Set up a company in Vietnam providing security services with foreign investment

The business of security services to ensure security is currently being invested by many investors. Although, the security service business is not specified in Vietnam’s schedule of commitments in the WTO, but it has been specified as a conditional business line in the Investment Law and Decree 96/2016/ND- CP has also detailed investment conditions. To set up a home security service business, you need to follow the following procedures:

Legal basis

• Vietnam’s commitment schedule in WTO
• Law on Investment 2020;
• Law on Enterprise 2020;
• Decree 31/2021/ND-CP elaboration of some articles of the Law on Investment.
• Decree 96/2016/ND-CP providing for security and order conditions for a number of conditional business sectors

Investment conditions to set up a company in Vietnam providing security services with foreign investment

Foreign investors are provided with protection services and must meet the following conditions:

• Capital ownership rate of foreign investors in economic organizations: not exceeding 50%
• Investment form: joint venture with domestic enterprises.

For foreign investors:

• Being an enterprise operating in security service business continuously for at least 05 years;
• The representative for the capital contribution of a foreign business establishment is a person who has not been handled by the legal authority of the foreign country where they do business for violations related to security service business from warning upwards;
• The capital contribution of the foreign business establishment may only be used to purchase technical machinery and equipment in service of security work. The investment capital of the foreign business establishment is at least 1,000,000 USD (one million USD);
• Having a certificate from a competent authority of the host country certifying that the enterprise and its representative have not committed any violation of the law of the host country or the law of the relevant country.

To set up a company in Vietnam providing security services with foreign investment, foreign traders have two choices:

• Establishing foreign-invested economic organizations;
• Contributing capital, purchasing shares or capital contribution to economic organizations providing security services.

Method 1: Establishing a foreign-invested economic organization

Step 1: The investor applies for an Investment Registration Certificate

Dossier include:

• A written request for implementation of an investment project;
• Documents on investor’s legal status: copy of identity card or identity card or passport (as an individual); a copy of the certificate of incorporation or equivalent document and the passport of the capital manager (as an organization);
• The investment project proposal includes the following contents: investor implementing the project, objectives, scale and investment capital, capital mobilization plan, location, duration, investment schedule, labor demand activities, proposals for investment incentives, assessment of the project’s socio-economic impacts and efficiency;
• Documents proving the financial capacity of the investor include at least one of the following documents: financial statements of the last 2 years of the investor; commitment to financial support of the parent company; financial institution’s commitment to financial support; guarantee on the financial capacity of the investor; other documents proving the investor’s financial capacity;
• Investment project proposal includes the following main contents: investor or investor selection form, investment objective, investment scale, investment capital and capital mobilization plan, location, duration, implementation progress, information on the current status of land use at the project site and proposed land use demand (if any), labor demand, proposal for investment incentives, impact activities, socio-economic efficiency of the project, preliminary assessment of environmental impacts (if any) in accordance with the law on environmental protection.

If the construction law provides for the preparation of a pre-feasibility study report, the investor may submit a pre-feasibility study report instead of the investment project proposal;

• In case the investment project does not request the State to allocate or lease land or permit the change of land use purpose, a copy of the paper on land use rights or other documents determining the right to use the site shall be submitted for implementation. current investment project;
• The explanation of the technology used in the investment project, for the project subject to appraisal and consultation on technology in accordance with the law on technology transfer;
• Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any);
• Power of Attorney for Viet An Law.

Place of application:  Department of Planning and Investment where the head office is expected to be located.

Processing order:  Within 15 days from the date of receiving the complete and valid dossier, the Department of Planning and Investment will issue the Investment Registration Certificate to the foreign investor. In case of refusal, the Department of Planning and Investment will reply in writing and clearly state the reason.

Step 2: Set up a company in Vietnam providing security services with foreign investment

Apply for a Enterprise Registration Certificate:

Business establishment dossier includes:

• Application for enterprise registration;
• Company charter;
• List of founding shareholders and shareholders being foreign investors (if it is a joint stock company); List of members (as a multiple-member limited liability company);
• Certified copy of ID card or citizen identification card or passport (if an individual); establishment decision, enterprise registration certificate or equivalent document and citizen identification card or identity card or passport with written authorization for capital manager in Vietnam (if an organization) ;
• A certified copy of the issued Investment Registration Certificate;
• Power of attorney for Viet An Law Firm ;

Place of application: Department of Planning and Investment where the enterprise’s head office is located.

Duration : 03 – 06 working days.

Disclosure of business registration information:

• After being granted an enterprise registration certificate, an enterprise must make a public announcement on the National Business Registration Portal and pay fees as prescribed by law. The content to be announced includes the contents of the Enterprise Registration Certificate and the following information:
• Business lines;
• List of founding shareholders; list of shareholders being foreign investors in the case of a joint-stock company (if any).
• Publication fee: The request for announcement of enterprise registration contents and payment of the fee for announcement of enterprise registration contents shall be made at the time the enterprise submits the enterprise registration dossier. In case the enterprise is not granted enterprise registration, the enterprise will be refunded the fee for announcing the enterprise registration content.

