Set up a Vietnamese company with foreigners contributing capital

As a developed economy, Vietnam is now attracting a lot of foreign investors. Therefore, the establishment of Vietnamese company with foreigners contributing capital is the trend of the market. To better understand this issue, Viet An Law will provide you with some basic information through the article below.

Legal basis

• WTO commitments;
• Investment Law 2020;
• Enterprise Law 2020;
• Decree 31/2021/ND-CP detailing and guiding the implementation of a number of articles of the Law on Investment;
• Decree 01/2021/ND-CP dated January 04, 01 of the Government on business registration;
• Official Letter 8909/BKHDT-PC on the implementation of the Investment Law.

Forms of set up of Vietnamese company with foreigners contributing capital

There will be two ways to establish a Vietnamese company with foreigners contributing capital, including:

• Foreigners contribute capital to establish Vietnamese company;
• Foreigners, contributing capital, buying shares of Vietnamese company

Thus, if you want to learn about the process and procedures of establishing a Vietnamese company with foreigners contributing, you need to determine whether your investment purpose is to establish a new enterprise or contribute capital to an existing enterprise so that you can prepare documents,  carry out the procedure accordingly. If you have any needs, please contact Viet An Law for our most complete advice.

Foreigners contribute capital to establish Vietnamese company

Conditions to set up a Vietnamese company with foreign capital

Before establishing a foreign-invested company in Vietnam, foreign investors need to meet the following conditions:

• Foreign investors are nationalities affiliated to countries in the WTO. Being a legal citizen, having all documents proving their legal status, valid individuals, certified by the consulate;
• Foreign investors may only establish company doing business in the fields permitted by Vietnamese law. Market access conditions for foreign investors specified in the List of industries and trades restricted from market access for foreign investors include: the ratio of ownership of charter capital of foreign investors in economic organizations; forms of investment, scope of investment activities; capacity of investors;…
• Other conditions prescribed in laws, resolutions of the National Assembly, ordinances and resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties to which Vietnam is a contracting party;
• Conditions on ensuring security and national defense;
• Provisions of the land law on conditions for receiving land use rights and conditions for land use in islands, communes, wards, border towns, communes, wards and coastal towns.

Process of foreigners setting up a company in Vietnam

Foreigners setting up a company in Vietnam need to follow the following steps:

Step 1: Issuance of investment registration certificate

Before carrying out the procedures for issuance of the Investment Registration Certificate, investors declare online information about investment projects on the National Foreign Investment Information System.

Dossiers submitted by investors to the investment registration authority include:

• A written request for implementation of an investment project;
• Copy of foreign investor’s passport
• Investment project proposal;
• A copy of the bank confirmation that the balance corresponds to the investment amount;
• In case the investment project does not request the State to allocate land, lease land, permit change of land use purposes, submit copies of land use right documents: Real estate lease contract, red book; construction decisions or other documents evidencing the project execution site;
• Contents of explanation of technologies used in investment projects, for projects subject to appraisal and collection of opinions on technologies 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).

Application processing deadline

Within 15 days from the date of receipt of a complete dossier, the investment registration agency shall issue an Investment Registration Certificate; In case of refusal, it must notify in writing the investor clearly stating the reason.

Competence to grant investment certificates

• Management Boards of industrial parks, export processing zones, hi-tech parks and economic zones shall grant, adjust and revoke investment registration certificates for investment projects in industrial parks, export processing zones, hi-tech parks and economic zones.
• The Department of Planning and Investment shall grant, adjust and revoke investment registration certificates for investment projects outside industrial parks, export processing zones, hi-tech parks, economic zones and the following projects:
• Investment projects implemented in 02 or more provincial administrative units;
• Investment projects implemented inside and outside industrial parks, export processing zones, hi-tech parks and economic zones;
• Investment projects in industrial parks, export processing zones, hi-tech parks, economic zones where management boards of industrial parks, export processing zones, hi-tech parks, economic zones have not been established or are not under the management of management boards of industrial parks, export processing zones, hi-tech parks, etc economic zone.

