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Setting up foreign company in Vietnam

Vietnam government passed the new law on Investment No. 67/2014/QH13 (New LOI) in 2014, and the new law on Enterprises No. 68/2014/QH13 (New LOE), which replace the previous laws as from July 1, 2015. Certain notable provisions of the new laws are asbelow.

● Requirements Capital: There is no requirements on foreign investment amount and registered capital in Vietnam. But registered capital can not less than 30% of total investment amount. The registered capital of encouraged/ large investment project can be reduced to 20%.

● Structure Foreign investors (company/ individual) can adopt one among following three structures when setting up company/ factory in Vietnam:

1. Direct investment by foreign company / individual; |
2. Indirect Investment through one holding company (single holding );
3. Indirect investment through two holding companies (double holding ).

The 2nd and/or 3rd structure is widely used. There are some through holding company:
1. Unlimited deferred offshore profits which can be used for re-investment;
2. Limited liability on overseas lawsuits (civil and criminal ), and financial liabilities against parent company.
The disadvantages of the single holding structure will occur when selling foreign assets, the parent company will be taxed for the profits. The parent company/individual will be exposed to unpredictable foreign risks and faces double-taxation problems. Therefore, the third structure - double holding is recommended.



● Procedures:
1. Setting up offshore holding company;
2. Collecting holding company documents;
3. Documents translation/ embassy notarization;
4. Checking proposed Vietnam company name;
5. Prepare the M&A and application form;
6. Evaluation of investment project by related authorities;
7. Issuance of the enterprise registration certificate;
8. Publish in newspaper gazette;
9. Seal registration, open bank account;
10. Tax, customs, and environmental protection registration.

Do not hesitate to contact us for more advices.

Requirements for a trading company in Vietnam
Minimum capital requirement in Vietnam

There is no official minimum capital requirement for setting up a trading company in Vietnam. However, founders need to ensure that the injected minimum capital is sufficient for covering all their planned expenses.

For you must consider the following costs when establishing a trading company in Vietnam:

    Whether a storage room is necessary for your products
    What are the transportation expenses
    Whether you need a retail outlet for selling your products



Trading company’s business plan

Foreign investors aiming to establish a trading company in Vietnam must first present a business plan including the following points:

    Business activities and methods of doing business
    Business plan and market development
    Evaluation of the implications and socio-economic efficacy of the business plan
    Labor use

Financial plan

In addition to a business plan, foreign investors also need to submit a financial plan. Documents that need to be included in the financial plan are:

    Representation of capital
    Sources of funds and fundraising plans
    Other financial documents

If your enterprise has already been established in Vietnam for at least 1 year, you also have to submit an income statement on the basis of your last audited financial statement.

After having prepared all the information needed to set up your company in Vietnam, you can initiate to compile documents as following:

    A document to apply for investment registration certificate
    Registration/written request for issuing Certificate of Certification of legal status of the founding shareholders:
    For the founding shareholder as legal personality: legalized copy (not more than 3 months from submission of document) of Establishment Decision, Certificate of Business Registration or other equivalent documents, Articles of Association or others equally. The documents in foreign languages must be translated into Vietnamese and certified by the company specialized in translation.

Setting up foreign company in Vietnam



    For the founding members as individuals: the legalized copy (not more than 3 months from submission of document) of documents: identification card, passport or any evidences of the individual’s valid legal status.
    Investment project proposals include the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital mobilization plan, location, time limit and investment progress, demand for labor, proposals for investment incentives, impact assessment, socio-economic efficiency of the project
    Copies of one of the following documents: Financial statements of the latest 02 years of the investor; Commitment to financial support of parent company; Commitment to financial support of the financial institution; guarantee the financial capacity of investors; Documents explaining the financial capacity of investors.
    Proposal for land use; In case the project does not request the State to allocate or lease land or to permit the change of land use purpose, a copy of the lease agreement or other documents confirming the right of use of the land shall be submitted. current investment project
    Explanation on the use of technology for investment projects, for projects using technologies on the list of technologies restricted from transfer according to the provisions of law on technology transfer, covering the following contents: origin of technology, process flow chart; Main specifications, use status of machinery, equipment and main technological lines
    BCC contract for investment projects in the form of BCC contract.

Agency for submitting application file: Business registration office

Time: The time needed for investment projects not subjected to investment policy is about 15 - 20 working days from the date of receipt of full documents.

For investment projects subject to investment policy: 05-10 working days from the date of receipt of the decision.

    A document for establishment of an enterprise
    Registration/written request for issuing foreign-owned business registration (form)
    The report on financial capacity of the investor prepared by and responsible for by the investor (the contents of the report must clarify the investment sources, investor’s financial capacity for implementation of the investment project).
    The draft Articles of Association of the Company corresponding to the type of enterprise (one-member limited liability Company, joint stock Company, Partnership Company). The draft Articles of Association must be signed by the company owner, legal representative for the one-member limited liability company; legal representative of members or the authorized representative for the limited liability company with more than 2 members; of the legal representative, of founding shareholders or the authorized representative of the founding shareholders for the Joint Stock Company. The contents of the Articles of Association must comprise the contents as stated in Article 22 of Law on Enterprise.
 



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