The concept of a joint venture company is specified in the Law on Foreign Investment in Vietnam as follows: A joint venture enterprise is an enterprise established in Vietnam by two or more parties on the basis of a joint venture contract or agreement signed between the Government of the Socialist Republic of Vietnam and a foreign Government or an enterprise by an enterprise have foreign invested capital in cooperation with Vietnamese enterprises or by joint venture enterprises cooperating with foreign investors on the basis of joint venture contracts.
Although recently in the Law on Investment 2020 this concept is no longer available, in practice investors still regularly use the term joint venture company to refer to companies with contributed capital of both Vietnamese and foreign investors. Accordingly, the currently existing joint venture company may refer to:
When choosing the time to participate in capital contribution of foreign investors so that the enterprise becomes a joint venture company, there are a number of issues noted about procedures and specific advantages and disadvantages. In this article, Viet An Law Firm will analyze specifically related to the establishment of a joint venture company so that customers have the most specific perspective.
For companies doing business in the field of retailing goods to consumers or setting up retail establishments of goods, it is necessary to apply for additional business licenses or licenses for setting up retail establishments;
A joint venture company is established in the way that a company with Vietnamese capital is established first, then investors buy contributed capital, receive share transfers from Vietnamese investors
Investors make capital contribution / capital transfer, declare income tax from transfer (if any).
Enterprises only need to carry out procedures for changing the Business Registration Certificate (previously called procedures for changing business registration).
Enterprises submit documents at the Business Registration Office
Within 03 working days after receiving a valid dossier, the Business Registration Agency shall issue a new Business Registration Certificate
Unlike foreign investors who contribute capital to establish a company, with Vietnamese investors from the beginning, whether contributing 1% or 99.99% of capital in the company must apply for an Investment Registration Certificate. In contrast, foreign investors who contribute capital or buy shares in Vietnamese companies that already have an Enterprise Registration Certificate (even in case of buying up to 100% of the contributed capital of the company) are not required to carry out procedures for issuance of an Investment Registration Certificate (except for the case of the company doing business in the field of education and training, if a foreign investor buys from 1% of the contributed capital, it is also necessary to carry out procedures for issuance of an Investment Registration Certificate). Therefore, if a foreign investor establishes a joint venture company, he should choose the form of buying contributed capital and shares, which will save the procedure for issuance of an Investment Registration Certificate. In particular, when the company does not have an Investment Registration Certificate in the business process, if there is a change, the company will save procedures for adjusting Investment Registration Certificates, reduce unnecessary costs, procedures and time for enterprises.
If a foreign investor contributes capital to establish a company with a Vietnamese investor at the beginning, foreign investors must submit documents proving financial capacity such as; Passbook, Confirmation of bank account balance equivalent to contributed capital in Vietnam, when foreign investors contribute capital or buy shares in Vietnamese companies, they do not need to present documents proving financial capacity.
The common feature of foreign investors contributing capital and investing in Vietnam is that they must make capital contributions through investment capital accounts in Vietnam.
In case a new joint venture company is established at the beginning, an investment registration certificate will be obtained. In case a foreign investor registers to contribute capital to a Vietnamese enterprise, there is no investment registration certificate.
In case a joint venture company is newly established at the beginning, the term of the joint venture company is shown on the investment registration certificate. In case a foreign investor registers to contribute capital to a Vietnamese enterprise, the time limit specified in the registered company’s charter, usually in this case the company registers indefinitely.
The law does not provide for joint venture companies, however, in case there are foreign investors contributing capital with Vietnamese investors, regardless of the percentage, it is still understood as a joint venture company.
A joint venture company can be established immediately from the investment of a 100% foreign capital company or through the form of capital contribution to an enterprise already established in Vietnam.
Viet An Law Firm advises on establishing joint venture companies in provinces and cities throughout the country. However, in each province when the requirements for lakes when foreign investors buy contributed capital and shares in Vietnam are different. Therefore, foreign investors wishing to establish a company, buy contributed capital, shares in Vietnamese companies, please contact Viet An Law Firm for detailed advice and support.
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