With the participation of Vietnam in the World Trade Organizations WTO, TPP, Asian,… the participation of foreign investors in the Vietnamese market is an indispensable result for this integration and development. A form of investment that many investors are interested in is establishing a company with 100% foreign capital.
Therefore, today, AMI would like to guide investors on the procedures for establishing a 100% foreign-owned company.
What is a 100% foreign-owned company?
A company with 100% foreign invested capital is a company owned by a foreign investor who is a member or a shareholder holding 100% of its charter capital, established and operating in accordance with Vietnam laws and international treaties that Vietnam is a member.
The order of establishing a company with 100% foreign capital
Establishment of a company is a form of investment to establish an economic organization. Article 22 of the Law on Investment 2014 stipulates that before the establishment of an economic organization, foreign investors must have an investment project to carry out the procedures for issuance of an Investment Registration Certificate as stipulated in Article 37 of the Law on Investment 2014, therefore, in order to establish a 100% foreign-invested enterprise, it is necessary to implement 2 following stages:
Phase 1: Apply for an Investment Registration Certificate
There are 2 cases:
In case the investment project is not subject to investment policy decision:
Step 1: The investor submits the dossier as stipulated in Clause 1, Article 33 of the Law on Investment 2014 to the investment registration agency.
Documents to prepare include:
- Written proposal for implementation of the investment project (form);
- 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;
- Proposals 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;
- 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;
- Proposals 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;
- Explanations 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;
- The BCC, for investment projects in the form of BCC.
Step 2: Within 15 days after receiving a complete dossier, the investment registration agency shall grant an investment registration certificate. In case of refusal, it shall issue a written reply clearly stating the reason to the investor.
In case the investment project is subject to investment policy decision
Step 1: Apply for a the investment policy decision
The application for investment policy decision to implement procedures for establishing a 100% foreign-owned company should be considered under the decision of the Government or provincial People’s Committee.
Competence of provincial-level People’s Committees to make investment policy decision
- Projects entitled to land allocation or land lease by the State not through auction, bidding or transfer; projects requiring change of land use purposes;
- Projects using technologies on the list of technologies restricted from transfer in accordance with the law on technology transfer.
Implement: The investor submits the prescribed documents as in the case of applying for the above investment certificate to the investment registration agency. Within 35 days from the date of receiving the investment project dossier, the investment registration agency must notify the results to the investor.
Competence of the Prime Minister to make investment policy decision
- Projects falling into one of the following cases, regardless of their capital sources: Relocation and resettlement of 10,000 or more people in mountainous regions or 20,000 or more people in other regions; Building and commercial operation of airports; air transport; Building and commercial operation of national seaports; Petroleum prospection, exploitation and processing; Betting and casino business; Cigarette production; Development of infrastructure of industrial parks, export-processing zones and functional sub-zones in economic zones; Building and commercial operation of golf courses;
- Projects which are capitalized at VND 5,000 billion or more;
- Projects of foreign investors in the sectors of sea transport, provision of telecommunications services with network infrastructure, forest plantation, publishing, press, establishment of wholly foreign-owned science and technology organizations and science and technology enterprises;
Implement: The investor submits the required documents as in the case of applying for the above investment certificate to the investment registration agency and attached to the plan of site clearance, migration and resettlement (if any); detailing the preliminary assessment of environmental impacts, solutions to protect the environment and assess the socio-economic impacts and efficiency of investment projects. Investors receive the results within 35 – 40 days from the first submission date.
Step 2: Within 5 working days after receiving investment policy decisions, investment registration agency shall grant investment registration certificates to investors.
Phase 2: Implement procedures to set up a company with 100% foreign capital
After obtaining an Investment Registration Certificate issued by a competent authority, the investor proceeds to establish a company in accordance with the Enterprise Law 2014.
Step 1: Preparing and submitting the document
Documents include:
- Enterprise registration application for 100% foreign-owned company;
- Draft of company’s charter;
- List of members, List of founding shareholders;
- List of authorized representatives for members, shareholders are organizations;
- Valid copy of one of the documents proving the legal status of the investor: Citizen or people’s identity card, passport or other valid personal identification papers, for individual members; Establishment decision or other equivalent documents of the organizations; and one of the personal identification papers of the authorized representative and the corresponding authorization document;
Documents such as the enterprise registration certificate or other equivalent documents shall be consularly legalized.
- The investment registration certificate is licensed by a competent authority.
Step 2: Within 03 working days from the date of receiving valid dossiers, the Business Registration Agency grants a business registration certificate to 100% foreign-owned company.
Above, AMI has shared with the investors very detailed about the procedures for establishing a 100% foreign-owned company, if you need further assistance, please contact us.
