What Foreign Investors Should Know When Setting up company in Vietnam in 2022?

  In the period of global economic integration, especially Post-Covid-19 era,  Vietnam – a developing country is considered one of the countries with potential markets that foreign investors choose to establish the business here taking advantage of the government policy to promote the economy i.e. “new normal” adaption living with Covid-19, quick opening of border allowing tourists to visit Vietnam since Apr 2022,  tax reduction, public investment increase…

Whom can set up business in Vietnam?

First, the objects allowed to establish and manage enterprises in Vietnam are all organizations and individuals who are not in the following cases: (i) Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons; (ii) People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law. At the same time, individuals with foreign nationality implementing business investment activities in Vietnam are considered foreign investors. The implementation of investment forms; the scope of operation as well as related procedures must meet the conditions under the Investment Law; related legal documents; other conditions of international treaties that Vietnam is a member.

How to invest and set up business in Vietnam?

Second, foreigners, foreign investors must explore legal forms of investment in Vietnam including: (i) Investing in establishing economic organizations; (ii) Invest in capital contribution, share purchase and purchase capital; (iii) Implementing investment project; (iv) Investment in the form of BCC contract; (v) Forms of investment and new economic organizations according to the Government’s regulations. They need to consider projects planning to invest in Vietnam in case of requesting approval of investment policy of 2020 Investment Law. The investment project of foreign investors is required to carry out procedures for granting investment registration certificates. If the case must be proposed to approve the investment policy, they must prepare dossiers and carry out procedures to request approval of investment policies. When completing the procedure, they will be granted a written decision on investment policy and investment registration certificates. If not falling in the case of approval of investment policy, foreign investors conduct procedures for applying for investment registration certificates.

What documents required to set up company in Vietnam?

Third, after being granted a certificate of foreign investment registration, foreign investors shall continue the procedures for enterprise registration. Vietnam laws do not have to limit the type of enterprise to foreign investors, hence investors can choose: One member limited liability Company; Two-member limited liability companies or more; Joint stock company; Partnerships. Each type of business has different advantages and disadvantages, and foreign investors should base on the purpose and investment scale to choose the type of suitable form of investment. In addition, the investment under the conditional business lines need to fully meet the conditions according to the provisions of law. Depending on the type of business, there will be the document requirements that need to register accordingly. And most importantly, foreign investors must prepare necessary conditions and sufficient conditions (validated documents for use in Vietnam, business name, head office address, business line, charter capital, legal representative,…) attached to the understanding and implementation of the order and procedures when they want to establish a certain type of enterprise in accordance with the Enterprise Law 2020.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang. 

Source: https://antlawyers.vn/library/what-foreign-investors-should-know-when-setting-up-company-in-vietnam-in-2022.html

What Foreign Investors Should Consider to Open a Business in Vietnam

  In the context of integration and globalization, the number of foreign investors whom wish to make investment and open a business in Vietnam has increased due to the attractiveness of the business environment.

Business considerations to open a business in Vietnam

Foreign investors often consider Vietnam an attractive destination to register businesses for several compelling reasons:

1. Robust Economic Growth: Vietnam has experienced consistent and robust economic growth over the past few decades. It is one of the fastest-growing economies in Southeast Asia and offers ample opportunities for foreign investors to tap into a growing consumer market.

2. Favorable Demographics: Vietnam boasts a young and increasingly affluent population, making it a promising market for various industries, including consumer goods, technology, and services for investors to open a business in Vietnam.

3. Strategic Location: Vietnam’s strategic location in Southeast Asia provides easy access to other fast-growing markets in the region, including China, Thailand, and Singapore. Its proximity to major shipping routes is also advantageous for trade.

4. Investment-Friendly Policies: The Vietnamese government has implemented a range of investment-friendly policies, including tax incentives and preferential treatment for foreign investors in specific sectors. These policies aim to attract foreign capital and technology.

5. Bilateral and Multilateral Trade Agreements: Vietnam has signed numerous trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), which offer preferential trade terms and access to a broader market.

6. Skilled and Cost-Effective Labor: Vietnam’s workforce is known for its relative affordability compared to some neighboring countries. It also boasts a pool of skilled and diligent labour, making it an attractive location for manufacturing and outsourcing operations.

7. Infrastructure Development: The Vietnamese government has invested significantly in infrastructure development, including transportation, logistics, and energy. These improvements enhance the ease of doing business and connectivity within the country.

8. Political Stability: Vietnam has maintained political stability for many years, providing a secure environment for foreign investment. The government’s commitment to economic reform and openness to foreign participation adds to this stability.

