Foreign investors contribute capital to advertising companies

Foreign-invested advertising companies are one of the most popular business types in Vietnam today. So, when foreign investors want to invest in the form of capital contribution to an advertising company, what procedures and conditions need to be followed? Let’s find out with Siglaw in the article below.

Table of Contents

Conditions for foreign investors to contribute capital to advertising companies in Vietnam

Conditions on forms of investment in advertising service business

Conditions of Vietnamese partners

Conditions for advertising service business

Procedures for foreign investors to contribute capital to advertising companies

Case 1: The advertising company was established from the beginning with the participation of foreign investors and Vietnamese investors.

Case 2: The advertising company in Vietnam was established first, then foreign investors contributed capital

Conditions for foreign investors to contribute capital to advertising companies in Vietnam

Conditions on forms of investment in advertising service business

According to the WTO Services Commitments Schedule, Vietnam commits as follows:

Advertising services (CPC 871): No restrictions, except: From the date of accession, foreign service suppliers are allowed to establish joint ventures or enter into business cooperation contracts with Vietnamese partners who are licensed to conduct advertising services. From the date of accession, joint ventures are allowed in which the foreign capital contribution cannot exceed 51% of the legal capital of the joint venture. From 1 January 2009, there is no limit on the capital contribution ratio of foreign parties to advertising companies in joint ventures.

Thus, foreign investors are not allowed to establish 100% foreign-owned advertising companies in Vietnam but are only allowed to establish joint venture companies, in which the capital contribution to establish the company is not limited in percentage but only needs to meet the requirement of less than 100%.

Conditions of Vietnamese partners

The WTO Commitments Schedule stipulates that “foreign advertising service providers are allowed to establish joint ventures with Vietnamese partners who have been licensed to conduct advertising services.” Therefore, the Vietnamese partner must be a registered enterprise in the advertising industry and have documents proving experience in this field.

Conditions for advertising service business

Article 7 of the 2012 Law on Advertising stipulates that prohibited advertising products and services include: 

• Goods and services prohibited from trading according to the provisions of law;
• Alcohol with an alcohol concentration of 15 degrees or more;
• Tobacco;
• Prescription drugs; non-prescription drugs but recommended by competent state authorities to limit use or use under the supervision of a physician;
• Breast milk substitutes for children under 24 months of age, nutritional supplements for children under 6 months of age; feeding bottles and artificial nipples;
• Hunting guns and bullets, sports weapons and products and goods that incite violence;
• Products and goods that are sexually stimulating;
• Other products, goods and services prohibited from advertising as prescribed by the Government when they arise in practice.

Procedures for foreign investors to contribute capital to advertising companies

According to the law, foreign investors and Vietnamese investors need to contribute capital to establish a joint venture company to provide advertising services. Accordingly, a joint venture company can exist in two forms:

• The advertising company was established from the beginning with the participation of foreign investors and Vietnamese investors.
• The advertising company in Vietnam was established first and then had additional investors contributing capital.

Case 1: The advertising company was established from the beginning with the participation of foreign investors and Vietnamese investors.

Step 1: Prepare the investment registration documents

The application dossier for a Certificate of registration for investment in advertising services for projects not subject to investment policy approval includes:

• Document requesting to implement an advertising service business investment project;
• House/office lease contract to implement the investment project;
• Copy of Vietnamese ID card/citizen ID card/passport (in case of capital contribution to an advertising company with Vietnamese);
• Documents proving the financial capacity of the investor. If the account is in a foreign country, the documents must be consularized, then translated and notarized into Vietnamese;
• Proposal for an advertising service business investment project including the following contents: project implementation, investment scale, investment objectives, location, investment period, investment capital and capital mobilization plan, investment progress, labor demand, assessment of the project’s socio-economic impact and efficiency, proposed investment incentives;
• Proposal for land use needs; in case the project does not request the Government to allocate land, lease land, or allow the change of land use purpose, a copy of the land use right papers or other documents determining the right to use the location in District 3 to implement the investment project;
• Explanation of the process of using technology in the first advertising service business project for project interface appraisal, obtaining technology ideas according to the provisions of law on technology transfer;
• In case foreign investors are individuals, it is necessary to supplement: A copy of the foreign investor’s passport;
• For foreign investors who are organizations, the following additional documents are required:
  • A copy of the business registration certificate of the foreign organization;
  • A copy of the ID card/CCCD/passport of the representative of the capital contribution to the foreign investment organization in Vietnam;
  • Audited financial statements of the foreign organization within the last 2 years (must be consularly legalized, valid for 90 days).

After preparing all documents, investors can submit an application for a Investment Registration Certification for Advertising services in two ways:

• Declare information about investment projects online on the National Information System for Foreign Investment at https://fdi.gov.vn/Pages/TrangChu.aspx. Within 15 days from the date of online declaration, investors submit the application for an Investment Registration Certificate to the Department of Planning and Investment of the province/city where the company is headquartered.
• Submit the application directly to the Department of Planning and Investment of the province/city where the company is headquartered for projects outside industrial parks, export processing zones, high-tech parks, and economic zones and submit it to the Management Board of industrial parks, export processing zones, high-tech parks, and economic zones for projects located in industrial parks, export processing zones, high-tech parks, and economic zones.

Within 15 days from the date of receipt of complete documents, the Investment Registration Authority shall issue the Investment Registration Certificate. In case of refusal, the investor must be notified in writing and the reasons stated.

