Establish foreign-owned towage service companies in Vietnam

In accordance with Article 256 of the Maritime Code 2015 of Vietnam, ship towage includes “tugging, towing, hauling, pushing or sailing alongside the ship and other floating equipment on the sea and within a port water area by a towboat”. Ship towage plays an important role in maritime business. At this time, maritime transportation and services related to maritime transportation are developing strongly and gain much attention from foreign investors. However, maritime business is related to national defense, thus the laws of Vietnam applies limitations on foreign investment in this sector. Ship towage is also a conditional business sector listed in the Law No. 03/2016/QH14 then foreign investors need to satisfy those conditions to run their business. In order to give our Clients a hand during preparation, Viet An Law Firm collects and provides some basic information as follows:

Legal documents:

• The Law on Investment 2014;
• The Law on Enterprises 2014;
• The Maritime Code 2015 of Vietnam (takes effects on July 1^st 2017);
• Decree No. 160/2016/NĐ-CP regulating on conditions on sea transportation business, shipping agency services and towage services (takes effects on July 1^st 2017).

In order to invest in ship towage business in Vietnam, foreign investors have to options:

• Establish foreign-owned towage services company in Vietnam;
• Contribute capital, purchase shares, purchase capital contributions in Vietnamese towage services company.

Option 1: Establish a foreign-owned towage services company in Vietnam

In accordance with clause 1 Article 13 Decree No.160/2016/NĐ-CP, foreign capital proportion in the company shall not exceed 49%. Therefore, foreign investors cannot establish a 100% foreign-owned towage services company. They have to corporate with Vietnamese partners to establish the company and foreign capital in it shall not exceed 49%.

Step 1: Apply for the Investment Registration Certificate

• A written request for permission for project execution;
• Individual investors: copies of ID or passport of each individual;
• Organization investors: copies of Establishment Certificate or equivalent paper confirming the legal status;
• Project proposal specifying: the investors, project’s objectives and scale; capital and capital rising method; location, duration and schedule of the project; labor demand;
• Copies of financial statements in the current 02 years or financial support commitment of the parent company or financial institutions; guarantee for investors’ financial capacity, description of investors’ financial capacity; request for investment incentives; assessment of socio-economic effects of the project;
• Land use demand. If the project does not use land allocated or leased by the State or does not require the State to change land use purpose, the copies of the lease agreement or equivalent papers proving that investors have rights to use the location shall be submitted;
• If the project use any technology in the List of technologies restricted from transfer, investors have to submit the explanation on technology transfer.

Submit the application at: The Department of Planning and Investment.

The process: Within 15 days from the receipt date of the valid application, the Department of Planning and Investment will grant the Investment Registration Certificate to foreign investors. If the Department of Planning and Investment refuse to grant, they will respond in notices and explain the reasons.

Step 2: Establish a foreign-owned towage services company in Vietnam

Apply for the Business Registration Certificate:

An application includes:

• A written request for business registration;
• The Articles of Associates;
• The list of members of the multi-member limited liability company or the list of partners of partnership;
• Notarized copies of ID or valid passport of each individual member; notarized copies of the Business Registration Certificate/Establishment Certificate of each organization member; notarized copies of ID or valid passport of each legal representative of each organization;
• Power of attorney (Clients grant to Viet An);
• Certificate of Investment Registration of foreign investors.

Submission place: The Department of Planning and Investment.

Duration: 03 – 06 working days.

Announce the business registration contents:

• Business registration information must be announced publicly on the National Portal of Business Registration within 30 days from the date of issuance of the Business Registration Certificate. The contents of the announcement are all the information stated in the Business Registration Certificate.
• Notice: In accordance with Clause 1 Article 26 of the Decree 50/2016/NĐ-CP, if the company does not announce or lately announce the business registration information on National Portal of Business Registration, they are fined an amount of money from 1.000.000 VND to 2.000.000 VND.

Engrave the seal and publish the seal sample:

• The company can authorized Viet An Law Firm or can engrave the seal by itself then announce the seal sample to the Department of Planning and Investment. The company is allowed to decide about the appearance, quantity and the contents of the deal but it must contain the name and the code of the company;
• After receiving the announcement on the seal sample, the Business Registry Office shall grant the receipt to the company, post the announcement on the National Portal of Business Registration and issue the Announcement on Publication of the seal sample to the company.

Option 2: Contribute capital, purchase shares, purchase capital contributions to Vietnamese towage services company in Vietnam

If foreign investors choose this option, they do not need to apply for Investment Registration Certificate but just register to contribute capital, purchase shares, purchase capital contributions to a Vietnamese towage services company at the Department of Planning and Investment. After the Department approves, the company will transfer the capital and change its shareholders, members.

Step 1: Foreign investors register to contribute capital, purchase shares/capital contributions to the company

Application includes:

• Application for capital contribution, shares/capital contributions purchase indicating: the information of the target company, the foreign capital contribution after completing the procedures;
• Copies of the ID or passport of each individual investor; copies of Establishment Certificate or equivalent papers confirming the legal status of each investor who is an organization.

Submission place: The Department of Planning and Investment.

The process: If the capital contribution, shares purchase, capital contribution purchase of foreign investors comply with the regulations on investment forms and foreign capital contribution, within 15 days from the date of receipt of the valid application, the Department of Planning and Investment will grant a written announcement. If the application does not satisfies conditions, the Department of Planning and Investment will grant a written announcement providing reasons and explanation.

Step 2: Transfer the shares, capital contributions and change the shareholders or members of the company

However, another important thing is that the company must satisfy the conditions during operation, no matter which option they choose.

As regulations in Chapter IV: Conditions for towage services companies in the Decree No. 160/2016/NĐ-CP, those conditions are:

The ships: Have at least 01 tugboat; tugboats must be Vietnamese watercraft and satisfy technical standards;

Organization’s structure and labor:

• The person in charge of business and operation of towage services must obtain at least a college degree and above specializing in maritime, foreign trade, commerce or economic;
• The person in charge of legal affairs must obtain at least a college degree specializing in law;
• Seafarers working on the boat must satisfy requirements on specialties, health and be granted professional certificates as regulated by the laws;
• Vietnamese seafarers working on the boat must satisfy requirement on specialties and be granted professional certificates by the Ministry of Transportation; satisfy health requirements as regulated by the Ministry of Health.

Foreign investment services in Viet An Law Firm:

• Consult about regulations and procedures related to foreign investment in Vietnam;
• Consult about business sectors, business conditions of each sector under the laws of Vietnam;
• Consult and draft the applications for Investment Registration Certificate, Business Registration Certificate and sublicenses;
• Represent for Clients to perform procedures at state-authorized agencies when being authorized;
• Consult about after-establishing issues: contracts, labor, tax, social insurance…

Clients need legal advice about regulations, procedures to establish foreign-owned towage services companies in Vietnam as well as other issues related to foreign investment and enterprise, please feel free to contact Viet An Law Firm for more information!