Establish a company in Vietnam to produce and distribute cultural products

Cultural products and services not only play an important role in economic development, and perform entertainment functions but also contribute to the performance of educational functions, fostering aesthetic values, continuity function, and historical development… Recognizing that importance, in recent years, cultural products and services in our country have been focused on development. In Vietnam, there are also specific commitments to establish a company in Vietnam to produce and distribute cultural products, including video recordings.

Conditions for establishing a foreign-invested company that produces and distributes cultural products, including video recordings

Regulations on WTO, VKFTA, VJEPA, AFAS:

may not exercise the right to distribute recorded items.

Services: Film production (CPC 96112, excluding videotapes), film distribution (CPC 96113, excluding videotapes), film screening (CPC 96121)

• All movies must be censored about the content by a Vietnamese competent authority.
• Only in the form of a business cooperation contract or a joint venture with a Vietnamese partner has been allowed to provide these services in Vietnam. The contributed capital of the foreign party must not exceed 51% of the legal capital of the joint venture.

Film screening service (CPC 96121)

Culture houses, film screening venues, public film screening clubs and associations, and mobile film screening teams of Vietnam are not allowed to enter into business cooperation contracts or joint ventures with foreign service suppliers

This industry is on the list of Most Favored Nation exemptions under the WTO Commitments.

Regulations on ACIA

Restrictions on publications: (i) Publishing of books, music books and other publications (ISIC 2211); (ii) Publishing of newspapers, magazines, periodicals (ISIC 2212); (iii) Publishing of video tapes (ISIC 2213); (iv) Other types of publication (ISIC 2219).

Regulations on CPTPP

Appendix NCM I-VN-9

For film production (CPC 96112), film distribution (CPC 96113) and projection (CPC 96121):

• Film production, distribution, and screening services may not be provided except through a business cooperation contract or joint venture with a Vietnamese partner that is authorized to provide these services, or by purchasing shares in a Vietnamese enterprise that is authorized to provide these services. In case of joint venture or share purchase, the foreign party’s contributed capital must not exceed 51%.
• For the movie screening, foreign investors are not allowed to enter into business cooperation contracts or joint ventures with cultural houses, public cinema screening clubs and associations, mobile cinema screening teams, or owners or operators of Vietnamese temporary theaters.

Theaters must show Vietnamese films on major national holidays. The ratio of Vietnamese films per the total number of films shown annually will not be less than 20%. Theaters must show at least one Vietnamese film between 18:00-22:00.

Appendix NCM I-VN-25

Foreign investment is prohibited in Vietnam’s state-owned commercial enterprises that are currently allowed to import certain video products, as indicated in Table 8c in the Working Party Report on Vietnam’s accession to the WTO. For greater certainty and to be consistent with Article 9.11.1.c (Forwards only, not backward), the liberalization of a state-owned commercial enterprise does not result in the requirement to liberalize all state-owned commercial enterprises. .

Appendix NCM II-VN-14

For the sound recording sub-sector: Vietnam reserves the right to adopt and maintain any measure related to sound recording services except allowing foreign ownership of up to 51% of an enterprise operating in the sound recording industry.

Appendix NCM II-VN-20

For the video tape production and distribution industry: Vietnam reserves the right to adopt and maintain any measure related to the investment in the production and distribution of video tapes on any material.

Regulations on EVFTA

(Appendix 8-C): Vietnam may adopt or maintain any measure relating to the operation of an enterprise as defined in points 1(e) and 1(m) of Article 8.2 (Definitions) which is inconsistent with Clause 2 of Article 8.5 (National Treatment), provided that the measure is not inconsistent with the commitments set out in Appendix 8-B (Vietnam’s Schedule of Specific Commitments).

Regulations on Vietnamese law

Foreign organizations and individuals may distribute phonograms and video recordings with the content of art performances in the Vietnamese territory in accordance with the provisions of Decree 144/2020/ND-CP dated December 14^th, 2020 of the Government stipulating the performance art activity and other relevant provisions of law that are not contrary to international treaties to which the Socialist Republic of Vietnam is a contracting party.

Conditions for the circulation of phonograms and video recordings with art performance content for commercial purposes are specified in Article 22 of Decree 144/2020/ND-CP:

• Being a public non-business unit with the function of performing arts; organizations and individuals that register the business of phonograms and video recordings in accordance with law.
• Perform the deposit as prescribed in Article 23 of this Decree.

Foreign organizations and individuals are not allowed to directly distribute video recordings with the content of art performances in the Vietnamese territory.

