Investment Procedures and Enterprise Registration in Vietnam

1.Who are a foreign entities setting up foreign company in Vietnam?

KENFOX: Entities and individuals have the right to set up a foreign company in Vietnam in accordance with Law on Enterprise, except for the following cases:

• Minors; persons whose capacity for civil acts is restricted or lost; organizations without legal entity status;
• Persons who are prosecuted for criminal liability, serving prison sentences or administrative decisions at compulsory drug rehabilitation establishments or compulsory educational establishments or being prohibited from conducting business, assuming certain positions or doing certain work relating to business pursuant to a decision of a court; other cases as stipulated by the law on bankruptcy and anti-corruption;

Note: Where the business registration office so requests, any person registering establishment of an enterprise must submit a legal record to the business registration office.

2. What are required documents to establish a 100% foreign-owned company in Vietnam?

KENFOX: Per Article 22 and 23 of Decree 78/2015/ND-CP,to set up a 100 % foreign-owned company in Vietnam, please prepare the following documents:

For aLimited Liability Company:

• An application form for business registration;
• The charter of company;
• The list of members;
• Legitimate copies of:
• ID card, passport or equivalent papers of members being individuals;
• Decision on establishment, the Certificate of Business Registration or equivalent documents and the letter of authorization; the ID card or other papers of the authorized representative of members being organizations;
• For members being foreign organizations: copies of the Certificate of Business/Enterprise Registration or equivalent documents;
• The Investment Registration Certificate of foreign investors as prescribed by the Law on Investment.

For a Joint-Stock Company:

• An application form for business registration;
• The charter of company;
• The list of founding shareholders and shareholders being foreign investors;
• Legitimate copies of:
• ID card, passport or equivalent papers of founding shareholders or shareholdersbeing foreign investors;
• Decision on establishment, the Certificate of Business Registration or equivalent documents and the letter of authorization; the ID card or other papers of the authorized representative of founding shareholders or shareholders being foreign investors;
• For shareholders being foreign organizations: copies of the Certificate of Business Registration or equivalent documents;
• The Investment Registration Certificate of foreign investors as prescribed by theLaw on Investment.

In general, foreign investors should pursue the following process to do business in Vietnam:

• International investors are obliged to obtain an Investment Registration Certificate (“IRC”) from the municipal/provincial Department of Planning and Investment (“DPI”) in relevant provinces in Vietnam.
• A Business Registration Certificate (“BRC”), often referred to as an Enterprise Registration Certificate (“ERC”), is the second mandatory document to be obtained during the registration procedure.

After receiving both certificates, investors are obliged to proceed with their tax registration, pay business license tax and make their initial capital contribution

3. In what cases a foreign investor must obtain an Investment Registration Certificate (“IRC”)

KENFOX:The Investment Registration Certificate (“IRC”) is required in the following cases:

• Investment projects of foreign investors.
• Investment projects of the business organizations mentioned in Clause 1 Article 23 of the Investment Law.

Article 23 of the Investment Law: [1. When establishing business organizations, contributing capital, buying shares or capital contributions of business organizations; making investments under business cooperation contracts in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:

4. a) 51% of charter capital or more is held by foreign investors, or the majority of the general partners are foreigners if the business organization is a partnership;
5. b) 51% of charter capital or more is held by the business organizations mentioned in Point a of this Clause;
6. c) 51% of charter capital or more is held foreign investors and the business organizations mentioned in Point a of this Clause.]

4. In what cases an investor does not have to obtain an Investment Registration Certificate (“IRC”)

KENFOX:The cases in which an Investment Registration Certificate (“IRC”) is not required are as follows:

1. a) Investment projects of Vietnamese investors;
2. b) Investment projects of the business organizations mentioned in Clause 2 Article 23 of the Investment Law;
3. c) Investment is made by contributing capital, buying shares, or buying capital contributions of business organizations.

5. What are procedures and required documents to obtain Investment Registration Certificate (“IRC”) in Vietnam?

KENFOX:

The procedures to obtain Investment Registration Certificate (“IRC”) in Vietnam are provided under Article 37 of the Vietnam Investment Law (2014). Accordingly, there are two cases in which the investment conditions must be met for an Investment Registration Certificate (“IRC”) to be issued as follows:

(1) If the project is subject to issuance of a Decision on Investment Policies as prescribed in Article 30, Article 31, and Article 32 of Vietnam Investment Law, the Investment Registry Office shall issue the Investment Registration Certificate (“IRC”)to the investor within 05 working days from the receipt of the Decision on Investment Policies.

