Procedures for establishing a joint venture company in Vietnam

(Foreign investors contribute capital right from the establishment)

Foreign investors investing in Vietnam can do so in the form of 100% foreign capital contribution or joint venture with Vietnamese organizations and individuals. In case a foreign investor contributes investment capital together with a Vietnamese investor to establish an enterprise, it is often called the establishment of a joint venture company in Vietnam. Although the Investment Law 2020 does not have the concept and regulations on the establishment of a joint venture company. However, the procedures for establishing a joint venture company are carried out similarly to establishing a 100% foreign capital company.

Legal bases

• Investment Law 2020;
• Decree 31/2021/ND-CP guiding the Law on Investment;
• Circular 03/2021/TT-BKHDT;
• WTO commitments.

Cases in which foreign investors contribute capital at the beginning of establishing a joint venture company in Vietnam

• In case the foreign investor has agreed to cooperate with a Vietnamese partner to jointly implement the investment;
• In case according to the provisions of Vietnamese law for some investment fields, foreign investors are required to enter into joint ventures with Vietnamese investors.

Procedures for establishing a joint venture company in Vietnam

Step 1: Issuance of Investment Registration Certificate

Number of documents: 01 set;

Receiving agency

• The Ministry of Planning and Investment shall receive dossiers of application for approval of investment policies for investment projects under the investment policy approval competence of the National Assembly and the Prime Minister;
• The Department of Planning and Investment shall receive dossiers of application for approval of investment policies for investment projects under the investment policy approval competence of provincial-level People’s Committees outside industrial parks, export processing zones, hi-tech parks and economic zones; investment projects shall be carried out simultaneously both inside and outside industrial parks, export processing zones, hi-tech parks and economic zones; investment projects in industrial parks, export processing zones, hi-tech parks, economic zones where management boards of industrial parks, export processing zones, hi-tech parks, economic zones have not been established or are not under the management of management boards of industrial parks, export processing zones, hi-tech parks, etc economic zones;
• Management boards of industrial parks, export processing zones, hi-tech parks and economic zones shall receive dossiers of application for approval of investment policies for investment projects under the competence of provincial-level People’s Committees for implementation in industrial parks, export processing zones, high-tech parks, economic zones.

Processing time for issuance of investment certificates

The investment registration agency shall issue the Investment Registration Certificate within the following time limits:

• 05 working days from the date of receipt of the written approval of the investment policy concurrently with the investor’s approval for an investment project subject to the issuance of an Investment Registration Certificate;
• 15 days from the date of receipt of the investor’s request for an Investment Registration Certificate for an investment project not falling into the case of approval of investment policies.

Procedures for issuance of investment certificates

Investors submit dossiers to investment registration agencies directly or online via the foreign investment information system;

The registration authority considers the validity and issues an investment registration certificate to the investor.

Step 2: Issuance of business registration certificate

Number of documents: 01 set;

Receiving agency: Department of Planning and Investment of the province / city

Processing time for issuance of business registration certificates

03 working days from the date the investor submits all valid documents as prescribed.

Procedures for issuance of the Business Registration Certificate

• Investors submit dossiers at the Department of Planning and Investment directly or online through the National Business Registration Portal;
• The Department of Planning and Investment shall consider the validity and issue the Business Registration Certificate;
• The company carries out the engraving of legal entity seals and procedures after the establishment of the enterprise.

Step 3: Grant business licenses for some conditional trades

For some investment sectors that require a business license before doing business such as retail, setting up retail establishments, leasing, commercial intermediaries,… investors shall carry out procedures for issuance of business licenses.

Dossier of issuance of Investment Registration Certificate

• A written request for implementation of an investment project;
• Documents on the legal status of the investor: a copy of the identity card or identity card or passport (if an individual); a copy of the certificate of incorporation or equivalent document and the passport of the capital manager (if it is an organization);
• An investment project proposal includes the following contents: investors implementing the project, objectives, scale and investment capital, capital mobilization plan, location, duration, investment progress, 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 02 years of the investor; commitment to financial support of the parent company; commitment to financial support of the financial institution; guarantee on the financial capacity of the investor; other documents proving the financial capacity of the investor;
• An investment project proposal includes the following principal contents: investor or investor selection form, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, implementation progress, information on the current status of land use at the project site and land use demand proposal (if any), demand for labor, proposal for investment incentives, impacts, socio-economic efficiency of the project, preliminary environmental impact assessment (if any) in accordance with the law on environmental protection.
• In case the investment project does not request the State to allocate land, lease land, permit change of land use purpose, submit copies of land use right papers or other documents determining the right to use the location for the implementation of the investment project;
• Contents of explanation of technologies used in investment projects, for projects subject to appraisal and collection of opinions on technologies 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).

Dossier of issuance of the Business Registration Certificate

Depending on the type of company that the investor wants to establish, the investor prepares the corresponding documents. However, the following basic documents are basically required:

• Application for registration of the enterprise;
• The company’s charter;
• List of founding shareholders and shareholders being foreign investors (if they are joint-stock companies); 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, enterprise registration certificate or equivalent document and citizen identity card or identity card or passport with written authorization for the capital manager in Vietnam (if it is an organization);
• A certified copy of the granted Investment Registration Certificate;
• Power of attorney for Viet An Law Firm;

Some questions related to the procedure for establishing a joint venture company

Does the law regulate the ratio of joint venture capital contribution between foreign investors and Vietnamese investors?

In addition to the investment domains specified in WTO commitments and specialized legal documents in a number of investment industries limiting the capital contribution ratio of foreign investors, foreign investors and Vietnamese investors themselves agree on the capital contribution ratio in the joint venture company.

Some sectors limiting the percentage of capital contribution of foreign investors: Road freight business (no more than 51%), Road passenger transport business (no more than 49%), Agriculture-related services (no more than 51%), Telecommunications services without network infrastructure (not more than 65%), …

Conditions for foreign investors to establish joint venture companies in Vietnam?

Foreign investors need to satisfy the conditions on investment subjects; form of investment; financial capacity; investment fields when establishing a joint venture company in Vietnam. Depending on the investment field, investors must meet different conditions. Investors contact Viet An Law Firm for detailed advice on investment conditions in the joint venture company.

Do Vietnamese investors in joint venture companies have to prove their financial capacity when contributing joint venture capital?

Vietnamese investors contributing capital in joint venture companies must prepare all documents as for foreign investors. Accordingly, it is necessary to prepare documents proving financial capacity when contributing capital to the joint venture.

Is a foreign capital joint venture company less than 49% called a foreign capital company?

According to the provisions of the Law on Investment: Foreign capital economic organization means an economic organization whose foreign investors are members or shareholders. Therefore, a joint venture company, whether it has 1% capital of foreign investors or less than 49% or more than 49% of foreign capital, is a foreign capital company.

For any information related to the procedures for establishing a new joint venture company, please contact Viet An Law Firm for detailed advice and guidance.