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Types of Licenses Required for a Hong Kong-invested Company
According to data from the Foreign Investment Agency under the Ministry of Planning and Investment (MPI), as of the end of August 2019, investment from Hong Kong investors in Vietnam reached USD 5.6 billion, ranking first among foreign investors in the country, surpassing other major partners such as South Korea, Japan, and Hong Kong itself. So, what licenses are required for a Hong Kong-invested company to operate in Vietnam? Let’s explore this topic with Siglaw Firm through the following article!
Licenses Required for a Hong Kong-invested Company:
Investment Registration Certificate
The Investment Registration Certificate (also referred to as an investment certificate or investment license) is a license issued by the competent authority to foreign investors who meet the conditions to carry out investment projects in Vietnam. The IRC can be either a physical document or an electronic version, detailing the investor’s registered information about the project.
Foreign investors are required to obtain the Investment Registration Certificate (IRC) if they fall under any of the following cases:
- Establishing a foreign-invested company in Vietnam:
This applies when foreign investors set up a new enterprise with foreign capital. - Investing in a Vietnamese economic organization:
This applies when the foreign investor, as a legal entity, makes investments in an existing Vietnamese economic organization in accordance with Vietnamese law.
The Investment Registration Certificate is a mandatory requirement for foreign investors to legally establish a foreign-invested company or carry out an investment project in Vietnam. Obtaining the IRC is compulsory for business activities involving foreign capital, including companies with Hong Kong investment.
The purpose of issuing the IRC is to enable state authorities to manage investment projects and monitor the progress of foreign investors. It also serves as a fundamental basis for the government to effectively regulate operations and oversee foreign capital inflows into Vietnam.
Business Establishment License for Hong Kong-invested Company
The Business Establishment License is a certificate issued by Vietnamese state authorities to individuals, business households, or enterprises with Hong Kong capital to conduct business activities in Vietnam. This license protects the ownership of the company’s name and legal documentation in accordance with the law. It also facilitates state authorities in monitoring and managing business activities, ensuring participation in insurance schemes and compliance with other regulatory processes.
Regarding procedures, the registration application is reviewed by the Department of Planning and Investment. The department assesses the validity of the submitted documents and ensures compliance with regulatory conditions. Once all requirements are met, the company will be granted the business license, enabling it to legally operate in Vietnam.
For each type of business activity, companies with Hong Kong capital will receive a corresponding license. Depending on the business model, different types of licenses are issued. Currently, two main licenses are granted for establishing businesses with Hong Kong capital:
- For Enterprise Registration Certificate: The Department of Planning and Investment is the authority that issues the Business Registration Certificate after receiving and verifying the validity of the application documents.
- For Certificate of household business: The Economic Department of the district will issue the license upon receiving the application for the individual business license from the household business.
Each license aligns with the nature and scope of the business, ensuring compliance with relevant regulations for both large enterprises and household businesses.
A business license for conditional business sectors is required if a Hong Kong-invested company intends to engage in industries categorized as conditional under Vietnamese law.
The Certificate of Sufficient Business Conditions, commonly referred to as a “sub-license,” does not have a specific legal definition under current regulations. It can be understood that this certificate is a legal document issued by a competent authority certifying that an organization or individual has met the necessary conditions to operate a business in sectors classified as conditional. When operating in these sectors, the business must comply with the legal regulations established by the Vietnamese government for those specific industries, primarily for reasons pertaining to national defense, public security, social order, social ethics, and community health.
For example, a Hong Kong-invested company wishing to establish a liquor distribution company in Vietnam must comply with the conditions set forth by Vietnamese law, as the distribution of liquor is considered a conditional business activity. Specifically, the Hong Kong-invested company must meet the following requirements to establish a liquor distribution company in Vietnam:
Firstly, the Hong Kong-invested company must be a legally established enterprise in accordance with Vietnamese law. Secondly, the company must have legal rights to use a warehouse or a warehouse system with a total usable area of 150 square meters or more. The liquor intended for distribution must meet the food safety conditions as stipulated. The company must have a liquor distribution system covering at least two provinces or centrally-controlled cities; in each province or city, there must be at least one wholesaler of liquor. The company must provide an introductory document or a framework contract with liquor manufacturers, other liquor distributors, or foreign liquor suppliers. Lastly, the Hong Kong-invested company must ensure compliance with all fire prevention and environmental protection requirements as prescribed by Vietnamese law.
Above are the types of licenses required for a Hong Kong-invested Company. If have any questions regarding the necessary licenses for companies with Hong Kong investment, please contact Siglaw Firm for detailed assistance!
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