Establishing a 100% foreign-owned enterprise

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Establishing a 100% foreign-owned enterprise

Vietnam is rising as a star in the South East Asia region. Accordingly, many foreign investors want to enter this market and invest in this country. However, the procedure of establishing a 100% foreign-owned enterprise is not that simple. In fact, it is quite complex and required a lot of approval from many sides. This is to enable that the companies established won’t have any damaging effects on Vietnam and its citizens. That being said, what is the procedure for establishing a 100% foreign-owned enterprise in Vietnam?

The process of establishing a 100% foreign-owned enterprise

The process of establishing a 100% foreign-owned enterprise contains the following steps:

Register investment policy

The investment policy decision of the provincial-level People’s Committee 

For an investment project subject to an investment policy decision, the investor must register the investment policy with the provincial-level People’s Committee.

Provincial-level People’s Committees shall decide on investment policies for the following projects:

  • The project is allocated or leased land by the State without auction, bidding, or transfer; projects requiring a change of land use purpose;
  • The project uses technology on the list of technologies restricted from transfer in accordance with the law on technology transfer.

Dossier of application for approval of investment policy of the People’s Committee of the province includes:

  • A written request for the implementation of an investment project.
  • Copy of Certificate of Establishment or other equivalent document certifying legal status as prescribed (For institutional investors) and notarized copy of ID card or valid ID card or passport (For individual investors).
  • The investment project proposal includes the following contents: investor, investment objective, investment scale, location, duration, investment capital, investment progress, labor demand, the proposal for priority investment incentives, socio-economic efficiency of investment projects.
  • Financial statements for the last 2 years of foreign investors.
  • Commitment to the financial support of a financial institution.
  • Commitment to the financial support of the parent company.
  • Documents explaining the financial capacity of investors.
  • Guarantee of investor’s financial capacity.
  • Proposing land use needs.
  • Explanation of technology use: technology name, technology process diagram, technology origin, main specifications, equipment, and technological lines, usage status of machines, process diagram technology, main specifications, usage status of machines and equipment…if necessary according to regulations.
  • BCC contract for investment projects in the form of a BCC contract.

The investment policy decision of the Prime Minister

In some cases, the investor must register the investment policy under the authority of the Prime Minister.

If the foreign investor’s projects are projects in the fields of the shipping business, the business of telecommunications services with network infrastructure, afforestation, publishing, press, the establishment of scientific and public organizations, science and technology enterprise with 100% foreign capital, the enterprise must register the investment policy with the Prime Minister in accordance with the provisions of the Law on Investment 2020.

Dossier of application for approval of investment policy of the Prime Minister includes:

  • Plan on site clearance, migration, and resettlement (if any).
  • Preliminary assessment of environmental impact, environmental protection solutions.
  • Assessment of economic and social impacts and efficiency of investment projects.
  • All other documents as the investment policy registration of the Provincial People’s Committee Agency.

The investment policy decision of the National Assembly 

The National Assembly shall decide on investment policies for the following projects:

  • Nuclear power plants;
  • Investment projects requiring change of land use purpose of special-use forests, watershed protection forests or border protection forests of 50 hectares or more; protective forests against the wind, flying sand and protection forests against waves and sea encroachment of 500 ha or more; production forests of 1,000 ha or more;
  • Investment projects that require migration and resettlement of 20,000 people or more in mountainous areas, and 50,000 or more people in other areas;
  • Investment projects that require relocation of 20,000 people or more in mountainous areas, and 50,000 or more people in other areas.

Dossier of application for approval of investment policy of the National Assembly includes:

  • Plan on site clearance, migration, and resettlement (if any);
  • Preliminary assessment of the impact on the environment and solutions to protect the environment;
  • Assess the economic, social, and affective impacts of the project;
  • Propose specific mechanisms and policies (if any).

Procedures for applying for an investment registration certificate

After the investment policy has been approved by the National Assembly, the Prime Minister, or the provincial-level People’s Committee, the business must apply for an investment registration certificate. 

