Establishing a company in Vietnam with foreign capital contributions

As a developed economy, Vietnam is currently attracting many foreign investors. Therefore, establishing a company in Vietnam with foreign capital contributions is a market trend. To better understand this issue, Viet An Law will provide you with some basic information through the article below.

Legal basis

• WTO Commitment Schedule;
• Law on Investment 2020;
• Law on Enterprise 2020;
• Decree 31/2021/ND-CP detailing and guiding the implementation of several articles of the Investment Law;
• Decree 01/2021/ND-CP on business registration;
• Official dispatch 8909/BKHDT-PC on implementing the Investment Law.

Forms of establishing a company in Vietnam with foreign capital contributions

There will be two ways to establish a Vietnamese company with foreigners contributing capital, including:

• Foreigners contribute capital to establish Vietnamese companies;
• Foreigners, contributing capital, purchasing shares of Vietnamese companies.

Therefore, if you want to learn about the process and procedures of establishing a Vietnamese company with foreign contributions, you need to determine whether your investment purpose is to establish a new business or contribute capital to the business to be able to prepare documents and carry out appropriate procedures. If you have any questions, please contact Viet An Law to receive the most complete advice from us.

Foreigners contribute capital to establish a Vietnamese company

Conditions for establishing a Vietnamese company with foreign capital

Before establishing a foreign-invested company in Vietnam, foreign investors need to meet the following conditions:

• Foreign investors are people with nationality belonging to countries in the WTO. Be a legal citizen, have all documents proving valid legal and personal status, certified by the consulate;
• Foreign investors are only allowed to establish companies doing business in areas permitted by Vietnamese law. Market access conditions for foreign investors specified in the List of industries and occupations restricted to market access for foreign investors include the charter capital ownership ratio of foreign investors in economic organization; investment form, scope of investment activities; and capacity of investors;…
• Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the Standing Committee of the National Assembly, decrees of the Government, and international treaties to which Vietnam is a member;
• Conditions for ensuring security and national defense;
• Land law regulations on conditions for receiving land use rights, land use conditions in islands, communes, wards, border towns, coastal communes, wards, and towns.

Process for foreigners to establish a company in Vietnam

Foreigners establishing a company in Vietnam need to take the following steps:

Step 1: Issue investment registration certificate

Before carrying out the procedures for granting the Investment Registration Certificate, the investor declares information about the investment project online on the National Information System on Foreign Investment.

Investor documents submitted to the investment registration agency include:

• Document requesting implementation of the investment project;
• Copy of foreign investor’s passport
• Proposing investment projects;
• Copy of bank confirmation with balance corresponding to the investment amount;
• In case the investment project does not request the State to allocate land, lease land, or allow change of land use purpose, submit copies of documents on land use rights: Real estate lease contract, real estate certification; Construction decisions, or other documents proving the project location;
• Content explaining the technology used in investment projects for projects subject to appraisal and consultation on technology according to the provisions of the law on technology transfer;
• Other documents related to the investment project, conditions, and capacity requirements of the investor according to the provisions of law (if any).

The time limit for processing documents

Within 15 days from the date of receiving complete documents, the investment registration agency shall issue an Investment Registration Certificate; In case of refusal, the investor must be notified in writing and clearly state the reason.

Authority to issue Investment Registration Certificates

• The Management Board of industrial parks, export processing zones, high-tech zones, and economic zones issues, adjusts and revokes Investment Registration Certificates for investment projects in industrial parks, export processing zones, and industrial parks. high-tech, economic zone.
• The Department of Planning and Investment issues, adjusts, and revokes Investment Registration Certificates for investment projects outside industrial parks, export processing zones, high-tech zones, economic zones, and the following projects:
• Investment projects implemented in 02 or more provincial administrative units;
• Investment projects implemented inside and outside industrial parks, export processing zones, high-tech parks, and economic zones;
• Investment projects in industrial parks, export processing zones, high-tech zones, economic zones where the Management Board of industrial Parks, export processing zones, high-tech zones, economic zones has not been established or is not under the managed scope of Management Board of industrial parks, export processing zones, high-tech zones, and economic zones.

