Set up an alcohol distribution company in Vietnam

Alcohol business is one of the conditional business activities, so enterprises need to apply for a license to distribute alcohol products before conducting business activities. So what is an alcohol distribution company? What are the conditions and procedures to set up a alcohol distribution company? In the article below, Viet An Law Firm will provide you with full information related to the above issues.

Legal basis

• Enterprise Law 2020;
• Decree 105/2017/ND-CP regulating alcohol trading, amended and supplemented by Decree 17/2020/ND-CP;
• Decree No. 09/2018/ND-CP The Decree details the Law on Commerce and the Law on Foreign Trade Management on goods purchase and sale activities and activities directly related to goods purchase and sale by foreign investors and foreign-invested economic organizations in Vietnam.

The concept of alcohol distribution and the company distributes alcohol in Vietnam

Alcohol distribution is understood as the following activities:

• Importing alcohol, buying alcohol from alcohol producers or individuals and other alcohol distributors
• Sale of alcohol to alcohol distribution traders, wholesale traders, alcohol retailers, traders selling alcohol for on-site consumption within licensed provinces and cities
• Sale of alcohol to merchants who buy wine for export
• Directly retail alcohol and sell alcohol for on-site consumption at traders’ business locations within licensed provinces and centrally-run cities.

Thus, a company with the above activities is considered an alcohol distribution company. Accordingly, the Company will import alcohol or purchase alcohol from alcohol production enterprises or alcohol distribution enterprises and exercise the right to distribute alcohol through the Company’s alcohol distribution system or agent.

Conditions for foreign investors to distribute alcohol in Vietnam

Pursuant to the provisions of Article 9 of Decree No. 09/2018/ND-CP, foreign investors, when they want to do alcohol distribution business in Vietnam, first need to meet all conditions to be able to be granted a business license, including:

In case a foreign investor belonging to a country or territory is a party to treaties to which Vietnam is a contracting party commits to open markets for goods purchase and sale activities and activities directly related to goods purchase and sale:

• It is necessary to satisfy the conditions on market access in treaties to which Vietnam is a contracting party;
• Have financial plans to carry out activities of applying for business licenses;
• Do not owe overdue tax in case having set up an enterprise in Vietnam for 01 year or more.

In case the foreign investor does not belong to the countries or territories acceding to treaties to which Vietnam is a contracting party:

• Have financial plans to carry out activities of applying for business licenses and not owe overdue tax in case an enterprise has been set up in Vietnam for 01 year or more.
• Meet the following criteria;
• In accordance with the provisions of specialized laws.
• In accordance with the level of competition of domestic enterprises in the same field of activity.
• Ability to create jobs for domestic workers.
• There is the possibility and extent of contribution to the state budget.

In addition to the above conditions for obtaining a business license, foreign investors distributing alcohol in Vietnam also need to satisfy additional conditions for alcohol distribution as prescribed in Article 11 of Decree 105/2017/ND-CP described below.

Conditions to set up an alcohol distribution company in Vietnam

Pursuant to the provisions of Article 11 of Decree 105/2017/ND-CP amended and supplemented by Decree 17/2020/ND-CP stipulating conditions for setting up alcohol distribution companies, it will include:

• Being an enterprise established in accordance with the provisions of law.
• Enterprises must have alcohol distribution systems in 02 provinces or centrally-run cities or more (including the area where the enterprise is headquartered). In each area, there will have to be at least 01 wholesale alcohol trader.
• In case the enterprise establishes a branch or business location outside the head office to sell alcohol, the certification of the wholesale alcohol trader will not be required at this time.
• The enterprise must have a written introduction or principle contract from a alcohol producer, other alcohol distributor or an overseas alcohol supplier.

Procedures for setting up an alcohol distribution company in Vietnam

Step 1: Select the type of business and line of business

According to the current enterprise law, there are 5 types of enterprises:

• 1-member limited liability company;
• Limited liability company with 2 or more members;
• Joint stock company;
• Partnerships;
• Private enterprise.