For projects subject to a decision on investment policies, the investment registration agency will issue an Investment Registration Certificate to the investor within 5 days from the date of receipt of the decision on investment policy.

An application for an Investment Registration Certificate includes the following documents:

  • For individual investors: Copy of identity card, ID card, or passport
  • For institutional investors: Copy of Certificate of Establishment or other equivalent document certifying legal status;
  • An investment project proposal includes the following contents: investor, investment objectives, investment scale, investment capital, and capital mobilization plan, location, time, investment schedule, labor demand, the proposal for investment incentives, impact assessment, socio-economic efficiency of the project;
  • Financial statements for the last 2 years of the investor;
  • Commitment to the financial support of the parent company;
  • Commitment to the financial support of financial institutions;
  • Guarantee on the financial capacity of the investor;
  • Documents explaining the investor’s financial capacity;
  • Proposing land use needs; 
  • The explanation on the use of technology includes the following contents: technology name, technology origin, technological process diagram; Main technical parameters, usage status of the main machinery, equipment, and technological lines for projects using technologies on the List of technologies restricted from transferring.
  • BCC contract for investment projects in the form of a BCC contract.

Apply for a certificate of enterprise registration to establish a company with 100% foreign capital

After obtaining the investment registration certificate, the business needs to apply for a certificate of enterprise registration to establish a company with 100% foreign capital.

Dossier to establish a company with 100% foreign capital includes:

  • Application for business registration.
  • Company charter with 100% foreign capital.
  • List of members/List of founding shareholders and shareholders being foreign investors.
  • Valid ID card or passport (for individuals).
  • Business registration certificate for organizations and enclosed with personal identification papers, authorization decision of authorized representative of the organization (for organizations).
  • Investment registration certificate for foreign investors.

Dossier to establish a 100% foreign-owned limited company:

  • Business registration application;
  • Company rules;
  • Members list;
  • Copies of the following papers: Citizen’s identity card, Passport, or other lawful personal identification of members (for individuals);
  • The establishment decision, the enterprise registration certificate or other equivalent documents of the organization and the power of attorney; Citizen’s identity card, passport, or other lawful personal identification of the authorized representative of the member (for organization);
  • For a member being a foreign organization, a copy of the Certificate of Business Registration or an equivalent document must be consular legalized;
  • Investment registration certificate for foreign investors in accordance with the Law on Investment.

Dossier of the establishment of a joint-stock company with 100% foreign capital:

  • Business registration application;
  • Company rules;
  • List of founding shareholders and shareholders being foreign investors (list of authorized representatives if any);
  • Copies of the following papers: Citizen’s identity card, Passport, or other lawful personal identification of members being individuals;
  • The establishment decision, the enterprise registration certificate or other equivalent documents of the organization and the power of attorney; Citizen’s identity card, passport or other lawful personal identification of the authorized representative of the member being an organization;
  • For a member being a foreign organization, a copy of the Certificate of Business Registration or an equivalent document must be consular legalized;
  • Investment registration certificate for foreign investors in accordance with the Law on Investment.

Publishing the establishment statement of a company with 100% foreign capital

After an enterprise is granted an enterprise registration certificate, it must make a public announcement on the national business registration portal according to the procedures and pay fees as prescribed.

Information on business registration must be published on the National Portal within 30 days from the date of issuance of the Business Registration Certificate.

Engrave the company’s seal with 100% foreign capital

After obtaining the Certificate of Business Registration, the enterprise needs to engrave its legal entity seal.

A legal entity seal includes a seal made at a seal engraving establishment or a seal in the form of a digital signature in accordance with the law on electronic transactions.

The enterprise has the full right to decide on the type, quantity, form and content of the seal of the enterprise, branch, representative office and other units.

According to the provisions of the Enterprise Law 2020, effective from January 1, 2021, enterprises engrave their own seals and manage their own seals and are responsible for their own seals.

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