INVESTMENT TO ESTABLISH FDI ENTERPRISE

According to the Foreign Investment Agency, in 2022, the total registered FDI capital into Vietnam will reach nearly 27.72 billion USD, and the realized FDI capital will reach a record 22.4 billion USD, up 13.5% compared to the same period in 2021. This is the highest amount of realized FDI in 5 years (2017 – 2022). Accumulated in the period 1986 – 2022, Vietnam has attracted nearly 438.7 billion USD of FDI, in which 274 billion USD has been disbursed, accounting for 62.5% of the total valid registered investment capital.

SOME NOTES WHEN SETTING UP A FDI ENTERPRISE IN VIETNAM

When setting up an FDI business in Vietnam, investors need to pay attention to the following factors:

• Conditions for establishing an FDI company in Vietnam depend on the investor’s chosen field. Investors must carefully understand the market access conditions for the business sector they intend to invest in the bilateral and multilateral free trade agreements that Vietnam has signed, along with Vietnam’s WTO Commitments Schedule. Besides, for a few specific industries, Vietnamese law also stipulates certain conditions, such as capital, licenses, etc.
• Foreign investors contributing capital to establish FDI companies in Vietnam need to prove their finances through savings books, deposit balances, tax reports, profitable financial statements, etc.
• The capital contribution rate depends on the company’s field of operation. Investors base on the FTAs to which Vietnam is a member and the WTO Commitments Schedule to determine the correct capital contribution ratio.
• FDI enterprises in Vietnam must provide house and office rental contracts and real estate documents of the rented house and office to submit together with the establishment documents.
• FDI enterprises in Vietnam need to open an investment capital account to make capital contributions and repatriate profits.
• FDI enterprises in Vietnam are required to make capital contributions to the capital account and are monitored for capital contributions through investment reports and capital contribution deadlines.
• The term of capital contribution of FDI enterprises is recorded in the Investment Registration Certificate. The bank will only accept the capital contribution on time if the investor has made the capital contribution by the deadline. After this time limit, if investors want to carry out capital contribution procedures, they need to extend the time limit for capital contribution and amend the Investment Registration Certificate at the Department of Planning and Investment.
• Tax declaration procedures, VAT rates, and corporate income tax of FDI enterprises are similar to those of Vietnamese companies. However, FDI enterprises must audit their year-end financial statements.
• FDI enterprises in Vietnam granted an investment registration certificate must carry out the procedures for annual investment reports, investment supervision evaluation reports, and project implementation reports to the investment registration agency.

FORMS OF ESTABLISHING FDI ENTERPRISES IN VIETNAM

FDI enterprises can be established in two forms:

• Investors contribute capital to establish the enterprise from the beginning.
• Contribute capital, purchase shares, or purchase contributed capital.

PROCEDURES FOR ESTABLISHING A FDI ENTERPRISE WHEN INVESTORS CONTRIBUTE CAPITAL FROM THE BEGINNING

Step 1: Prepare and submit an application for an Investment Registration Certificate

An application for an Investment Registration Certificate includes:

• A written request for implementation of an investment project;
• House/office lease contract to implement investment projects to establish FDI enterprises;
• Copy of ID card/passport of Vietnamese people (in case of joint capital contribution with Vietnamese people);
• Written verification of the foreign investor’s bank account balance equal to or more than the investment amount. If the account is in a foreign country, the papers must be consular legalized, then translated and notarized into Vietnamese;
• The investment project proposal in Vietnam includes the following contents: investor implementing the project, investment scale, investment objectives, location, investment duration, investment capital and capital mobilization plan, progress investment level, labor demand, impact assessment, socio-economic efficiency of the project, and proposal for investment incentives;
• Proposed demand for land; In case the project does not request the State to allocate or lease land or permit the change of land use purpose, a copy of the location lease agreement or other document certifying that the investor has the right to use the site for implementation of the investment project;
• An explanation of the use of technology, including the following contents: technology name, technology origin, technological process diagram, main technical parameters, and usage status of equipment and main technological lines, for projects using technologies on the list of technologies restricted from transfer;
• If the foreign investor is an individual, it is necessary to add: A copy of the foreign investor’s passport.
• For foreign investors to be organizations, it is necessary to add:
  • A copy of the Enterprise Registration Certificate of the foreign organization;
  • Copy of ID card/passport of the representative of the capital contribution to the foreign investment organization in Vietnam;
  • Financial statements within the last two years audited by a foreign organization (must be consular legalized, valid within 90 days)

After fully preparing the documents, the investor can apply for the Investment Registration Certificate by two methods:

Online declaration of information about investment projects on the National Foreign Investment Information System at https://fdi.gov.vn/Pages/TrangChu.aspx. Within 15 days from the date of the online declaration, the investor shall submit the application for the Investment Registration Certificate to the Department of Planning and Investment.

Within 15 days of receiving the complete application, the Department of Planning and Investment shall issue an Investment Registration Certificate. In case of refusal, the investor must be notified in writing and clearly state the reason.