Step 2: Prepare and submit application for Enterprise Registration Certificate

The application for a Enterprise Registration Certificate for a joint venture company providing advertising services includes:

• Application for enterprise registration certificate;
• Draft company charter depending on each type of enterprise;
• Decision on contributing charter capital and appointing managers; List of authorized representatives (for members being organizations);
• List of members (for LLCs with two or more members) or List of founding shareholders and shareholders being foreign investors (list of authorized representatives if there are shareholders being organizations) for JSCs;
• Copies of the following documents: Citizen identification card, Identity card, Passport or other legal personal identification of individual members;
• For members being foreign organizations, a copy of the Enterprise Registration Certificate or equivalent document must be consularized;
• Investment registration certificate for investors that have been granted.

A joint venture company providing advertising services shall submit an Enterprise Registration Certificate to the Business Registration Authority of the province/city where the company has its head office or submit it on the National Business Registration Information Portal. A joint venture company providing advertising services shall be granted a Certificate within 03 working days from the date the Business Registration  Authority receives a complete and valid dossier.

Step 3: Complete the procedures for the joint venture advertising service company to come into operation.

After establishing a joint venture company, the enterprise needs to carry out the following procedures:

• Announcement of enterprise registration information: A joint venture company providing advertising services must carry out procedures to announce the enterprise registration content on the National Information Portal within a maximum of 30 days from the date of receiving the Enterprise Registration Certificate and fully pay the prescribed fees.
• Engrave the enterprise seal: The joint venture company providing advertising services will decide on the quantity and form of the seal, and must ensure full company information such as the name and enterprise code.
• Purchase of electronic digital signature: A joint venture company providing advertising services must register to purchase a digital signature for the purpose of paying taxes and submitting tax returns online.
• Register a bank account for the company: A joint venture company providing advertising services must register a bank account for the company to be able to carry out activities related to money.
• Declaration and payment of business license tax: After purchasing a digital signature and registering to pay business license tax online, the company must declare and submit a complete tax declaration.
• Contribute capital to a joint venture company: Members and shareholders of a joint venture company must contribute capital to the advertising company in full and in the correct type of assets as committed when registering to establish the business within 90 days from the date of being granted the Enterprise Registration Certificate.

Case 2: The advertising company in Vietnam was established first, then foreign investors contributed capital

Step 1: Prepare documents to register to contribute capital to an advertising company

Foreign investors need to prepare the following documents to carry out the procedures for registering to contribute capital to an advertising company:

• A registration form for capital contribution/purchase of shares/stakes, which contains: enterprise registration information of the business organization to which the foreign investors expects to contribute capital or whose shares/stakes are expected to be purchased by the foreign investors; business lines; list of owners, members and founding shareholders, list of owners, members and founding shareholders that are foreign investors (if any); holding of charter capital by foreign investors before and after the capital contribution/purchase of shares/stakes in the business organization; expected transaction value of the contract for capital contribution/purchase of shares/stakes; information about the business organization’s investment project (if any);
• Copies of legal documents of the individual or organization that contributes capital or purchases shares/stakes and of the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors;
• A principal agreement on capital contribution or purchase of shares/stakes between the foreign investors and the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors or between the foreign investors and the shareholders or members of such business organization.
• Copy of Certificate of Rights to Use Land of the advertising company with foreign investors contributing capital in case the advertising company has a certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defense and security;
• Letter of introduction, power of attorney letter for submitting the documents.

Step 2: Submit documents

Foreign investors submit documents at the Investment Registration Authority;

• If an advertising company’s headquarter is located in an industrial park, export processing zone, high-tech zone, the economic zone is the Management Board of industrial parks, export processing zones, high-tech zones, economic zones..
• If the company’s headquarter is outside of an industrial park, export processing zone, high-tech zone, the economic zone is the Foreign Economic Affairs Department – Department of Planning and Investment of the province/city where the company is headquartered.

Within 15 working days from the date of receipt of valid dossiers, the Investment Registration Authority shall consider the satisfaction of the conditions for capital contribution or purchase of shares or stakes.

In particular, if the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors has the certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defense and security, the Investment Registration Authority shall follow the procedures below:

• Within 03 working days from the receipt of the valid application, the Investment Registration Authority shall seek opinions of the Ministry of National Defense and Ministry of Public Security about the satisfaction of the conditions.
• Within 07 working days from the receipt of the Investment Registration Authority’s request, the Ministry of National Defense and Ministry of Public Security shall give their opinions about the satisfaction of the conditions for national defense and security assurance by the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors; in case of failure to give any opinion by the aforementioned deadline, it is considered that it concurs with the satisfaction of the conditions for national defense and security assurance by the business organization to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors;
• Within 15 days from the receipt of the valid application, the Investment Registration Authority shall consider the satisfaction of the conditions for capital contribution or purchase of shares or stakes, and notify investors according to the opinions given by the Ministry of National Defense and Ministry of Public Security. The notification shall be sent to foreign investors and business organizations to which foreign investors contribute capital or whose shares/stakes are purchased by foreign investors

Step 3: Make capital contributions to the advertising company

After the Investment Registration Authority approves the capital contribution, the foreign investor contributes capital to the software company by establishing a direct investment capital account at a bank in Vietnam, then transfers the capital contribution through this account.

Members transferring capital shall declare taxes upon transfer in accordance with the laws on personal income tax and corporate income tax (if any).

Step 4: Procedures for changing company type, members, and company shareholders

After receiving the capital contribution of a foreign investor, the advertising company needs to carry out procedures to change the members and shareholders of the company. In case the capital contribution to an advertising company leads to a change in the type of company, it is necessary to carry out procedures to change the business registration according to regulations.

Above are some of Siglaw’s shares on the conditions and procedures for foreign investors to contribute capital to an advertising company. For any questions related to the capital contribution process to a company, feel free to contact Siglaw for more answers and dedicated advice.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

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