The publication fee is 100,000 VND according to the provisions of Circular 47/2019/TT-BCT.

Business seal

• A seal includes a seal made at a seal engraving establishment or a seal in the form of a digital signature in accordance with the law on electronic transactions.
• The enterprise shall decide on the type, quantity, form and content of the seal of the enterprise, its branches, representative offices and other units.
• The management and keeping of the seal shall comply with the provisions of the company’s charter or regulations issued by the enterprise, branch, representative office or other unit of the enterprise with the seal. Enterprises use seals in transactions as prescribed by law.

Method 2: Contribute capital, buy shares, contribute capital to economic organizations providing security services

This method will help investors save more time and costs because they do not have to apply for an Investment Registration Certificate. However, investors must ensure the proportion of capital contribution of foreign investors in accordance with regulations. If choosing this method, investors only need to carry out the procedures for registration of capital contribution, purchase of shares and contributed capital at the Department of Planning and Investment. In addition, for activities that foreign investors are not allowed to carry out, it is necessary to consider and implement procedures to reduce industries.

Step 1: Foreign investors register to contribute capital, purchase shares, stakes to economic organizations

Dossier include:

• A written registration for capital contribution, share purchase, or stake purchase  includes the following contents: information on enterprise registration of the economic organization to which the foreign investor intends to contribute capital, purchase shares, or purchase capital shares. contribution; business; list of owners, members, founding shareholders, list of owners, members, shareholders being foreign investors (if any); rate of ownership of charter capital of foreign investors before and after capital contribution, share purchase, stake purchase to economic organizations; expected transaction value of the contract of capital contribution, share purchase, stake purchase; information on investment projects of economic organizations (if any);
• Copies of legal papers of individuals and organizations contributing capital, purchasing shares, purchasing stakes and economic organizations with foreign investors contributing capital, buying shares, purchasing capital contributions: Passport (if applicable) is an individual); Business license or equivalent document and Passport of the person authorized to manage the capital portion in Vietnam (if an organization);
• Written agreement in principle on capital contribution, purchasing shares, purchasing stakes between foreign investors and economic organizations in which foreign investors contribute capital, purchasing shares, purchasing stakes or between investors foreign investment with shareholders or members of that economic organization;
• A copy of the certificate of land use rights of an economic organization in which foreign investors contribute capital, purchase shares or purchase capital contributions, if such economic organization has a certificate of land use right in the island, commune, border wards and towns and coastal communes, wards and towns; Other areas affecting national defense and security, except for economic organizations implementing investment projects in industrial parks, export processing zones, hi-tech parks and economic zones established under the Government’s regulations.
• Power of Attorney for Law Viet An.

Place of application: Department of Planning and Investment where the economic organization’s head office is located.

Procedures: If the foreign investor’s capital contribution, share purchase or capital contribution meets the conditions on ownership ratio and investment form in accordance with the Schedule of Commitments and Vietnamese law, Within 15 days from the date of receipt of complete dossiers, the Department of Planning and Investment will notify in writing. In case the application does not meet the conditions, the Department of Planning and Investment will notify in writing and clearly state the reason.

Step 2: Carry out procedures for transferring shares, stakes and changing shareholders, members, and owners.

Some questions related to the establishment of a company with foreign capital

What types of companies can foreign investors establish to provide security services in Vietnam?

Investors can choose one of the following types:

• Multiple-member Limited Liability Company;
• Joint Stock Company.

Are foreign investors allowed to invest 100% of capital to trade in security services?

Investors are not allowed to invest 100% of capital to provide security services in Vietnam.

What is the minimum amount of capital that foreign investors must have when investing in security services?

The capital contribution of the foreign business establishment is at least 1,000,000 USD (one million USD).

Foreign individual investors have the right to invest in security services business in Vietnam?

Are not. Foreign investors must be enterprises operating in security service business for at least 05 consecutive years by the time of applying for investment in Vietnam.

Service to set up a company in Vietnam providing security services with foreign investment of Viet An law firm

• Consulting on the conditions for establishing a foreign-invested company: capital contribution ratio of foreign investors in Vietnam; conditions for business lines; project implementation location; pay attention to the procedures before and after the establishment of a foreign-invested company;
• Consulting to choose the right type of company for investors: Limited Company or Joint Stock Company;
• Advice on opening a capital transfer account, capital contribution term;
• Consulting and guiding investors to prepare necessary documents to establish a foreign-invested company;
• Consulting, drafting company establishment documents for investors;

• Representing investors to work with competent Vietnamese state agencies in the process of carrying out the procedures for establishing a company for investors (Apply for Investment Registration Certificate, Enterprise Registration Certificate, Business Licenses, Licenses according to specialized requirements, making seals of legal entities, procedures after company establishment,…);

• Comprehensive, regular advice, accounting services, tax law package of activities arising in the process of doing business in Vietnam for investors.