, individuals and organizations can choose the above forms according to the provisions of Vietnamese law.

How are foreign investment activities regulated?

Economic organizations with foreign investment capital must meet the conditions and carry out procedures according to the provisions of law when investing in establishing other economic organizations, contributing capital, purchasing shares, and stakes and entering a BCC contract if that economic organization falls into one of the following cases:

• There are foreign investors holding more than 50% of the charter capital or the majority of partners are foreign individuals for economic organizations that are partnerships;
• Have an economic organization specified in the Investment Law 2020 holding more than 50% of charter capital;
• There are foreign investors and economic organizations specified in the Investment Law 2020 holding more than 50% of charter capital.

Thus, foreign investors participating in economic investment in Vietnam in one of the above three cases will be governed by separate regulations compared to domestic natural persons. Therefore, foreign investors need to clearly understand and properly implement investment-related activities in accordance with Vietnamese law.

Do foreign individuals establishing a company in Vietnam need to apply for a work permit?

According to the provisions of Decree 152/2020/ND-CP regulating foreign workers working in Vietnam and recruiting and managing Vietnamese workers working for foreign organizations and individuals in Vietnam Foreigners working in Vietnam must have a work permit, except in the following cases:

• Be an owner or capital-contributing member of a limited liability company with a capital contribution value of 3 billion VND or more.
• Be the Chairman of the Board of Directors or member of the Board of Directors of a joint stock company with a capital contribution value of 3 billion VND or more.
• Moving within an enterprise within the scope of 11 service sectors in Vietnam’s service commitment schedule with the World Trade Organization, including business, information, construction, distribution, education, and environment. education, finance, healthcare, tourism, culture, entertainment and transportation.
• Entering Vietnam to provide professional and technical consulting services or perform other tasks serving research, development, appraisal, monitoring, evaluation, management, and program implementation, The project uses official development assistance (ODA) according to regulations or agreements in international treaties on ODA signed between competent agencies of Vietnam and foreign countries.
• Licensed by the Ministry of Foreign Affairs to operate information and press activities in Vietnam according to the provisions of law.
• Be sent to Vietnam by a competent foreign agency or organization to teach and research at an international school under the management of a foreign diplomatic representative agency or the United Nations; establishments and organizations established under agreements that Vietnam has signed and participated in.
• Volunteers are foreign workers who work in Vietnam voluntarily and without salary to implement international treaties to which Vietnam is a member and have confirmation from foreign diplomatic missions or international organizations in Vietnam.
• Enter Vietnam to work as a manager, executive director, expert, or technical worker with a working period of less than 30 days and no more than 03 times in 01 year.
• Enter Vietnam to implement international agreements signed by agencies and organizations at the central and provincial levels according to the provisions of law.
• Pupils and students studying at schools and training facilities abroad have internship agreements with agencies, organizations, and businesses in Vietnam; interns and trainees on Vietnamese ships.
• Relatives of members of foreign representative agencies in Vietnam are allowed to work in Vietnam according to the provisions of international treaties to which Vietnam is a member.
• Have an official passport to work for state agencies, political organizations, or socio-political organizations.
• The person responsible for establishing a commercial presence.
• Certified by the Ministry of Education and Training for foreign workers entering Vietnam to teach and research.

Documents foreigners need to prepare when establishing a company in Vietnam

Application for Investment Registration Certificate

Foreign individuals and organizations that want to establish a company in Vietnam will need to apply for an Investment License. Procedures to apply for an Investment License include:

• Application for issuance of Investment Registration Certificate.
• Personal legal documents: ID card, passport, citizen identification accompanied by documents to verify legal status with consular confirmation.
• Report on the financial capacity of foreign individuals and organizations wanting to establish a company in Vietnam. The content of the report must clearly show the source of investment capital that the foreigner will use to invest and that the investor has enough financial capacity to do so. Foreign investors can submit the following two types of documents to prove their ability and financial capacity: Financial statements (for foreign investors that are legal entities) and Confirmation of account balance Bank (for foreign investors who are individuals)
• Proposal on current investment projects.
• Proposal on land use needs if the company uses leased land in Vietnam.

Then submit the application to the Department of Planning and Investment to receive an Investment License after 15 days.

Application for Enterprise Registration Certificate

After granting the Investment Registration License, it is necessary to prepare documents to register to establish a foreign-invested company.

Specific dossier includes:

• Application for issuance of Enterprise Registration Certificate to establish a company.
• List of members participating in the establishment of the company.
• The draft of the Company’s charter corresponds to the type of business that the foreigner intends to establish. The draft of the company charter must ensure the full signatures of Legal representatives, founding shareholders, or authorized representatives of founding shareholders for the establishment of the company. joint stock company. Or the legal representative, the company’s owner, the company’s members, or the authorized representative for the establishment of a limited liability company.
• Document certifying the legal status of the foreigner establishing the company in Vietnam.

For individuals:

• Valid copy of one of the following personal identification documents: ID card, citizen identification, valid passport, or other valid personal identification legal documents.
• Authorization decision (if authorized to represent another person) for institutional investors; Attached is a valid, notarized copy of the personal identification documents of the authorized representative.
• If the company uses state capital, there must be written approval of the use of state capital for investment from a competent state agency.
• Joint venture contract for the form of investment in establishing a joint venture economic organization between foreign investors and domestic investors.
• In addition, foreigners who want to establish a company in Vietnam need to provide additional information: Documents on the qualifications and experience of the foreigner establishing the company and documents proving the legal right to use the company’s headquarters (legal house/office rental contract).

Enterprises submit documents to the Business Registration Office at the Department of Planning and Investment. The Department of Planning and Investment will review and issue a business registration license to the company after 3 – 6 days if the application is valid.

Customers who are foreign investors need advice on company establishment services to meet the conditions for foreign individuals to establish a company in Vietnam, please contact Viet An Law Firm for best support.