Establishment of a 100% foreign capital company

From January 1, 2021, the Law on Investment 2020 came into effect. Based on the provisions of the Investment Law 2020 and legal documents detailing the process of establishing a 100% foreign capital company as follows. For further information, please refer to article Establish a company in Vietnam of Viet An Law.

Steps to establishing a 100% foreign capital company

Step 1: Register investment policies at competent agencies to establish a 100% foreign capital company

Foreign investors, when entering Vietnam to invest in the project, must carry out procedures for applying for investment registration certificates. However, before applying for investment registration certificates, in some cases, investors must register investment policies under the competence of the Prime Minister or provincial-level People’s Committee agencies.

In case of decision on investment guidelines, provincial-level People's Committee agencies

Provincial-level People’s Committees may decide on investment guidelines for the following projects:

• Projects assigned or leased land by the State, not through auction, bidding, or transfer; projects requesting the re-transfer of land use purposes;
• The project uses technology on the list of technologies restricted from transfer under the law on technology transfer.

Dossiers of application for approval of investment guidelines of provincial-level People’s Committees include:

• A written request for implementation of the investment project;
• For individual investors: Copy of identity card, ID card, or passport
• For investors being organizations: copies of establishment certificates or other equivalent documents confirming legal conditions;
• Proposals for investment projects include: investors implementing projects, investment objectives, investment scale, investment capital and plans for capital mobilization, location, duration, investment schedule, labor needs, proposals on the enjoyment of investment incentives, impact assessment, socio-economic efficiency of the project;
• Copy of one of the following documents: Financial statements of the last 02 years of investors; Commitment to the financial support of the parent company; Commitment to the financial support of financial institutions; Guarantee on the financial capacity of investors; Documents proving the financial capacity of investors;
• Proposing land use needs; in case the project does not request the State to assign or lease land or permit the change of land use purposes, it shall submit a copy of the lease agreement or other documents confirming that the investor has the right to use the location for the implementation of the investment project;
• Explanations on the use of technology include the following contents: name of technology, the origin of technology, diagram of a technological process; main specifications, use status of machinery, equipment, and main technological lines for projects using technologies on the list of technologies restricted from transfer
• BCC contracts for investment projects in the form of BCC contracts.

In case of a decision on investment guidelines of the Prime Minister

In case of projects of foreign investors in the fields of the shipping business, telecommunications services with network infrastructure, restation, publishing, press, the establishment of scientific and technological organizations, science and technology enterprises with 100% foreign capital. Accordingly, in case of the establishment of a 100% foreign capital company related to the above issues, it is necessary to register investment policies with the Prime Minister by the Law on Investment in 2020.

Dossiers of application for approval of investment guidelines of the Prime Minister include:

• Documents similar to the registration of investment guidelines of provincial-level People’s Committee agencies
• Plan for site clearance, migration, resettlement (if any);
• Preliminary assessment of environmental impacts, environmental protection solutions;
• Assess the impact and socio-economic efficiency of the investment project.

In case of a decision on investment guidelines of the National Assembly

• Nuclear power plants;
• Investment projects that require the re-use of special-use forest land, water supply protection forests, and border protection forests of 50 hectares or more; wind protection forests, flying sand barriers, and protection forests with waves and encroachments of 500 hectares or more; forests producing 1,000 hectares or more;
• Investment projects that require the resettlement of 20,000 or more people in mountainous areas, 50,000 or more in other regions;
• The investment project requires the resettlement of 20,000 or more people in mountainous areas, 50,000 or more in other regions.

Dossiers of application for approval of investment guidelines of the National Assembly include:

• Plan for site clearance, migration, resettlement (if any);
• Preliminary assessment of environmental impacts and environmental protection solutions;
• Assess the economic, social impact and effectiveness of the project;
• Propose specific mechanisms and policies (if any).

Step 02: Apply for an investment registration certificate for a 100% foreign capital company

In the following cases, investors must carry out procedures for applying for investment registration certificates

• Investment projects of foreign investors;

Investment projects of the following economic organizations:

• Having foreign investors holding 51% or more of charter capital or having a majority of general partners being foreign individuals, for economic organizations being partnerships;
• Having the above-prescribed economic organizations holding 51% or more of charter capital;
• There are foreign investors and economic organizations specified above holding 51% or more of charter capital.

