The establishment of a joint venture company is now a very popular investment model and a safe and effective choice for investors. However, the understanding of the legal regulations relating to procedures for establishing this type of joint venture is still very limited.
Understanding that, with the desire to help investors and businesses have a clearer understanding of this model, AMI would like to share some legal knowledge related to joint ventures in the article below.
What is a joint venture company?
When the Investment Law 1996 was adopted, the joint venture company term was first mentioned but since the Investment Law 2005 and the Investment Law 2014 replaced, the joint venture company definition no longer exists.
We can simply understand that a joint venture company is a company model formed on the basis of a joint venture contract between one or more domestic investors and one or more foreign investors. This is a form of international business organization whereby investors participating in may be two or more parties with different nationalities, with the aim of jointly owning the project management capital, sharing profits and risks in the course of business.
Conditions for establishment of joint venture company
In order to establish a joint venture company, investors need to meet the conditions stipulated in the Enterprise Law 2014, specifically as follows:
- For investors being individuals: having full civil act capacity, not staying in the period of serving imprisonment penalties and not falling into the cases where business investment is prohibited under the provisions of the Enterprise Law 2014
- For investors being legal entities: legal entities are legally established and must be legally existing at the time of implementing the investment.
- Investors ensure compliance with the provisions of Vietnam laws and international treaties of Vietnam with that country are signed or recognized
- The financial capacity of investors must be at least equal to the amount of capital committed to invest in the project.
- The bank holds the deposit for the purpose of using for the investment of each investor who must be a bank that is allowed to operate in Vietnam.
Other conditions that need to be met when establishing a company in accordance with Vietnam laws, international treaties of Vietnam with that country are signed or recognized.
Procedures for establishment of joint venture company
Unlike domestic enterprises, in order to go into operation, the joint venture enterprise needs to go through the following two steps:
Step 1: Applying for Investment Registration Certificate:
Investors conduct procedures as stipulated in Article 37 of the Investment Law 2014.
For investment projects subject to investment policy decision, the investment registration agency shall grant investment registration certificate to investor within 5 working days after receiving written investment policy decision.
For investment projects not subject to investment policy decisions, investor shall submit dossiers according to regulations to investment registration agency and within 15 days after receiving complete dossiers, investment registration agency grants Investment Registration Certificate; In case of refusal, the investment registration agency must notify in writing to the investor and state the reason.
The documents specified in Clause 1, Article 33 of the Investment Law 2014 include:
- Written proposal for implementation of the investment project;
- Documents determining legal status of investors: copy of the identify card or passport, for individual investors; copy of the establishment decision or an equivalent document certifying the legal status, for institutional investors;
- Proposal for the investment project, covering: the investor implementing the project, investment objectives and scope, investment capital and capital raising plan; the project’s location, duration, investment schedule and labor demand, investment incentives, and assessment of the project’s socio-economic impacts and benefits (if any);
- Copy of one of the documents proving the investor’s financial capacity: A copy of one of the following documents: the investor’s financial statement of the last 2 years; financial support commitment of the parent company and of a financial institution; guarantee for the investor’s financial capacity; and document explaining the investor’s financial capacity;
- Proposal on land use; in case the investor does not propose the State to allocate or lease land or to permit change of land use purposes, the investor shall submit a copy of the site lease agreement or another document certifying that the investor has the rights to use the site used for project implementation;
- Explanation about use of technologies, for the projects prescribed at Point b, Clause 1, Article 32 of the Law on Investment 2014, covering: name and origin of technologies, diagrams of technological processes; primary technical specifications, conditions of main machinery, equipment and technological lines;
Step 2: Establishing a Company
After being granted an Investment Registration Certificate, the investor is entitled to establish a joint venture enterprise in Vietnam according to the procedures and regulations of the Enterprise Law 2014.
A dossier of establishment of a joint venture company specified in Article 22, Article 23 of the Enterprise Law 2014 includes:
- Enterprise registration application;
- Draft of company’s charter;
- List of members for limited liability companies, List of founding shareholders for joint stock companies
- List of authorized representatives for members, shareholders are organizations;
- Valid copy of one of the following documents:
+ Members, shareholders are individual: Citizen or people’s identity card, passport or other valid personal identification papers;
+ Members, shareholders are organization: Establishment decision or other equivalent documents of the organization; and one of the personal identification papers of the authorized representative and the corresponding authorization document;
For members, shareholders are foreign organization, copy of Enterprise Registration Certificate or equivalent documents shall be consularly legalized.
- The investment registration certificate is licensed by a competent authority.
Above are the contents of AMI’s advice on the establishment of a joint venture company in Vietnam, hoping to bring you useful knowledge about corporate law.