Establish 100% FDI enterprise in Vietnam

In this article, we explore the legal intricacies of the procedure to establish 100% FDI enterprise in Vietnam. By examining the legal framework, procedures, compliance obligations, and regulatory safeguards, we aim to equip potential investors with the knowledge needed to navigate the establishment process and ensure adherence to Vietnamese law. Our goal is to provide valuable insights that foster sustainable economic growth and prosperity in Vietnam.

Since a 100% foreign direct investment enterprise is a “foreign-invested economic organization” as prescribed in Article 3, Clause 22 of the Law on Investment 2020, the establishment of these enterprises will be applied according to separate regulations that differ from enterprises established on capital from Vietnamese investors.

Apply to the establishment of foreign-invested enterprises subject to the case of applying for investment policy approval

Step 01: Prepare capital and dossier to establish 100% FDI enterprise in Vietnam

The minimum registered capital requirement for foreign investors will vary depending on the specific case and province. Please contact Luat Viet An to receive guidance on preparing the necessary capital and documentation to establish a business in Vietnam.

Step 02: Registration of investment policy

Foreign investors entering Vietnam to implement a project must follow the procedures to apply for an Investment Registration Certificate. However, before carrying out the application for an Investment Registration Certificate, in some cases, the investor must register an investment policy under the jurisdiction of the Prime Minister or the provincial People’s Committee.

Cases of investment policy decision belong to the competence of Provincial People’s Committees

Provincial People’s Committees shall decide on investment policy for the following projects:

• Projects that are allocated or leased land by the Government through auction, bidding or transfer; projects that require change of land use purpose;
• Projects using technologies on the List of technologies restricted from transfer under the technology transfer law.

Dossier include:

• The proposal to implement the investment project;
• For individual investors: Copy of identity card, citizen identity card or passport
• For institutional investors: copy of Enterprise Registration Certificate or other equivalent documents certifying legal status;
• The proposal of investment project including the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital raising plan, location, duration, schedule of investment, demand for labor, proposal of investment incentives, impact assessment, socio-economic efficiency of the project;
• A copy of one of the following documents: financial statements of the last 2 years of the investor; financial commitment of the parent company; financial institutions’ commitment to financial support; guarantee of financial capacity of the investor; documents explaining the financial capacity of the investor;
• Proposal of land use demand; if the project does not request the Government to allocate, lease land or permit the change of land use purpose, a copy of the location-leasing agreement or other documents certifying that the investor has the right to use that location for carrying out investment projects shall be submitted;
• An explanation of the use of technology including the following contents: technology name, technology origin, technology process diagram; main specifications, using status of main machines, equipment, and technological lines for projects using technologies on the list of technologies restricted from transferring
• BCC contracts for investment projects in the form of BCC contracts.
• Power of Attorney for Viet An Law to conduct procedures.

Cases of investment policy decision belong to the competence of the Prime Minister:

• Investment projects regardless of capital sources in any one of the following cases:
  • Relocation of 10,000 people or more in mountainous areas or 20,000 people or more in other areas;
  • Construction of airports and aerodromes; runways of airports and aerodromes; international passenger terminals; cargo terminals of airports and aerodromes with a capacity of at least 1 million tonnes per year;
  • Passenger air transport business; Petroleum processing; Casino services, excluding business in prize-winning electronic games for foreigners;
  • Construction of ports and wharves special or in which investment is at least VND 2,300 billion within the category of Class I seaports;
  • Construction of residential housing (for sale, lease or lease purchase) that use at least 300 hectares of land or with a population of at least 50,000 people;
  • Industrial zones and export processing zones.
• Foreign investors’ investment projects in the following fields: provision of telecommunications services with network infrastructure; afforestation; publication, press;
• Investment projects which at the same time fall within the power of at least two (02) provincial People’s Committees to grant approval for investment guidelines;
• Other investment projects subject to approval for their investment guidelines or subject to investment decision by the Prime Minister as prescribed by law.

