Vietnam has emerged as an attractive destination for foreign investors looking to establish their business presence in Southeast Asia. With its growing economy, favorable investment climate, and strategic location, Vietnam offers numerous opportunities for foreign investment. However, setting up a foreign invested company in Vietnam requires understanding the legal requirements, corporate forms, and licensing procedures. In this comprehensive guide, we will walk you through the step-by-step process of setting up foreign invested companies in Vietnam.

Corporate Forms for Foreign Investors

Foreign investors can choose between two main corporate forms for setting up a company in Vietnam: Limited Liability Companies (LLCs) and Joint Stock Companies (JSCs).

Limited Liability Companies (LLCs)

LLCs in Vietnam can have either a sole member or multiple members, with a maximum limit of 50 members. The equity of an LLC is contributed by its members as capital contributions, rather than being divided into shares like a JSC. It’s important to note that LLCs are prohibited from issuing shares to the public and can only raise capital through additional contributions from existing members or the admission of new members, subject to the pre-emption right of existing members.

Joint Stock Companies (JSCs)

JSCs in Vietnam are required to have a minimum of three shareholders at all times, with no upper limit on the number of shareholders. If a JSC has more than 100 shareholders, it can become a public company, which is governed by securities laws and regulations. JSCs have the flexibility to issue different types of securities, such as common shares, preference shares, and bonds, for raising capital.

Conditions for Foreign Investment

Vietnam adopts a “negative list” approach, which allows foreign investment in most sectors except for specifically prohibited areas. However, certain business sectors are considered “conditional” for foreign investors, which may impose restrictions on foreign ownership ratios and require additional regulatory approvals. To determine if the proposed business activities fall under the conditional sectors, foreign investor may refer to the list published by the Foreign Investment Agency under the Ministry of Planning and Investment.

Step-by-Step Guide to Registering a Company

Setting up a foreign invested company in Vietnam essentially involves a two-stage registration process namely (i) registration of an investment projects and (ii) establishing an entity. If the project involves the use of land or engages in special business activities, the project approvals in stage (i) may also require a section of investors by way of land auction or bidding procedures.

Here is a step-by-step guide to registering a company in Vietnam:

Step 1: Choose a Location

Foreign investors need to identify a suitable location for their investment project. Depending on the project objectives, investors may seek a land plot for construction or opt to rent an existing property. It’s important to note that foreign investors are not allowed to lease land from private landlords in Vietnam. Instead, the State of Vietnam leases or allocates land to foreign investors. Alternatively, investors can rent commercial or private properties from private lessors for non-land-based projects.

Step 2: Legalize Foreign Documents

As part of the application dossier, foreign investors are required to submit their corporate and identity documents, which must be legalized and translated into Vietnamese. The legalization process typically involves notarization by a notary public, certification by the Ministry of Foreign Affairs, and legalization by the Vietnamese Embassy or Consulate in the country where the documents were issued. Foreign investors can choose to use the translation services provided by the Vietnamese Embassy or Consulate or engage a certified translation agent in Vietnam.

Step 3: Prepare the Application Dossier

Investors should start preparing the application dossier for an Investment Registration Certificate. The dossier should include information about the project, such as its name, objectives, land use area, and location. Additionally, investors must demonstrate how they meet the conditions for investment according to international treaties and domestic law, as well as their technical and financial capacity to carry out the project. The application dossier should also include the MOU relating to the project location and the legalized and translated corporate documents of the investor.

At this stage, investors can also begin preparing the application dossier for an Enterprise Registration Certificate, which will be submitted after obtaining the Investment Registration Certificate. The Enterprise Registration Certificate application should include information about the foreign invested company, such as its name, charter capital, registered office address, legal representative, business activities, and shareholders/members’ information. The content of the application will depend on the chosen corporate form (LLC or JSC).

Step 4: Submit to the Authority

The application dossier for an Investment Registration Certificate should be submitted to the local Department of Planning and Investment or the Board Management of the Industrial Zone where the project will be located. The authority has 15 working days to review and issue the Investment Registration Certificate. However, the process may take longer if the business sectors are conditional, as the local authority may need to seek opinions from relevant authorities. Investors may be asked to provide additional information or documents if the application dossier is incomplete.

Step 5: Establish the Company

After obtaining the Investment Registration Certificate, investors can apply for an Enterprise Registration Certificate to establish their foreign invested company. This application can be submitted online through the National Business Registration Portal. Once the application is approved, investors need to submit a hard copy of the application to the local Department of Planning and Investment where the registered office is located. The authority has three working days to issue the Enterprise Registration Certificate.

Conclusion

Setting up a foreign invested company in Vietnam can be a complex process, but with a clear understanding of the legal requirements and licensing procedures, foreign investors can navigate the process successfully. By following the step-by-step guide outlined in this comprehensive guide, you can ensure a smooth registration process for your foreign invested company in Vietnam. Remember to consult with legal and business professionals to ensure compliance with local laws and regulations, and to maximize the benefits of your investment in Vietnam.

Disclaimer: This article is for informational purposes only and should not be construed as legal or professional advice. Please consult with a qualified legal or business professional for specific guidance on setting up a foreign invested company in Vietnam.