Step 2: Issuance of business registration certificate

Procedures for issuance of the Certificate of Business Registration:

• Investors submit dossiers at the Department of Planning and Investment directly or online through the National Business Registration Portal;
• The Department of Planning and Investment shall consider the validity and issue the Certificate of Business Registration;
• The company carries out the engraving of legal entity seals and procedures after the establishment of the enterprise.

Dossier of enterprise establishment for issuance of the Certificate of Business Registration

After obtaining the investment registration certificate, investors need to prepare documents to establish an enterprise. Depending on the type of company that the investor wants to establish, the investor prepares the corresponding documents. However, the following basic documents are basically required:

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

Receiving agency: Department of Planning and Investment of the province/city.

Processing time for issuance of business registration certificates:

03 working days from the date the investor submits all valid documents as prescribed.

Foreigners contribute capital, buy shares of Vietnamese company

Forms of capital contribution, share purchase, purchase of contributed capital of foreign investors

• Purchase of first-time issued shares or additional issued shares of a joint-stock company;
• Capital contribution to limited liability company, partnerships;
• Purchase of shares of a joint-stock company from the company or shareholder;
• Purchase capital contributions of members of limited liability company to become members of limited liability company;
• Purchase capital contribution of capital contributors in a partnership to become a capital contributing member of a partnership;
• Capital contribution or purchase of capital contribution of members of other economic organizations not falling into the above cases.

The process of foreigners contributing capital to Vietnamese company

Step 1: Prepare your application.

When making capital contribution or share capital purchase into Vietnam, a dossier of registration for capital contribution, share purchase or capital contribution includes:

• A document of registration for capital contribution, share purchase or capital contribution includes the following contents: information on economic organizations to which foreign investors plan to contribute capital, purchase shares or contributed capital; the percentage of ownership of charter capital of foreign investors after capital contribution, share purchase or capital contribution to economic organizations;  transaction value of contracts for capital contribution, share purchase and capital contribution; information on investment projects of economic organizations (if any);
• Copy of identity card, identity card or passport for individual investors; a copy of the Certificate of Incorporation or other equivalent document confirming the legal status of an institutional investor.
• Written agreement on capital contribution between foreign investors and economic organizations receiving capital contribution
• Foreign investors contribute capital, purchase shares or purchase capital contributions of economic organizations having land use right certificates in islands and border communes, wards and townships; coastal communes, wards and townships; other areas that affect national defense and security.

Step 2: Register for capital contribution, purchase of shares, contributed capital.

Investors contributing capital, buying shares or contributed capital shall submit dossiers of registration of capital contribution, share purchase or contributed capital as prescribed in Clause 2, Article 26 of the Law on Investment to the Department of Planning and Investment where the economic organization has foreign investors contributed capital or purchased shares,  capital contribution to head office;

The Department of Planning and Investment shall consider the satisfaction of investment conditions for foreign investors and notify investors so that investors can carry out procedures for changing shareholders and members in accordance with law. In case the conditions are not met, the Department of Planning and Investment shall notify the investor in writing clearly stating the reason.

Step 3: The enterprise is entitled to contribute capital to carry out procedures for changing to, shareholders at the business registration office

In addition, economic organizations with foreign investors contributing capital, buying shares or capital contributions are not required to carry out procedures for issuance or adjustment of investment registration certificates or decisions on investment policies for investment projects implemented before the time foreign investors contribute capital,  purchase of shares and contributed capital.

The time limit for settlement is 15 days from the date of receipt of a valid dossier as prescribed by law, the Department of Planning and Investment where the economic organization’s head office is located shall carry out the procedures for registration of capital contribution, purchase of shares or contributed capital.

Above are some of the advice of Viet An Law on establishing a Vietnamese company with foreigners contributing capital, if you need advice on establishing a company, please contact us for the best support!