Cases of investment policy decision belong to the competence of the National Assembly

• Investment projects that exert great effects or potentially serious effects on the environment, including:
  • Nuclear power plants;
  • Projects that require repurposing of land of special-use forests, headwater protection forests or border protection forest of at least 50 hectares; of sand-fixing and windbreak coastal forests or protection forests for wave prevention of at least 500 hectares; of production forests of at least 1,000 hectares;
• Investment projects that require repurposing of land meant for wet rice cultivation during with 02 or more crops of at least 500 hectares;
• Investment projects that require relocation of 20,000 people or more in mountainous areas or 50,000 people or more in other areas;
• Investment projects that require application of a special mechanism or policy that needs to be decided by the National Assembly.

The same dossier as the investment policy registration of the provincial People’s Committee Agency is required, including:

• Plan of ground clearance, emigration, resettlement (if any);
• Preliminary assessment of environmental impacts and environmental protection solutions;
• Assessing the socio-economic impacts and effectiveness of the project;
• Proposing specific mechanisms and policies (if any).

Step 03: Apply for an Investment Registration Certificate

According to Article 37 of Investment Law 2020, foreign investors must carry out the procedures to apply for an investment registration certificate:

• Investment projects of foreign investors;
• Investment projects of the business organizations if:
  • Over 50% of its charter capital is held by a foreign investor(s) or, in case of a partnership, the majority of its general partners are foreigners;
  • Over 50% of its charter capital is held by a business organization(s) mentioned in Point a of this Clause;
  • Over 50% of its charter capital is held by a foreign investor(s) and a business organization(s) mentioned in Point a of this Clause.

Executive time

For investment projects subject to investment policy decision: winthin 50 working days from the date of receiving the investment policy decision.

Step 04: Obtaining Enterprise Registration Certificate

After obtaining the Investment Registration Certificate, investors need to prepare documents to set up the enterprise.

Dossier component

For limited liability company

• Application for business registration.
• Company charter.
• List of Members.
• Copy of the legal document of individuals/ organizations of a company member. For members being foreign organizations, the copy of the enterprise registration certificate or equivalent document must be consular legalized;
• Investment Registration Certificate for foreign investors in accordance with the Law on Investment.
• Power of Attorney for Viet An Law to conduct establishing procedure.

For joint stock companies

Dossier include:

• Application for business registration.
• Company charter.
• List of founding shareholders and shareholders being foreign investors (list of authorized representatives if any)
• Copy of the legal document of individuals/ organizations of a company shareholder. For members being foreign organizations, the copy of the enterprise registration certificate or equivalent document must be consular legalized;
• Investment Registration Certificate for foreign investors.
• Power of Attorney for Viet An Law to conduct establishing procedure.

Implementing agency: Business registration authority agency

Executive time: 03 working days from the date of receiving a complete and valid dossier.

Publish the announcement of the business establishment

Enterprises, after being granted enterprise registration certificates, must publicly announce on the National Business Registration Portal according to the order and procedures and pay fees according to regulations.

The content to be published includes the contents of the Enterprise Registration Certificate and the following information:

• Business lines;
• List of founding shareholders and shareholders being foreign investors for joint stock companies.

Implementing agency: Announcement publishing unit of the Department of Business Registration.

Step 05: Post-establishment procedures

After obtaining the Enterprise Registration Certificate and having published the enterprise establishment announcement. The enterprise must carry out the seal engraving at one of the licensed seal engraving units. Enterprises may decide by themselves on the number and form of seals within the permitted scope of law.

Notes on investment capital of 100% FDI enterprise in Vietnam

Without specifying the capital conditions in Vietnamese regimes, at present, the view of issuance of investment registration certificates in some provinces and cities especially considers the investment capital of foreign investors to evaluate the dossier of issuance of investment registration certificates. It can be mentioned that in Hanoi, the normal investment capital to be considered for investment registration is from 100,000 – 150,000 USD or more for projects with a term of 3 years,… Accordingly, foreign-invested companies that want to be granted a long-term of project implementation need to register the highest possible charter capital and investment capital.

Viet An Law Firm provides full package of legal services to establish 100% FDI enterprise in Vietnam. For further information, please contact Viet An Law Firm for detailed advice.