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Foreign investors establish a limited liability company with two or more members
With the principle of limited liability of capital contributors, a limited liability company (LLC) is an attractive type of enterprise for foreign investors when establishing a business in Vietnam. According to Vietnamese law, LLCs are classified into LLCs with two or more members and LLCs with one member. The following article by Siglaw Law Firm will provide customers with information on foreign investors establishing LLCs with two or more members in Vietnam.
Learn about LLCs with two or more members under Vietnamese law
Conditions for foreign investors to establish an LLC with two or more members
Market access conditions
Conditions on prohibited and restricted industries
Procedures for establishing an LLC with 2 or more members with foreign investment capital
Step 1: Investment registration
Step 2: Register a 2-member LLC with foreign investment capital
Foreign investors receive transfer of capital contribution in LLC with two or more members
Learn about LLCs with two or more members under Vietnamese law
An LLC with two or more members is a legal entity with from 02 to 50 members who are organizations or individuals. Members are financially responsible within the scope of capital contributed to the enterprise.
Conditions for foreign investors to establish an LLC with two or more members
Market access conditions
According to Article 9 of the Investment Law 2020, foreign investors establishing FDI enterprises in Vietnam must pay attention to the List of industries and occupations with restricted market access for foreign investors, including: industries and occupations that have not yet had market access and industries and occupations with conditional market access.
Conditions on prohibited and restricted industries
Investors need to pay attention to the industries prohibited from investing in Vietnam, including the industries specified in Article 6 of the Investment Law 2020. In addition, industries restricted from investment in Vietnam are currently specified in Appendix IV of the Investment Law 2020, so investors need to carefully research to meet all conditions before investing in this area.
Procedures for establishing an LLC with 2 or more members with foreign investment capital
The establishment of a new LLC with 2 or more members with foreign investment capital goes through 2 steps: investment registration and enterprise registration.
Step 1: Investment registration
*For cases where investment policy approval is not required:
The investor will submit the application for investment registration to the competent authority to issue the Investment Registration Certificate (IRC). The application for the IRC includes:
– Document requesting to implement an investment project to establish a two-member LLC with foreign investment capital;
– Investment project proposal;
– Documents proving the financial capacity of the investor;
– Certified copy of personal identification documents for individual investors; copy of Business Registration for institutional investors;
– Lease contract or other documents confirming the investor’s right to use the business premises;
– Authorization letter for individuals and organizations to submit the application to the Department of Planning and Investment.
– Business cooperation contract (BCC contract) for investment projects in the form of BCC contracts.
– Proposal for land use needs (if any);
– Explanation of technology use for investment projects for projects using technology on the List of technologies restricted from transfer (if any).
After preparing all the documents, the investor will submit the documents to the competent authority. The competent authority for investment registration is one of the following two agencies: the Department of Planning and Investment of the province or centrally-run city; or: the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones. Investors need to consider the specific regulations of the locality where they invest to submit the documents to the correct competent authority.
Within 15 working days from the date of receipt of the documents, the competent authority shall consider and issue the IRC; in case of refusal, it must be made in writing and clearly state the reasons.
*In case of having to apply for investment policy approval
The investor will submit the application for investment policy approval to the government agency. The application for investment policy approval includes documents similar to the application for investment registration. After preparing all documents, the investor will submit the documents to the competent authority receiving the documents, which can be one of the following authorities:
– Ministry of Planning and Investment;
– Department of Planning and Investment of provinces and centrally run cities;
– Management Board of industrial parks, export processing zones, high-tech zones, and economic zones.
Investors need to consider the specific type of project they are investing in to submit their application to the correct competent authority. If the enterprise is approved for investment policy, it is no longer necessary to carry out investment registration procedures.
Step 2: Register a 2-member LLC with foreign investment capital
The application for an enterprise registration certificate includes:
– Enterprise registration application;
– Company charter;
– List of company members;
– A valid copy of one of the documents proving the legal status of the organization or the identification document of the individual who is a company member.
– The issued IRC.
After preparing all the documents, the investor will submit the documents to the Department of Planning and Investment of the province or centrally-run city; and at the same time, submit the documents online at the National Business Registration Portal (dangkykinhdoanh.gov.vn).
After receiving the enterprise registration documents, the Business Registration Office will issue a Receipt of Documents to the applicant. Within 03 working days from the date of receiving valid documents, the investor will be granted an ERC. In case the competent authority refuses to issue, it must notify in writing stating the reasons.
Post-establishment procedures
– Open a bank account: Foreign-invested companies are required to open a direct investment capital account for investors to transfer capital. The companies then need to transfer to a payment account to pay for company operating expenses.
– Labor registration: Carry out labor registration, report and apply for Work Permits for foreigners and social insurance for employees.
– Apply for Sub-licenses: Apply for necessary sub-licenses for conditional industries (if any).
Foreign investors receive transfer of capital contribution in LLC with two or more members
If the investor does not participate in establishing a limited liability company with two or more members and foreign investment capital, he or she can receive a transfer of capital contribution from a Vietnamese investor. By doing so, the foreign investor will not have to carry out investment registration procedures, and the company only needs to register the enterprise. This helps to reduce administrative procedures later if there are changes in the contents of the enterprise registration.
For comprehensive advice on the procedures for foreign investors to establish a limited liability company with two or more members, please contact:
Siglaw Law Firm
Head office: No. 44/A32 – NV13, Glexemco A, Le Trong Tan, An Khanh, Hoai Duc, Hanoi.
Hotline: 0961 366 238
Southern Branch: A9.05, SkyCenter building, No. 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City.
Central Branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City
Phone: (+84) 961 366 238
Email:
Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.
Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.
Central branch: 177 Trung Nu Vuong, Hai Chau District, Da Nang City
Facebook: https://www.facebook.com/hangluatSiglaw
