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Set up an Indian-invested company in Vietnam

After ASEAN and India signed the Framework Agreement on Comprehensive Economic Cooperation in 2003, the demand for Indian-invested companies in Vietnam has increased significantly. In the article below, Viet An Law will provide you with some information on this topic.

Indian-invested company in Vietnam

Legal bases

  • WTO, AIFTA;
  • Enterprise Law 2020;
  • Investment Law 2020;
  • Decree 50/2016/ND-CP on sanctioning administrative violations in the field of planning and investment;
  • Decree 31/2021/ND-CP details and guides the implementation of a number of articles of the Law on Investment.

The concept of an Indian invested company

A foreign-invested company is an enterprise set up under the laws of Vietnam, set up or joined by investors who are foreign individuals or organizations contributing capital to carry out business activities in Vietnam.

Therefore, it can be understood that an Indian-invested company is a company set up under Vietnamese law by Indian individuals/organizations contributing capital to carry out business activities in Vietnam.

What are the forms of Indian investors investing in Vietnam?

  • Invest in the establishment of economic organizations.
  • Investment in capital contribution, purchase of shares, purchase of contributed capital.
  • Implementation of investment projects.
  • Investment in the form of BCC contract.
  • New forms of investment and types of economic organizations according to the Government’s regulations.

Procedures for setting up an Indian-invested company in Vietnam

Procedures for setting up a foreign-invested company with from 1% to 100% capital contributed by foreign investors immediately upon establishment are carried out according to the following steps:

Step 1: Prepare dossiers for issuance of Investment Registration Certificate for Indian investors

A dossier of application for an Investment Registration Certificate includes:

  • A written request for implementation of an investment project.
  • Documents proving legal status:
  • For institutional investors: a copy of the Certificate of Incorporation or other equivalent document confirming the legal status for institutional investors.
  • For individual investors: Copy of identity card/identity card or passport for individual investors.
  • An investment project proposal includes the following contents: investor implementing the project, investment objectives, investment scale, investment capital.  and capital mobilization plan, location, duration, investment schedule, labor demand, proposal for investment incentives, impact assessment, socio-economic efficiency of the project.
  • Documents proving the financial capacity of the investor:
  • For institutional investors: financial statements of the last 02 years of the investor. Or pledge financial support from the parent company. Or pledge financial support by the financial institution. Or guarantee on the financial capacity of the investor. Or documents explaining the financial capacity of the investor.
    • For individual investors: confirmation of account balance, passbook;
  • Head office lease contract, Documents proving the lessor’s leasing right (Certificate of land use right, Construction permit, Certificate of business registration with real estate business function of the lessor or equivalent documents).
  • Proposing land use needs; in case the project does not request the State to allocate land, lease land, permit change of land use purpose, submit a copy of the site lease agreement or other document certifying that the investor has the right to use the location for the implementation of the investment project;
  • Explanation on use of technology applied to investment projects, for projects using technologies on the list of technologies restricted from transferring in accordance with the law on technology transfer, including: technology name, technology origin, technological process diagram; main technical parameters, usage status of machinery, equipment and main technological lines;
  • BCC contract for investment projects in the form of BCC contract;
  • Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any).

Number of documents: Investor submits 01 application

Step 2: Submit the application for issuance of the Investment Registration Certificate

Procedures for issuance of investment registration certificates for investment projects not subject to decisions on investment policies shall be carried out by investors as follows:

Online declaration of information about investment projects on the National Foreign Investment Information System

  • 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. Within 15 days from the date of online declaration, the investor shall submit the dossier for issuance of the Investment Registration Certificate to the Investment Registration Agency.
  • After the Investment Registration Office receives the dossier, the investor is granted an account to access the National Foreign Investment Information System to monitor the processing of the dossier.
  • The investment registration agency shall use the National Foreign Investment Information System to receive, process and return the results of investment registration dossiers, update the status of application processing and issue codes for investment projects.

Submit dossiers directly for issuance of Investment Registration Certificates

Investors shall submit dossiers for issuance of investment certificates at investment registration agencies within their competence as follows:

  • Department of Planning and Investment of the province where the company is headquartered:
  • Investment projects outside industrial parks, export processing zones, hi-tech parks, economic zones;
  • Investment projects on infrastructure development of industrial parks, export processing zones, hi-tech parks and investment projects in industrial parks, export processing zones and hi-tech parks in localities where management boards of industrial parks, export processing zones and hi-tech parks have not been established.
  • Investment projects implemented in many provinces and centrally-run cities;
  • Investment projects are implemented simultaneously inside and outside industrial parks, export processing zones, high-tech parks and economic zones.
  • Management boards of industrial parks, export processing zones, high-tech parks and provincial economic zones where the company is headquartered
  • Investment projects on infrastructure development of industrial parks, export processing zones and hi-tech parks;
  • Investment projects shall be implemented in industrial parks, export processing zones, hi-tech parks, economic zones.