9. Supportive Investment Agencies: Local investment promotion agencies provide assistance and support to foreign investors in navigating the investment process.

10. Diverse Investment Sectors: Vietnam offers investment opportunities across various sectors, including manufacturing, technology, agriculture, tourism, and renewable energy. This diversity allows investors to choose sectors that align with their expertise and interests.

11. Growth of the Middle Class: The rising middle class in Vietnam is driving increased consumer spending, creating a demand for a wide range of products and services.

12. Improving Business Environment: Vietnam has made efforts to improve its business environment, streamline administrative procedures, and reduce bureaucracy to make it easier for foreign investors to open a business in Vietnam

13. Access to Global Value Chains: Vietnam’s participation in global value chains, particularly in electronics, textiles, and manufacturing, makes it an attractive destination for companies seeking to integrate into these supply chains.

14. Tourism Potential: Vietnam’s natural beauty, rich cultural heritage, and historic sites contribute to its growing tourism industry, attracting foreign investment in hotels, resorts, and related services.

15. Green Energy Initiatives: Vietnam is increasingly focusing on renewable energy projects, presenting opportunities for foreign investors in wind, solar, and hydroelectric power to open a business in Vietnam.

Vietnam’s strong economic growth, favorable investment policies, strategic location, and diverse opportunities across various sectors make it an appealing choice for foreign investors looking to open a business in Vietnam and expand their businesses in Southeast Asia. However, it’s essential for investors to conduct thorough market research, understand local regulations, and seek professional legal advice in Vietnam to navigate the complexities of the Vietnamese business landscape successfully.

Legal considerations to open a business in Vietnam

To open a business in Vietnam, however, foreign investors must meet the requirements of Vietnam and international treaties to which Vietnam is a party.

Firstly, the field in which foreign investors wish to conduct business must not be on the list of industries that have been denied entry to the market for foreign investors or are prohibited from doing so under the Law on Investment.

Secondly, foreign investors may be restricted to the percentage of charter capital ownership in some economic organizations.  For example, foreign investors ownership could only be up to 30% of charter capital of a commercial bank in Vietnam.  Limiting the amount of charter capital is indirectly restricting the management and control rights of investors. Instead of freely making policies or decisions, foreign investors have to depend on other members of the company, namely domestic investors. The investors are suggested to consult with corporate lawyers in Vietnam or banking and finance lawyers in Vietnam for specific details in the specialized area like banking or finance.

Thirdly, foreign investors must consider the type of business they want to register. A foreign insurance enterprise, for example, may operate in Vietnam as an insurance limited liability company or as a branch of a foreign non-life insurance enterprise.

If the investor registers the establishment of an enterprise that is not under Vietnam law and the international treaties that Vietnam has signed, the application for registration is considered invalid.

In addition, each type will also have certain limitations. For example, setting up a joint stock company might not be suitable for all investors. In the governance of a joint stock company, the decision-making process is complicated and time-consuming with different sequences and procedures.

Finally, the Vietnam law also have requirements on the legal status, financial status, and competence of investors in certain professions. To open a business in Vietnam, foreign investors must meet all the prescribed conditions.

In conclusion, the foreign investors would need to undertake the legal research into the business it wish to register in Vietnam, and make strategic decision considering the legal and business requirements to maximize the benefits Vietnam would bring to open a business in Vietnam.

About ANT Lawyers, a law firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi,  and Danang, and will help customers in doing business in Vietnam.

Source: https://antlawyers.vn/corporate-lawyers-in-vietnam/what-foreign-investors-should-consider-in-making-investment-in-conditional-areas.html

What Are the Procedures for Applying the Enterprise Registration Certificate for Foreign Investor in Vietnam?

  According to Viet Nam’s commitments under the framework of the WTO and EVFTA agreement, foreign investors are allowed to establish foreign-invested enterprises to conduct business activities in Vietnam. However, the order and procedures for establishing enterprises for foreign investors must comply with the provisions of Vietnamese law.

Accordingly, this process consists of two main steps: (1) carry out the procedures for applying for the Investment Registration Certificate and (2) carry out the procedures for applying for the Enterprise Registration Certificate. In other words, to be granted the Enterprise Registration Certificate to officially and legally conduct business activities, a foreign investor must first obtain an Investment Registration Certificate.

For investment registration, foreign investors must have an investment project, except in the case of establishing a creative start-up small and medium-sized enterprise and an innovative start-up investment fund under the law on business support small and medium. The industries and trades in the investment project must not be in the industries and trades that prevent the access the market for foreign investors or the industries and trades being banned from doing business under the Law on Investment 2020. After that, investors need to prepare a dossier for issuance of the Investment Registration Certificate to be submitted to the Department of Planning and Investment where the investor implements the investment project.