Step 2: Issue an Enterprise registration certificate

Procedures for issuance of Enterprise Registration Certificate:

• Investors submit applications directly to the Department of Investment Planning or online via the National Business Registration Portal;
• The Department of Planning and Investment reviews the validity and issues the Enterprise Registration Certificate;
• The company carries out the engraving of the legal entity seal and procedures after establishing a business.

Business establishment documents issued with Enterprise Registration Certificate

After obtaining the investment registration certificate, investors need to prepare documents to establish a business. Depending on the type of company the investor wants to establish, the investor prepares the corresponding documents. However, the following basic documents are needed:

• Application for business registration;
• Company charter;
• List of founding shareholders and shareholders who are foreign investors (if a joint stock company); List of members (if it is a multiple-member LLC);
• 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 authorization document for the capital manager in Vietnam (if an organization);
• Certified copy of identity card or citizen identification card or passport of the legal representative of the joint venture company;
• Certified copy of the issued Investment Registration Certificate;
• Power of attorney for Viet An Law Firm;

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

Processing time for issuance of enterprise registration certificate:

03 working days from the date the investor submits complete and valid documents according to regulations.

Foreigners contribute capital and purchase shares in Vietnamese companies

Forms of capital contribution, share purchase, purchase of contributed capital by foreign investors

• Purchase shares issued for the first time or additional shares issued by a joint stock company;
• Contribute capital to limited liability companies and partnerships;
• Purchase shares of a joint stock company from the company or shareholders;
• Purchase the capital contributions of members of a limited liability company to become a member;
• Purchase the capital contribution of a capital-contributing member in a partnership company to become a capital-contributing member;
• Contributing capital or purchasing capital contributions from members of other economic organizations that do not fall into the cases mentioned above.

Process for foreigners to contribute capital to Vietnamese enterprises

Step 1: Prepare documents

When contributing capital or purchasing share capital in Vietnam, the registration dossier for capital contribution, share purchase, or capital contribution includes:

• The registration document for capital contribution, share purchase, or capital contribution includes the following contents: information about the economic organization to which the foreign investor intends to contribute capital, purchase shares, or contribute capital; Charter capital ownership ratio of foreign investors after capital contribution, share purchase, capital contribution to economic organizations; transaction value of capital contribution contract, share purchase, capital contribution; information about investment projects of economic organizations (if any);
• Copy of identity card, ID card, or passport for individual investors; Copy of Certificate of Establishment or other equivalent document certifying legal status for institutional investors.
• Document of agreement on capital contribution between the foreign investor and the economic organization receiving the capital contribution.
• Foreign investors contribute capital, purchase shares, and purchase capital contributions from economic organizations that have land use rights certificates on islands and border communes, wards, and towns; coastal communes; and other areas that affect national defense and security.

Step 2: Register to contribute capital, purchase shares, or contribute capital.

Investors contributing capital, purchasing shares, or capital contributions submit registration documents for capital contributions, stock purchases, or capital contributions according to the provisions of Clause 2, Article 26 of the Investment Law to the Department of Planning and Investment where the business is held. Some foreign investors contribute capital, purchase shares, or have capital contributions to set up their headquarters;

The Department of Planning and Investment considers meeting investment conditions for foreign investors and notifies investors so that they can carry out procedures for changing shareholders and members according to the provisions of the law. In case the conditions are not met, the Department of Planning and Investment shall notify the investor in writing and clearly state the reason.

Step 3: Enterprises receiving capital contributions must carry out procedures for changing status or shareholder status at the business registration agency

In addition, economic organizations with foreign investors contributing capital, purchasing shares, or capital contributions do not have to carry out procedures for granting or adjusting investment registration certificates or deciding on investment policies for foreign investors with investment projects implemented before the time foreign investors contribute capital, purchase shares or stakes.

The processing time limit is 15 days from the date of receipt of valid documents according to the provisions of law, the Department of Planning and Investment where the economic organization is headquartered will carry out procedures for registering capital contributions and purchasing shares or stakes.

Above is some advice from Viet An Law on establishing a company in Vietnam with foreign capital contributions, if you need advice related to the above content. Please contact us for the best support!