Step 3: Issuance of Investment Registration Certificate

The time limit for issuance of the Investment Registration Certificate is 05 working days if the investment project needs approval of the investment school owner, 15 working days for the project that does not need to approve the investment policy

Step 4: Prepare the dossier and submit the dossier for issuance of the Certificate of Business Registration

After a foreign-invested company is granted an investment registration certificate, the investor shall carry out procedures for issuance of an enterprise registration certificate similar to the procedures for establishing a Vietnamese capital company.

Dossier of application for an enterprise registration certificate

  • Application for business registration.
  • Company’s charter.
  • List of members (for limited liability companies with two or more members) or List of founding shareholders and shareholders being foreign investors (list of authorized representatives if any shareholders are organizations).
  • Copies of the following documents: Citizen identity card, National identity card, Passport or other lawful personal identification of individual members;
  • Establishment decision, Business Registration Certificate or other equivalent document of the organization and authorization document; Citizen identity card, identity card, passport or other lawful personal identification of the authorized representative of the member being an organization
  • For members being foreign organizations, a copy of the Business Registration Certificate or equivalent document must be consular legalized;
  • Decide on capital contribution and appoint managers; List of authorized representatives (for members being organizations);
  • Investment registration certificates for investors have been issued.

Competence to grant the Certificate of Business Registration:

Business Registration Office, Department of Planning and Investment of the province where the company’s head office is located

Step 5: Announce the contents of business registration information

After being granted the Certificate of Business Registration, an enterprise must publicly announce it on the National Business Registration Portal. At the same time, the disclosure fee must be paid in accordance with the provisions of law. The contents of the announcement include the contents of the Certificate of Business Registration and the following information:

  • Business lines;
  • List of founding shareholders; list of shareholders being foreign investors, for joint-stock companies (if any).

Fees for disclosure of enterprise registration contents:

The request for publication of enterprise registration contents and payment of fees for disclosure of enterprise registration contents shall be made at the time the enterprise submits the enterprise registration dossier.

Step 6: Engrave the company’s 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 e-transactions.
  • The enterprise decides on the type of seal, quantity, form and content of the seal of the enterprise, branches, representative offices and other units of the enterprise.
  • The management and retention of the seal shall comply with the provisions of the company’s charter or regulations promulgated by the enterprise, branch, representative office or other unit of the enterprise bearing the seal. Enterprises use seals in transactions in accordance with the provisions of law.

Step 7: Open a direct investment capital account from India

  • After completing the procedures for establishing an Indian-invested company, the investor shall open an Indian direct investment capital account. Investors shall transfer capital to this capital account according to the time limit for capital contribution recorded in the Investment Certificate.
  • In addition, Indian-invested companies need to open more trading accounts to receive money from investment capital accounts to carry out revenue and expenditure procedures in Vietnam.

Step 8: An Indian-invested company shall carry out the following procedures for company setting up

After the company is set up, investors need to carry out the same post-establish  procedures as Vietnamese companies. Concrete:

  • Hang signs at headquarters.
  • Register digital signatures for electronic tax payment and tax reporting via the Internet
  • Buy an electronic digital signature to make electronic tax payment
  • Offer to issue electronic invoices.
  • Make reports on the implementation of the project as prescribed in the Investment Registration Certificate.
  • Declare and pay taxes as prescribed.

Why is it necessary when an Indian investor establishes an Indian investment capital company to register a company?

  • According to the provisions of Clause 2, Article 8 of the Enterprise Law 2020, when investors invest in establishing economic organizations, they must fully and promptly fulfill their obligations on business registration, register changes in enterprise registration contents, publicize information on the establishment and operation of enterprises, reporting and other obligations as prescribed by this Law.
  • In case an Indian investor establishes a company without registering the establishment of an enterprise, it will be administratively handled with a fine ranging from VND 20,000,000 to VND 30,000,000 as prescribed in Clause 4, Article 28 of Decree 50/2016/ND-CP. In addition to the above fine, foreign investors are also subject to remedial measures: Forced registration of business establishment.

How to know if the business lines that Indian investors intend to invest in Vietnam is on the list of permitted business lines?

Since 2007, Vietnam has officially become a member of the World Economic Organization (WTO). In Vietnam’s Schedule of commitments to join the WTO in the field of trade in services, Vietnam has committed to open up to 11 sectors and 110 sub-sectors. As India is also a member of the WTO, Indian investors will be allowed to set up Indian-invested companies in Vietnam in the industries that Vietnam has committed to.

Above are the advice of Viet An Law Firm on the setting up of an Indian invested company in Vietnam, if you have any further questions, please contact us for the best support!

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