Dossier for applying for the investment registration certificate includes: an application for issuance of the investment certificate; the Investor’s financial capacity report is prepared and responsible by the Investor; an explanation of the ability to meet the conditions that the investment project must satisfy according to the provisions of law for the project in the field of conditional investment; the economic – technical explanation includes the following main contents: objectives, scale, investment location, investment capital, project implementation progress, land use demand, technological solutions and solutions environmental legislation; draft of the company’s charter with full signatures of the legal representative, members or authorized representatives; members list; documents for verifying the investor’s legal status; documents for verifying financial ability. The investment registration authority repond to the application for the Investment Registration Certificate to the investor within 15 days from the date of receipt of a valid dossier.

After being granted the Investment Registration Certificate, the foreign investor shall carry out the procedures to be granted the Enterprise Registration Certificate. In this step, the legal conditions are not as strict and complicated as the first step, but it also requires investors to prepare a number of papers and documents. Depending on the type of enterprise and the content of registration, the business registration subject needs to submit different types of documents under the requirements of the law. Investors can submit the dossier in person at the Business Registration Office or submit it online via the electronic network. The Business Registration Office shall issue the Enterprise Registration Certificate within 03 working days from the date of receipt of a valid dossier. In case the dossier is invalid or the name of the enterprise requested for registration is not in accordance with regulations, the Business Registration Office must notify in writing the contents that need to be amended, supplemented to the enterprise founder or the enterprise within 03 working days from the date of receipt of the dossier.

It can be remarked that the two-step process creates obstacles for many foreign investors when establishing an enterprise in Vietnam. It has been suggested the legislator to consider shortening the order and reducing the number of documents that need to be submitted, and at the same time, promote the online procedures to save time and human resources. For efficiency in preparing documents, the client could engage a lawyer in Vietnam to assist carrying out procedures of setting up company and applying for investment and business certificate in Vietnam.

Source: https://antlawyers.vn/business/what-are-the-procedures-for-applying-the-enterprise-registration-certificate-for-foreign-investor-in-vietnam.html

Establish Business in Vietnam and Obtain Business Registration Certificate

  It is getting easier for the investor in doing business in Vietnam. In order for the investor to do business in Vietnam, the investor needs to establish business in Vietnam. Business registration certificate is considered a legal document of an organization, which is a paper or electronic document that records information related to business registration that the Business Registration Authority grants to an enterprise.

What to prepare for submission to establish business in Vietnam?

According to the provisions of the Law on Enterprises, to establish business in Vietnam, the investors need to prepare the following:

• Enterprise name ;
• Address where the head office of the enterprise is located;
• Full name, contact address, nationality, number of legal papers of the individual, for the legal representative of limited liability companies and joint stock companies; for general partners of a partnership company; for business owners of private enterprises.
• Full name, contact address, nationality, number of legal papers of the individual, for members being an individual; name, enterprise identification number and head office address of the member being an organization, for limited liability companies;
• Charter capital for companies, investment capital for private enterprises.

In which, the name of the enterprise must be a Vietnamese name consisting of two elements: type of business and proper name.

Currently, Vietnam recognizes four types of enterprises when the investors chose to establish business in Vietnam:

• Limited liability companies
• Joint stock companies
• Partnerships
• Private enterprises

The enterprise’s proper name can be written with the letters of the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols. The enterprise code element recorded on the Certificate of Business Registration is a series of numbers created by the National Information System on Business Registration, issued to an enterprise upon its establishment, and recorded on the Certificate of Business Registration. Each business has only one unique code and that code will not be reused for other businesses.

Business registration procedures to establish business in Vietnam

The business registration can be carried out directly at the Vietnam Business Registration Office or through the postal service or through the electronic information network. If choosing the form of enterprise registration via electronic information network, the enterprise founder shall submit an application at the National Enterprise Registration Portal. Business registration documents will be presented in electronic form and have the same legal value as paper business registration documents.

The business registration agency is responsible for reviewing the validity of the enterprise registration dossier and granting the Business registration certificate within 03 working days from the date of receipt of the application. In case the application is not sufficient or not prepared according to the regulations, the business registration agency must notify in writing the contents that need to be amended and supplemented to the enterprise founder.

If the business registration authority refuses to register the enterprise, it must notify in writing the enterprise founder and clearly state the reasons. The company could prepare its own submissions or hire a Vietnam business lawyers to assist with the submissions to establish business in Vietnam.

Source: https://antlawyers.vn/library/establish-business-in-vietnam-and-obtain-business-registration-certificate.html