Establish Chinese owned companies in Vietnam

The economic cooperation between Vietnam and China is deepening, especially through Chinese enterprises establishing companies in Vietnam. With competitive advantages such as a young and dynamic workforce, a large domestic market and a favorable investment environment, Vietnam has become an attractive destination for Chinese investors. This not only brings economic benefits to both countries but also contributes to promoting sustainable development. Viet An Law would like to guide customers through the preliminary procedures for establishing a Chinese-owned company in Vietnam through the article below.

Legal Basis

• Law on Investment 2020 and related guiding documents;
• Law on Enterprises 2020 and related guiding documents;
• WTO Schedule of Commitments on Services.

Establish a new company with 100% Chinese capital or less

Basic steps to establish a new company with 100% Chinese capital or less

Step 1: Apply for an investment certificate;

Step 2: Register for business establishment;

Step 3: Proceed to engrave the legal entity’s seal when it has a tax identification number;

Step 4: Open an investment capital account and contribute capital;

Step 5: After completing the capital contribution procedure, business activities can be carried out. Note that it may be necessary to apply for sub-licenses for conditional business investment lines

Application for investment certificate of a Chinese company

• Written request for implementation of the investment project;
• An investment project proposal includes the following contents: the investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment schedule, labor demand, proposal for investment incentives, impact assessment, etc socio-economic efficiency of the project;
• Dossier proving the company’s head office: Lease contract, Notarized copy of real estate documents of the lessor: Land use right certificate, Construction permit; if the lessor is a company: It is necessary to provide a copy of the enterprise registration certificate with the function of real estate business;
• Confirmation of account balance corresponding to the capital intended to establish an FDI company is consular legalized and notarized

Depending on whether the investor is an individual or a legal entity, it will be necessary to provide the following additional documents:

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 receipt of a complete and valid dossier, the Department of Planning and Investment will issue an 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.

Dossier of application for the certificate of registration of Chinese-owned enterprises

• Application for enterprise registration;
• Charter of the enterprise;
• List of members of a limited liability company with two or more members or a list of general partners;
• A notarized copy of the identity card or valid passport of the individual member; a notarized copy of the enterprise registration certificate of the member being an organization; a notarized copy of the valid identity card or passport of the legal representative of that organization;
• The investment registration certificate of the Chinese investor has been completed above.

Place of application: Department of Planning and Investment where the enterprise is headquartered.

Duration: 03 – 06 working days.

Engraving the seal of the legal entity when it has a tax identification number

After the business has a tax identification number, engraving the legal entity seal is an important step to complete the establishment procedure. The legal entity seal is an official identification sign of the business, used in transactions and legal documents. What should be included on the seal:

• Business name: Must match the name registered in the business registration certificate.
• Tax identification number: It is the unique number of the enterprise, issued by the tax authority.
• Head office address: Must match the registered address. Usually the county and city where the headquarters address is located.
• Type of enterprise: Example: Limited liability company, joint stock company,…

Opening an investment capital account and contributing capital

Procedures for opening an investment capital account

Preparation of dossiers for opening investment capital accounts includes:

• Enterprise establishment license or investment registration certificate.
• Investor’s identity document (passport, visa).
• Documents proving the legal origin of the investment capital.

Place to apply: Submit the application at the selected bank.

The bank will conduct the appraisal of the dossier and open an investment capital account for the investor.

After having an investment capital account, the company with Chinese capital contributes capital. Note that enterprises need to fully contribute the registered capital within 90 days from the date of issuance of the business registration certificate.

• Money transfer: Investors transfer money from an overseas account to an investment capital account opened in Vietnam.
• Confirmation: The bank will confirm the transfer of capital contribution.

Establishment of Chinese-owned companies in Vietnam in the form of purchase of contributed capital and shares in Vietnamese enterprises

For more convenience and speed, Chinese investors can choose to invest in the form of capital contribution and purchase of shares in Vietnamese companies. Accordingly, the procedure is carried out as follows:

Step 1: Register to buy contributed capital, buy shares of a Vietnamese company

• In fact, because the procedure for establishing a Vietnamese company is much simpler, many investors in China have chosen to establish a Vietnamese company first and then carry out the procedures for buying the contributed capital, buying shares of the Vietnamese company or also buying back the contributed capital. buy shares of existing Vietnamese companies.
• The investor submits the dossier at the Department of External Economics – Department of Planning and Investment where the economic organization is headquartered to carry out procedures for registering capital contribution, purchase of shares and capital contributions to the Company with 100% Vietnamese capital. The dossier includes the following documents:
  • Written registration of capital contribution, purchase of shares, purchase of contributed capital (according to Form A.I.7 issued together with Circular 25/2023/TT-BKHDT).
  • Written agreement in principle on capital contribution, share purchase or purchase of contributed capital between foreign investors and economic organizations with foreign investors contributing capital, purchasing shares or purchasing contributed capital.
  • Copies of legal papers of individuals and organizations contributing capital, purchasing shares, purchasing contributed capital; and of economic organizations with foreign investors contributing capital, buying shares, buying contributed capital.
  • In case of necessity, the External Economic Relations Division may request the supply of a copy of the land use right certificate of the economic organization to which foreign investors contribute capital, purchase shares or purchase contributed capital.
• In case the capital contribution, purchase of shares or contributed capital of the foreign investor satisfies the conditions, the Department of Planning and Investment shall notify in writing within 15 days from the date of receipt of a complete dossier for the investor to carry out the procedures for changing shareholders. members in accordance with law. In case of failure to meet the conditions, the Department of Planning and Investment shall notify the investor in writing and clearly state the reason.

Step 2: Change the Certificate of Enterprsie Registration with additional information of foreign investors

• After obtaining the approval of the Investment Department – Department of Planning and Investment on the approval for foreign investors to contribute capital, purchase shares or contributed capital, the investor shall carry out the following procedures:
• Carry out procedures for changing shareholders and members on the Business Registration Certificate (Enterprise Registration Certificate) in accordance with the law at the Business Registration Office – Department of Planning and Investment.

Notes on setting up a Chinese company in Vietnam

Currently, the information about the E passport is not used in Vietnam for many reasons. The Chinese E passport is not fully used in Vietnam mainly due to problems related to the bull’s tongue map printed in the passport. This map shows the ox-tongue line, a territorial claim that Vietnam does not recognize. Specifically, the limitations when using the E passport in Vietnam include:

• No visa stamps: Instead of sticking a visa stamp directly on the passport, the E passport holder will be issued a separate visa.
• No notarized copy: Passport E will not be notarized for use in other administrative procedures.
• There may be difficulties in some procedures: In some cases, the use of an E passport may cause some difficulties or require additional procedures compared to other types of passports.

Causes of these limitations:

• Sovereignty issue: The bull’s-tongue map in passport E violates Vietnam’s territorial sovereignty.
• Diplomatic relations: This issue is related to diplomatic relations between Vietnam and China.
• Legal regulations: Vietnam has specific legal regulations on the use of passports and other identification documents.

If you are looking for advice about regulations and procedures to establish Chinese companies in Vietnam as well as others issues related to enterprises and foreign investment in Vietnam, please feel free to contact Viet An Law Firm for more information!