Investment form and the capital contribution ratio of foreign investors when establishing foreign-invested companies for the production and distribution of cultural products, including video recordings

According to the above regulations, foreign investors who want to invest in the production and distribution of cultural products, including video recordings, can only choose three forms:

• Business Cooperation Contract;
• Contributing capital to establish a joint venture company with a Vietnamese partner
• Purchase of capital contribution from a Vietnamese company.

Conditions and investment rate of foreign investors

• In all cases, it is only possible to establish a company or cooperate with a Vietnamese partner who has been authorized to provide these services in Vietnam.
• The capital contribution of the foreign party must not exceed 51% of the capital of the joint venture company.
• Only in the form of a business cooperation contract or a joint venture with a Vietnamese partner has been allowed to provide these services in Vietnam. The capital contribution of the foreign party must not exceed 51% of the legal capital of the joint venture.

Procedures to establish a company in Vietnam to produce and distribute cultural products, including video recordings

Step 01: Apply for an Investment Registration Certificate for a foreign-invested company

If projects do not use land (without direct land lease from the state) that do not use technologies on the list of restricted transfers, the procedures for approval of investment policies are not required. Foreign investors carry out the procedures for applying for an Investment Registration Certificate.

Dossier for issuance of the Investment Registration Certificate to a foreign-invested company:

• A written request for implementation of an investment project;
• Documents on investor’s legal status;
• For individual investors: copy of identity card, citizen ID card or passport;
• For organization investors: copy of the Establishment Certificate or other equivalent document certifying legal status;
• The investment project proposal includes the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, and investment schedule, demand for labor, proposal for investment incentives, assessment of the project’s socio-economic impact and efficiency;
• Copy of one of the following documents:
• The investor’s financial statements for the last 2 years;
• Commitment to support financial of the parent company;
• Commitment to support financial of financial organizations;
• Guarantee on the financial capacity of the investor;
• Documents explaining the financial capacity of the investor;
• Proposing land use needs; In case the project does not request the State to allocate or lease land or permit the change of the land use purpose, a copy of the location lease agreement or other document confirming that the investor has the right to use the location for implementation the investment project;
• The explanation on the use of technology includes the following contents: technology’s name, technology’s origin, technological process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines for projects using technologies on the List of technologies restricted from transferring;
• BCC contract for investment projects in the form of BCC contract.

The agency that submits the dossier for the Investment Registration Certificate for the company with 100% foreign capital at the investment registration agency

• If the company is located in an industrial park, it is the Management Board of industrial zones.
• If the company is located outside the industrial park, it is the Division of External Economic Relations – Provincial Department of Planning and Investment.

Step 02: Establish an enterprise and issue an enterprise registration certificate

After obtaining an Investment Registration Certificate, investors need to prepare the dossier to set up an enterprise.

Dossier of establishment of a foreign-invested company

• A document request for registration of an enterprise;
• Company’s charter;
• List of members/shareholders;
• Copy of the following papers: Citizen ID cards, identity cards, Passports or other lawful personal identification of members being individuals;
• The establishment decision, Enterprise Registration Certificate or other equivalent documents of the organization and written authorization; Citizen ID card, identity card, passport or other lawful personal identification of the authorized representative of the member being an organization;
• For a member being a foreign organization, a copy of the Enterprise Registration Certificate or equivalent documents must be consular legalized;
• An Investment Registration Certificate for foreign investors in accordance with the Law on Investment.

The agency that submits the dossier for an enterprise registration certificate to companies with 100% foreign capital

Business Registration Agency – Provincial Department of Planning and Investment.

Duration to issue the Enterprise Registration Certificate for companies with 100% foreign capital

05 working days from the date of receiving the complete and valid dossier.

Step 03: Posting the statement of establishment of a foreign-invested company

After an enterprise is granted an Enterprise Registration Certificate, it must make a public announcement on the National Portal of Business Registration according to the order and procedures and pay fees as prescribed.

The content to be announced includes the contents of the Enterprise Registration Certificate and the following information:

• Business lines;
• List of founding shareholders and shareholders being foreign investors for joint-stock companies.

Executing agency: Reporting division of the Business Registration Authority – Provincial Department of Planning and Investment.

Step 04: Engrave the seal of the foreign-invested company

After obtaining the Enterprise Registration Certificate and having posted the enterprise establishment statement. The enterprise engraves the seal at one of the licensed seal engraving units. Enterprises decide by themselves the number and form of seals within the scope permitted by law.

Step 05: Apply for a Business Eligibility License to operate for the production and distribution of cultural products, including video recordings

Customers wishing to establish a foreign-invested company, and provide legal consultation during the implementation of an investment project in Vietnam, please contact Viet An Law Firm for the best support!