What is a subsidiary of a company in Vietnam?

With the current development trend, companies and corporations in many fields often tend to establish subsidiaries when implementing important projects. So what is a subsidiary? Why establish a subsidiary? What is the procedure when setting up a subsidiary company of a company in Vietnam? Viet An Law will summarize the above contents in the following article.

Legal basis

• Law on Enterprise 2020.
• Decree 122/2020/ND-CP stipulates the coordination and interconnection of procedures for registration of establishment of enterprises, branches, and representative offices, declaration of labor use, and issuance of insurance registration numbers. social insurance, register to use corporate invoices.
• Decree 01/2021/ND-CP on business registration.
• Circular 47/2019/TT-BTC stipulating the collection rate, mode of collection, payment, management and use of fees for providing enterprise information and business registration fees.
• Decision 885/QD-BKHDT on announcement of administrative procedures newly promulgated, amended, supplemented, replaced, annulled, canceled and canceled publicly in the field of establishment and operation of enterprises and business households business under the management function of the Ministry of Planning and Investment.

What is a subsidiary of a company in Vietnam?

Pursuant to Article 195 of the Enterprise Law 2020, a subsidiary company is a case in which a company contributes more than 50% of its charter capital to another company.

Subsidiaries will be subject to the appointment of important positions such as members of the Board of Directors, Director, or General Director of that parent company.

Thus, the company contributing capital is called the parent company. Subsidiary is a company that will be subject to the full control of the parent company.

Purpose of establishing a subsidiary

Nowadays, establishing a subsidiary is one of the top choices of businesses, especially for multi-industry and multi-field companies because the subsidiary will bring benefits such as: after:

• Establishing a subsidiary in the same industry can help create an environment to increase internal competition and improve business efficiency.
• A subsidiary company is an enterprise operating independently of the parent company in terms of legal, financial, and business lines (it can do business in the same industry but is not dependent). This will help the subsidiary develop to specialize in a certain area.
• Establishing a subsidiary will help large enterprises (parent companies) have advantages in operating in multiple business lines, thereby accessing the market faster and at the same time being more efficient in business activities. is enhanced.
• In addition, subsidiaries are enterprises with their own legal status, so the establishment of subsidiaries will help companies with multi-industry business activities more conveniently in managing their businesses. business activities.

Subsidiary establishment dossier in Vietnam

According to Decree 122/2020/ND-CP and Decision 1523/QD-BKHDT, the application for the establishment of a subsidiary company will be similar to the application for registration of establishment of a new enterprise, corresponding to the types of enterprises such as joint-stock company, single-member limited liability company (limited liability) and multiple-member limited liability company. Specific dossiers include:

• Company charters;
• Enterprise Registration Certificate;
• List of members (in case a subsidiary is a multiple-member limited liability company) or list of shareholders (in case a subsidiary is a joint stock company)
• Power of attorney (if the applicant is not the legal representative of the company).
• Certified copies of personal papers of members of the company;
• Certified copy of personal documents;

In addition to the above documents, enterprises wishing to establish a subsidiary will need to add the following documents to the establishment dossier:

• Decision of the owner/chairman of the Members’ Council/Board of Directors on appointing capital contributors or managing subsidiaries.
• 01 true copy of the ID card/ identification citizen card /Passport of the person appointed and managed by the parent company;
• 01 copy of the Enterprise Registration Certificate of the parent company.

Number of records: 01 set.

Note: In the application file for the establishment of a subsidiary, it must be shown that the parent company is a shareholder/capital-contributing member owning more than 50% of the total number of ordinary shares or charter capital.

Place of application: directly at the business registration office.

Duration: 03 working days from the date of submission of valid documents.

Procedures for setting up a subsidiary company in Vietnam

To establish a subsidiary, businesses need to prepare the following procedures:

Step 1: Prepare documents and submit the application for establishment of a subsidiary

The first step to establishing a subsidiary is to prepare documents and submit the application to establish a subsidiary. After preparing all the documents, the application is submitted to the business registration office. The agency competent to receive and process the application for the establishment of a subsidiary is the Business Registration Office of the Department of Planning and Investment of the locality where the enterprise is located.

Currently, there are usually two ways to submit an application as follows:

• Option 1: Submit an application directly at the one-stop department at the Business Registration Office of the Department of Planning and Investment where the enterprise’s head office is located.
• Option 2: Register online at the National Business Registration Portal with a public digital signature or use a business registration account (for Hanoi and Ho Chi Minh City must register via network).

After submitting the application for registration of business establishment, the business registration office of the provincial Department of Planning and Investment will be responsible for reviewing the validity of the business registration dossier and granting or refusing to issue the Enterprise Registration Certificate.

Step 2: Receipt of application

Accordingly, in the process of reviewing the application for registration of the establishment of a subsidiary, if the application is complete and valid, the company will be granted an Enterprise Registration Certificate (within 03 days). When receiving the results, the legal representative of the company must bring a receipt for handling the application. In case he is not the legal representative, the authorized person must bring the power of attorney and submit a valid copy of one of the following papers:

• For Vietnamese citizens: Valid citizen identification/identity card.
• For foreigners: A passport or valid document replacing a foreign passport is valid.

Fee for subsidiary establishment in Vietnam

Pursuant to Article 32 of Decree No. 01/2021/ND-CP, enterprises must pay fees and charges for business registration at the time of submitting the application for company establishment. Accordingly, the fee for registration of business establishment in Circular 47/2019/TT-BTC is 100,000 VND/time. Enterprise founders pay fees directly by electronic payment service. In addition, enterprises that register their businesses online are exempt from business registration fees.

Thus, the fee for establishing a subsidiary will be 100,000 VND/time. If you register through the National Business Registration Portal, you will be exempted from the fee. In addition, there will also be some related costs such as the cost of opening a bank account, the cost of buying a digital signature, and creating a seal… These costs will depend on the actual situation of the customer. enterprise.

Procedures after establishing a subsidiary

After being granted a license for establishment and business operation, a subsidiary company needs to perform the following tasks:

• The company must publish its operation information on the National Portal on registration of business establishment at least 30 days before the expected date of official operation.
• Within 90 days from the date of being granted the enterprise registration certificate, members and shareholders must fully contribute the registered capital.
• Declare and pay license tax at the tax authority.
• Signboard at the company headquarters.
• Open a business bank account, notify the bank account to tax authority.
• Notify the seal sample to the business registration office.
• Tax registration for the first time.
• Notice of application of tax calculation method.
• Apply invoice.
• Register to use an electronic digital signature to pay electronic tax
• Labor declaration, payment of social insurance for employees.

If you want to find out more information about a subsidiary of a company in Vietnam, please contact Viet An Law Firm to get the best support!