Step 2: Prepare and apply for the Enterprise Registration Certificate

After obtaining the Investment Registration Certificate, the FDI enterprise will carry out the procedures for applying for the Enterprise Registration Certificate. An application for an Enterprise Registration Certificate includes:

• Business registration application form;
• Company’s Charter;
• List of members (for limited liability companies with two or more members) or List of founding shareholders and shareholders being foreign investors (list of authorized representatives if there are institutional shareholders) for JSC;
• The establishment decision, the Enterprise Registration Certificate or other equivalent documents of the organization and a power of attorney; Citizen’s identity card, people’s identity card, passport or other lawful personal identification of the authorized representative of the member being an organization;
• Copies of the following papers: Citizen identification cards, People’s identity cards, Passports, or other lawful personal identification of members being individuals;
• For a member being a foreign organization, a copy of the Certificate of Business Registration or an equivalent document must be consular legalized;
• Deciding on capital contribution and appointment of managers; List of authorized representatives (for members being organizations);
• An Investment Registration Certificate for investors has been granted.

Enterprises shall submit the Enterprise Registration Certificate to the Business Registration Office of the province or city where the enterprise is located or submit it online through the National Business Registration Portal. The enterprise will be granted the Certificate after 03 working days from the date the Business Registration Authority receives the complete and valid application.

Step 3: Announce the content of the business registration information

After being granted an Enterprise Registration Certificate, an enterprise must make a public announcement on the National Business Registration Portal and, at the same time, pay the publication fee as prescribed by law. The content to be announced includes the contents of the Enterprise Registration Certificate and the following information:

• Business lines;
• List of founding shareholders; list of shareholders being foreign investors in the case of a joint-stock company (if any).

Step 4: Make a seal of the enterprise

The company’s seal is made at a seal engraving facility or a seal in the form of a digital signature in accordance with the law on electronic transactions. Enterprises make their own decisions on the type, quantity, shape and self-management of the seal according to the provisions of the company’s charter or regulations promulgated by the enterprise.

Step 5: Issuing business licenses or qualifying licenses for operation

For some industries, foreign investors must apply for sub-licenses related to operating conditions after completing the procedures for establishing FDI companies. For example, food businesses applying for a license on food hygiene, safety and environment; Education businesses: Training license…

Step 6: Open a foreign direct investment capital account

This procedure needs to be done after establishing an FDI enterprise. Investors shall open a foreign direct investment capital account and transfer capital to this account according to the time limit for capital contribution stated in the Investment Registration Certificate.

In addition, FDI enterprises need to open transaction accounts to receive money from investment capital accounts to perform transactions in Vietnam.

Step 7: Procedures after company establishment

After completing the procedures for establishing a company, investors need to pay attention to the following tasks:

• Registration of digital signatures;
• Issue electronic invoices;
• Make reports on project implementation as prescribed in the Investment Registration Certificate;
• Declare and pay tax in accordance with the law.

PROCEDURES FOR ESTABLISHING A FDI ENTERPRISE IN THE FORM OF CAPITAL CONTRIBUTION, SHARE PURCHASE, PURCHASE OF CONTRIBUTED CAPITAL

Step 1: Establish a company with Vietnamese capital

Before investors make capital contribution or share purchase, a company with 100% Vietnamese capital must be established.

Step 2: Prepare and submit registration documents to purchase capital contributions and shares of foreign investors

A dossier of registration for the purchase of contributed capital or shares by a foreign investor includes the following documents:

• Written registration of capital contribution, purchase of shares or contributed capital of a company with 100% Vietnamese capital;
• Written agreement on capital contribution, share purchase, capital purchase;
• Declaration document (enclosed with a copy) Certificate of land use right of the economic organization receiving capital contribution, shares or capital contribution of foreign investors;
• Copy of identity card or passport for individual investors. A copy of the Certificate of Establishment or other equivalent document certifying the legal status of the investor being an organization;
• Power of attorney in case of authorizing a third party to represent investment registration procedures.

Foreign investors submit dossiers to the province’s Department of Planning and Investment where the enterprise is headquartered and will be issued with a Notice of eligibility for capital contribution, share purchase, contributed capital within 15 working days from the date of receipt of a valid dossier.

Step 3: Investors make capital contributions, buy shares, and contribute capital to Vietnamese enterprises

In case foreign investors contribute more than 51% of the capital, the Vietnamese company opens a direct investment capital account and contributes capital through this account.

Step 4: Change the Enterprise Registration Certificate

This procedure must be done after the foreign investor completes the capital contribution, purchase of shares, or contribution to a Vietnamese enterprise. The dossier to request changes to the Enterprise Registration Certificate includes:

• Notice of change of business registration contents;
• Decision on the change of the company;
• Minutes of the meeting on the change of the company;
• List of capital contributors or list of foreign shareholders;
• The transfer contract and documents certifying that the transfer has been completed and approved by the legal representative of the company;
• Notarized copy of investor’s passport/Certificate of business registration.

Step 5: Issuing a Business License and an Eligible License for Operation

As in step 5, the procedure for setting up an FDI enterprise is in case the investor contributes capital from the beginning.

The above are the most basic procedures investors can refer to when planning to establish an FDI enterprise in Vietnam. Suppose investors have problems or need a professional agency to support the procedure. In that case, Siglaw is confident that we can provide professional consulting services and save investors the most cost and time.

SERVICE OF SETTING UP A FDI ENTERPRISE IN VIETNAM BY SIGLAW

 

Instruction	Prepare necessary documents and information to compile dossiers of the establishment of FDI enterprises
Answer	Legal regulations related to business lines when using the service of establishing an FDI company of Siglaw law firm
Consultancy	The most optimal type of FDI enterprise, legal and tax incentives suitable for every kind of client
Capital	Instructions for opening a capital account and the legal process of transferring investment capital
Sublicense	Advising on necessary conditions for FDI companies to operate legally

 

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