Establish a company in Vietnam exercing petroleum trading

Business in the petroleum sector in Vietnam must satisfy the conditions prescribed by law. To help investors understand the legal regulations on the establishment of a foreign-invested company in the petroleum distribution business, Viet An Law Firm would like to have the following guidance:

Legal basis

• WTO, FTAs, ACIA;
• Law on Investment 2020;
• Decree 83/2014/ND-CP on petrol and oil trading, as amended and supplemented by Decree 08/2018/ND – CP and Decree 95/2021/NĐ-CP;
• Circular No. 34/2013/TT-BCT dated December 24, 2013 announcing the roadmap for goods trading and activities directly related to goods purchase and sale of foreign-invested enterprises in Vietnam. Vietnam issued by the Minister of Industry and Trade.
• Decree No. 09/2018/ND-CP dated January 15, 2018 detailing the Commercial Law and the Law on Foreign Trade Management on goods purchase and sale activities and activities directly related to the purchase and sale of goods by foreign investors and foreign-invested economic organizations in Vietnam.

Investment conditions for exercing petroleum trading in Vietnam

According to international treaties to which Vietnam is a signatory

According to the provisions of international treaties to which Viet Nam is a member, foreign investors are not allowed to exercise the distribution rights to crude oil and processed oil, including:

• Petroleum oils and oils obtained from bituminous minerals, in crude form
• Petroleum oils and oils obtained from bituminous minerals.

Conditions as prescribed by Vietnamese law

For the petroleum business, foreign investors, when wishing to invest in this field in Vietnam, must comply with the following conditions:

• Foreign-invested economic organizations may not exercise export rights to petroleum and oils obtained from bituminous minerals, in raw form; crude oil; condensate and others. In case a foreign investor is a petroleum contractor according to the provisions of the Petroleum Law, he is entitled to export the oil and gas portion under his/her ownership.
• Foreign-invested economic organizations may not exercise the right to import petroleum oils and oils obtained from bituminous minerals, except crude oil; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, the basis of which such preparations; waste oil.
• Foreign-invested economic organizations may not exercise the distribution rights to crude oil and processed oil, including: petroleum and oils obtained from bituminous minerals, in crude form; petroleum oils and oils obtained from bituminous minerals.
• Foreign-invested economic organizations may produce petrol and oil with conditions consistent with the approved planning.

How to establish a company in Vietnam exercing petroleum trading

Investors conduct investment activities in one of the following forms:

• Investing in the establishment of economic organizations;
• Investment in the form of capital contribution, purchase of shares or stakes in economic organizations;
• Investment under business cooperation contract;

Method 1: Establishing a foreign-invested economic organization

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);
• 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;
• 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 and 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 stipulates 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: Establishment of a foreign-invested wood processing 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.

Term:  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: Contributing capital, purchasing shares, stakes to economic organizations exercising petroleum trading

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, stakes to economic organizations

Dossier include:

• A written registration for capital contribution, share purchase or capital contribution 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 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, buying shares, purchasing capital contributions and economic organizations with foreign investors contributing capital, buying shares, purchasing capital contributions: Passport (if applicable) is 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, purchase of capital contributions between foreign investors and economic organizations in which foreign investors contribute capital, purchase shares, purchase capital contributions 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 parks and economic zones established under the Government’s regulations. .
• Power of Attorney for 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  procedures for transferring shares , contributed capital and changing shareholders, members , and owners .

Obtaining license for petroleum business

• License for petrol and oil wholesalers (before referred to as License for petrol and oil import and export business): is granted to enterprises with petrol and oil business registration in the Certificate of Business Registration, having a wharf, warehouse to receive imported petrol and oil, and a means of transport. domestic petrol and oil, having a petrol and oil distribution system, in accordance with the planning of traders doing business in exporting and importing petrol and oil according to the provisions of law.
• License for major petrol and oil producers: issued to an enterprise that has registered for petrol and oil business in the Certificate of Business Registration; have warehouse, prescribed capacity tank; have a experiment room; having a petrol and oil distribution system and managers, employees directly doing business need to meet the conditions prescribed by law.
• License for  petrol and oil general agents: being an enterprise whose registered business is petrol and oil; have warehouses, petrol tanks; have means of transport, have a petrol and oil distribution system; conditions on managers and employees directly doing business must be trained and certified as prescribed.
• License for  petrol and oil general retail agents: issued to businesses that meet the conditions for retail goods, managers and employees.

Some questions related to the establishment of a company with foreign capital

What types of companies can foreign investors establish for petroleum trade in Vietnam?

Investors can choose one of the following types:

• One-member limited liability company
• Multiple-member limited liability company
• Joint Stock Company.

Are foreign investors allowed to invest 100% of capital to trade petroleum in Vietnam?

Investors are allowed to invest 100% of capital to trade petroleum in Vietnam.

Service to establish a company in Vietnam exercing petroleum trading 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.