(2) If the project it not subject to issuance of a Decision on Investment Policies as prescribed in Article 30, Article 31, and Article 32 of Vietnam Investment Law, the investor shall follow the procedures as below:

33. a) The investor shall submit the documents as provided Article 33.1 of Vietnam Investment Lawto the Investment Registry Office;
34. b) Within 15 days from the receipt of sufficient documents, the Investment Registry Office shall issue the Investment Registration Certificate (“IRC”). In case of rejection, the investor must be notified in writing and provided with explanation.

As regards the required documents for issuance of Investment Registration Certificate (“IRC”), per Article 33.1 of Law on Investment No. 67/2014/QH13, an “Investment Project File/Dossier” must comprise the following documents:

1. A request for execution of the Investment Project in Vietnam;
2. A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of Establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization).
3. An Investment Proposal that specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, requests for investment incentives, assessment of socio-economic effects of the project;
4. Copies of any of the following documents: financial statements of the last 02 years of the investor; commitment of the parent company to provide financial support; commitment of a financial institutions to provide financial support; guarantee for investor’s financial capacity; description of investor’s financial capacity;
5. Demand for land use; if the project does not use land allocated, leased out by the State, or is not permitted by the State to change land purposes, then a copy of the lease agreement or other documents certifying that the investor has the right to use the premises to execute the project shall be submitted;
6. Explanation for application of technologies to the project mentioned in Point b Clause 1 Article 32 of Law on Investment No. 67/2014/QH13, which specifies: names of technologies, origins, technology process diagram, primary specifications, conditions of machinery, equipment and primary technological line;
7. The business cooperation contract (if the project is executed under a business cooperation contract).

Upon receipt of required documents from foreign investors, the following documents will be drafted by KENFOX:

• Written proposal of investment project (Form I.2 of Circular 16/2015/TT-BKHDT);
• Investment capital: Total investment capital to explain specific expenses such as compensation, resettlement support, land and water tax expenses; construction cost; Cost of machinery, equipment, technology, brand; other costs of forming fixed assets; redundancy costs; Method of capital contribution (specify the value in cash, machinery, equipment, value of land use rights, technological know-how), mobilized capital (borrowed from credit institutions or borrowed from the parent company, etc.).
• Progress of project implementation: Clearly state the specific timeline for each stage, e.g. Expected investment schedule, progress of compensation for ground clearance, construction time, operation time, production and business.
• Labor use related issues: The number of domestic workers, the number of foreign workers.
• Assessing the socio-economic impacts and efficiency of the project: Creating jobs, paying to the state budget, promoting export turnover.
• Explanation on the use of technology: Technology name, technology exit, technological process diagram, main technical parameters, use of machinery, equipment and technology transmission lines; Explanation of the ability to meet the conditions for receiving and transferring technology on the list of technology restricted transfer.
• Proposal on investment incentives: Preferences on corporate income tax, import and export taxes, incentives for land rent exemption and reduction.

The dossier is made in 01 set and submitted to the Investment Registration Agency. After receiving the application, the investment registration agency will review the Investment Project File/Dossier. If requirements are met, after 15 days, the Investment Registration Agency issues an investment certificate to the investor.

Based on the needs and capabilities of investors, depending on the field and scope of the project, investors will submit the relevant additional documents to each competent authority of investment decision as follows:

1. Projects are under the Vietnam National Assembly’s jurisdiction in making Decisions of Investment Policy as follows:

• Plan of land clearance, immigration, resettlement (if any);
• Preliminary evaluation of environmental impacts, the environmental protection measures;
• Assessing impact and socio-economic efficiency of projects;
• Proposing mechanisms, specific policies (if any).

1. Prime Minister of Vietnam is responsible for making Decisions of Investment Policy as follows:

• Plan of land clearance, immigration, resettlement (if any);
• Preliminary evaluation of environmental impacts, the environmental protection measures;
• Assessing impact and socio-economic efficiency of projects.

By defining the demand and the ability, investors will prepare and submit required documents to the competent agency or person of each level of respective competent authority in scale and investment fields. KENFOX provides the below for your information: