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Establishment of a 100% foreign owned LLC

Investors who intend to invest in Vietnam pay much attention on 100% foreign owned limited liability company (often called as LLC). This is a common legal enterprise form providing its owners with limited liability. Since the day the Law on Investment 2014 and the Law on Enterprise 2014 of Vietnam took effects, it is recorded that many 100% foreign owned LLC have been established in Vietnam as these regulations paved a simpler way for foreign investors.

With many experiences in the field of foreign investment, Viet An Law Firm is proudly to provide legal services relating to establishment of 100% foreign owned LLC. To give our clients a hand and share some knowledge, we collect and provide some regulations. Please take a closer look at the Q&A below:

Q: What is an LLC, according to the law of Vietnam?

A: A limited liability company is an enterprise form providing the owner(s) limited liability. To be clearer, the owner(s) are liable for debts and other liabilities of the enterprise up to the value of capital they contribute to the enterprise.

There are two forms of LLC:

  • Single-member LLC: owned by an organization or an individual;
  • Multi-member LLC: owned by from 50 members and below; members are organizations and/or individuals.

Q: How can foreign investors establish a 100% foreign LLC?

A: According to the law of Vietnam, foreign investors can establish a 100% foreign owned LLC, but not in all business sectors. They can own up to 100% capital of an enterprise, except for these cases:

  • If in Vietnam’s WTO Commitment, it states a maximum proportion of capital that foreign investors can own;
  • Specific cases regulated in the Law on Securities and relevant regulations.

There are maximum 03 certificates need to be issued from the beginning to the moment when a 100% LLC can be run:

  • The Certificate of Investment Registration: this is a paper states that foreign investors have legal rights to invest in Vietnam;
  • The Certificate of Business Registration: this is a paper states that a 100% foreign owned LLC is lawfully established;
  • Sub-License: this is not a compulsory one, but if the enterprise practices in some special business sectors, they have to claim for it. For example, if the enterprise want to import, export and distribute goods in Vietnam, the Business License is a must. This paper states that the enterprise have legal rights to perform procedures at customs to import, export goods and distribute them in Vietnam market. It depends on each business field, clients may contact Viet An Law Firm to have detailed information.

Q: What are the steps for each certificate?

A: We focus on two compulsory certificates:

The Certificate of Investment Registration:

Under the Law on Investment 2014, some investment projects are subjected to a decision on investment policy granted by the People’s Committee of Province while some do not. No matter what, the result is the same (The Certificate of Investment Registration) but there are some differences in the process and the duration.

A decision on investment policy is requiredA decision on investment policy is not required
What to doRegister investment policy with the People’s Committee of ProvinceClaim for the Certificate of Investment Registration
Dossier includesA written request for permission for investment project execution;If investor is an individual: a copy of ID card or passport;

If investor is an organization: a copy of the Certificate of establishment or equivalent paper which can certify the legal status;

Investment proposal, which specifies: investor(s), investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, request for investment incentives, assessment of socio-economic effects of the project;

Copies of any of the following documents: financial statement of the last two years of the investor; financial support commitment of the parent company; financial support commitment of a financial institution; guarantee for investor’s financial capacity; description of investor’s financial capacity.

Demand for land use: if the project does not use land allocated or leased out or permitted to change land purposes by the State, a copy of the lease agreement or other documents certifying the investor has the right to use that location to execute the project;

For the project use technologies on the List of technologies restricted from transfer: Explanation of application of technologies, which specifies: names of technologies, origins, technology-process diagram, primary specifications, conditions of machinery, equipment and primary technology line;

For the project executed under the Business Cooperation Contract: the Business Cooperation Contract.

 

Submit the dossier atThe investment registry office
Duration30 – 45 working days15 – 20 working days
The processThe investment registry office receives the dossierSends it to relating state-authorized agencies to examine the project

The investment registry collects suggestions and advice of state-authorized agencies

Sends the dossier and these suggestions and advice to the People’s Committee of Province

The People’s Committee of Province approve or refuse

If approved, the investment registry office shall issue the certificate

The investment registry office receives the dossierExamine and approve or refuse to issue the certificate

If approved, the investment registry office shall issue the certificate

 

The Certificate of Business Registration:

The next thing is establishing the company.

A dossier for establishing the company includes:

  • An application form for business registration;
  • The charter of company;
  • The list of members;
  • Copies of: ID card, passport or equivalent papers of members being individuals; decision on establishment, the Certificate of Business Registration or equivalent documents and the letter of authorization; the ID card or other papers of the authorized representative of members being organizations;
  • For members being foreign organizations: copies of the Certificate of Business Registration or equivalent documents shall have to be consular legalized;
  • The Certificate of Investment Registration.

Submit the dossier at: the business registry office.

Duration: 05 working days from the date of receipt.

The sub-license:

It depends on each business sector. If there is an obligation to get it before actually running the company, investors shall have to submit a dossier to specific state-agencies. When clients provide Viet An Law Firm details information, we could check it out and give advice.

Q: What are the after-establishment-procedures?

A: After being established, to avoid troubles with state-authorized agencies, the company should:

  • Announcing the establishment of the enterprise: Making announcement on the National Business Registration Portal and pay the fee as prescribed. This step is for the state’s management purpose as well as update the business database.
  • Engrave the seal-sample: The company is allowed to decide the number of seals and the contents. However, the seal should indicate the name and the business registration number.
  • Public the seal-sample: After engraving the seal, the company publish it on the National Business Registration Portal.
  • Tax declare: The company shall have to perform procedures for tax declaration at the tax agency. This step is for pointing out what kind of taxes the company has to pay and tax exemption (if any).
  • Pay the license tax.
  • Print invoices.

Q: Are there any thing foreign investors should know?

A: Many foreign investors are confused about some regulations in Vietnam. Let Viet An Law Firm help you:

  • Investment capital account: This is an account can be created in a bank in Vietnam. Foreign investors transfer their money to this account within 90 days from the date of issuance of the Certificate of Business Registration. When the capital is fully contributed, it could be transfer to the company’s account. Vice versa, profits of the company can be withdrawal but must be through this account, too.
Money of investor(s)  Investment capital account  Company’s bank account Profits  Investment capital account  Investor(s)’s bank account

  • Consular legalization:
     Any document issued by foreign organizations must be consular legalized to be valid in the territory of Vietnam. Foreign investors can do this at their country’s embassy or consulate in Vietnam or in their home country.

Legal services at Viet An Law Firm:

  • Consult about 100% foreign owned LLC, as well as other enterprise forms;
  • Consult about the law on foreign investment;
  • Consult about procedures after establishing company;
  • Consult about tax law, accounting, foreign labor, local labor, social insurance, intellectual property;
  • Consult and draft contracts as clients require;
  • Consult about business sectors, head-office locations.

Do not let legal issues trouble you! For more information, please feel free to contact Viet An Law Firm, we are willing to listen and communicate!

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