Application for issuance of investment registration certificate to 100% foreign-capital company

• A written request for implementation of the investment project;
• For individual investors: Copy of identity card, ID card, or passport
• For investors being organizations: copies of establishment certificates or other equivalent documents confirming legal conditions;
• Proposals for investment projects include: investors implementing projects, investment objectives, investment scale, investment capital and plans for capital mobilization, location, duration, investment schedule, labor needs, proposals on the enjoyment of investment incentives, impact assessment, socio-economic efficiency of the project;
• A copy of one of the following documents:
• Financial statements of the last 02 years of investors;
• Commitment to the financial support of the parent company;
• Commitment to the financial support of financial institutions;
• Guarantee on the financial capacity of investors;
• Documents proving the financial capacity of investors;
• Proposing land use needs; in case the project does not request the State to assign or lease land or permit the change of land use purposes, it shall submit a copy of the lease agreement or other documents confirming that the investor has the right to use the location for the implementation of the investment project;
• Explanations on the use of technology include the following contents: name of technology, the origin of technology, diagram of a technological process; main specifications, use status of machinery, equipment, and main technological lines for projects using technologies on the list of technologies restricted from transfer
• BCC contracts for investment projects in the form of BCC contracts.

The agency applying for the investment registration certificate to the company with 100% foreign capital at the investment registration agency

• If the company is headquartered in the industrial zone, it is the Management Board of industrial parks. 
• If the company is headquartered outside the industrial park, it is the Department of External Economics – Provincial Department of Planning and Investment.

Time for issuance of investment registration certificates to 100% foreign-own companies

• For investment projects not subject to investment policy decisions: 15-20 working days from the date of receiving complete dossiers
• For investment projects subject to investment policy decisions: 05-10 working days from the date of receiving the written decision on investment guidelines.

Step 03: Establish an enterprise that grants the enterprise registration certificate to a 100% foreign capital company

After having an investor registration certificate, it is necessary to prepare a dossier for the establishment of the enterprise.

Application for establishment of a 100% foreign capital limited liability company

• An application form for enterprise registration;
• Company’s Charter;
• List of members;
• Copies of the following documents: Citizen IDENTIFICATION card, ID card, passport, or other legal personal certification of the members being individuals;
• Establishment decisions, enterprise registration certificates or other equivalent documents of organizations and authorization documents; Citizen IDENTIFICATION card, ID card, passport or other legal personal certification of the authorized representative of the member being an organization;
• For members being foreign organizations, copies of enterprise registration certificates or equivalent documents must be consular legalized;
• Investment registration certificates for foreign investors by the Investment Law.

Application for establishment of a 100% foreign capital joint-stock company

• An application form for enterprise registration;

Company charter;

• List of founding shareholders and shareholders being foreign investors (list of authorized representatives if any);
• Copies of the following documents: Citizen IDENTIFICATION card, ID card, passport, or other legal personal certification of the members being individuals;
• Establishment decisions, enterprise registration certificates or other equivalent documents of organizations and authorization documents; 

Citizen IDENTIFICATION card, ID card, passport, or other legal personal certification of the authorized representative of the member being an organization;

• For members being foreign organizations, copies of enterprise registration certificates or equivalent documents must be consular legalized;
• Investment registration certificates for foreign investors by the Investment Law.

The agency applying for the enterprise registration certificate to the company with 100% foreign capital

Business Registration Office – Provincial Department of Planning and Investment.

Time for issuance of enterprise registration certificates to 100% foreign capital companies

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

Step 04: Post a report on the establishment of a 100% foreign capital company

Enterprises, after being granted the Enterprise Registration Certificate, must publicly announce on the National Business Registration Portal according to the order and procedures and pay fees as prescribed.

The contents of the announcement include the contents of the Enterprise Registration Certificate and the following information:

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

Implementing agency: The reporting department of the Business Registration Office – Provincial Department of Planning and Investment.

Step 05: Engrave the seal of the company 100% foreign capital

• After the enterprise registration certificate has been issued and the enterprise establishment declaration has been posted. The enterprise conducts the engraving at one of the licensed engraving units. Enterprises decide for themselves the number and form of seals within the permitted scope of the law.
• According to the provisions of the Law on Enterprises 2020 effective from 01/01/2021, enterprises are their seals and take responsibility for the use of legal seals of the company. Therefore, 100% of foreign capital companies, as well as Vietnamese capital companies, are not required to publish the notice of seal samples as before. This is also a very new point of the Law on Enterprises 2020 but also a concern point of many enterprises in the matter of self-management and use of seals of enterprises without supervision from state management agencies related to seals.

Questions related to the establishment of a 100% foreign capital company

In what forms do foreign investors invest in Vietnam?

Under the law on investment, foreign investors invest in Vietnam in the following forms:

• Investment in the establishment of economic organizations;
• Investment in capital contribution, purchase of shares, purchase of contributed capital;
• Implementation of investment projects;
• Investment in the form of BCC contracts;
• Forms of investment, new types of economic organizations as prescribed by the Government;

Can foreign investors contribute 100% of capital?

Depending on the industry in which the investor does business in Vietnam, the law may specify the capital ownership ratio of the investor. There are industries where foreign investors are 100% capital such as construction, trade, management consultancy,… but there are some areas where foreign investors can contribute only a certain percentage of capital or joint venture: advertising, tourism, logistic, transportation,…Customers wishing to use the service of establishing a 100% foreign capital company in Vietnam, please contact Viet An Law  Firm for the fastest support!