Step 2: Select the company name and head office address

When choosing a company name, the following points should be kept in mind:

• Do not give the same or confusing name to a previously registered business name;
• The company name is not contrary to fine customs;
• Do not use registered trade names, trademarks or geographical indications;
• It is forbidden to use the names of state agencies, units of the people’s armed forces, names of political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations.

When choosing a company headquarters, it is necessary to pay attention to the following points:

• There are 4 administrative levels including: House number with street name, Ward/commune/township name, District/town/provincial district/town/city name and Province or centrally-run city;
• Do not take bogus addresses (“ghost” addresses);
• Do not take the apartment address.
• In case the office is not under ownership, a lease agreement is required.

Step 3: Register charter capital

Charter capital is understood as the total value of assets contributed or committed by company members or company owners when establishing a limited liability company or partnership. For joint-stock companies, the charter capital will be the total par value of shares sold or registered to buy when establishing a joint-stock company.

Step 4: Submit business registration documents

The components of the dossier to be prepared to be granted a business registration license will include:

• Application for business registration;
• The company’s charter;
• List of owners, capital contributors or capital contributing shareholders;
• Notarized/certified copy of ID/CCCD or passport of an individual member, notarized/certified copy of the Certificate of Business Registration in case the member is an organization accompanied by a notarized/certified copy of ID/CCCD or passport of the legal representative of that organization;
• Written authorization of capital contribution in case the owner, member or shareholder is an organization;
• Power of attorney for the person carrying out the company establishment procedures.

The above dossier will be submitted at the Department of Planning and Investment where the Company is headquartered. Pursuant to the provisions of Clause 1, Article 26 of the Enterprise Law 2020, the enterprise founder or authorized person can choose methods such as submitting the application directly at the Department of Planning and Investment, submitting via postal service or via electronic information network. The processing time of the competent authority in case of a valid application is from 3 to 5 days.

Step 5: Prepare application documents for sublicenses related to alcohol distribution activities

Based on the provisions of Article 21 of Decree 105/2017/ND-CP, enterprises need to prepare a set of dossiers for a alcohol distribution license, including:

• An application for a alcohol distribution license according to Form No. 01 issued together with Decree 21 of Decree 105/2017/ND-CP;
• A copy of the Certificate of Business Registration;
• Documentation of the alcohol distribution system consists of one of the following two types of documents:
• A copy of the principle contract or confirmation letter or affidavit to participate in the alcohol distribution system together with a copy of the alcohol wholesale license of the trader who intends to participate in the alcohol distribution system;
• A copy of the company’s branch operation registration certificate or the company’s business location registration certificate for alcohol trading.
• Documentation related to the alcohol supplier includes:
• Copies of introductory documents or principle contracts of the winemaker, other alcohol distributors or overseas alcohol suppliers, which must specify the alcohols intended for business in accordance with the activities of the alcohol suppliers;
• In case the alcohol supplier is a domestic trader, a copy of the Alcohol Production License or Alcohol Distribution License is required.

Step 6: Apply for a Alcohol Distribution License

The enterprise shall submit the application directly or send it by post to the authority competent to issue the alcohol distribution license. Pursuant to the provisions of Point a, Clause 1, Article 25 of Decree 105/2017/ND-CP, the authority to grant licenses will belong to the Ministry of Industry and Trade.

Step 7: The competent authority considers, appraises and grants the alcohol distribution license

Within 15 working days from the date of receipt of a complete and valid dossier, the competent authority will conduct the review, appraisal and grant a license to the company. In case of refusal to grant a license, the competent authority shall have to reply in writing clearly stating the reasons.

In case the application is insufficient or invalid, within 3 working days from the date of receipt of the dossier, the competent agency will send a written request for supplementation.

If you have any questions regarding the conditions for establishing a alcohol distribution company or any other legal issues, please contact Viet An Law Firm for the best support!