1.The establishment of the foreign invested company (hereinafter referred to as the “NewCo”) requires an Investment Certificate from the licensing authority.
Depending on the location of the company, the licensing authority may be the provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).
Under Vietnam Law on Investment, in order to obtain an Investment Certificate for establishment of a foreign invested company, Foreign Investor is required to propose an Investment Project.
Investment Project is understood as “a collection of proposals for the expenditure of medium and long-term capital in order to carry out an investment activity in a specific geographical area and for a specified duration”. Then, relevant competent authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine whether to grant Investment Certificate or not.
Assessment of the legitimacy of an Investment Project shall be based on legal framework of Vietnam, including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the NewCo shall register its head-office.
Meanwhile, a conclusion regarding to the feasibility of an Investment Project shall be based on assessment on the financial ability of the Foreign Investor, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
Thus, procedure for establishment of a foreign invested company in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2005 is only 20 -45 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to valuate the investment project.
2.Specific comments on company conducting the import and export right of furniture.
Having carefully discussed with the licensing authorities in Vietnam, it was confirmed that it is possible for the foreign investors to setup the NewCo and a warehouse in Vietnam to conduct the import and export right of furniture.
In order to optimize success in setting up the NewCo as mentioned above, the foreign investors should consider following matters as suggested by the licensing authorities in Vietnam:
– The investor must have sufficient financial ability: They must provide sufficient documents showing that they have a stable financial ability to run the business in Vietnam. Accordingly, a good audited financial statement for the most recent year of company shall be highly appreciated. Also, they should provide a Bank Statement to certify that the current account balance in Bank is sufficient to make the capital contribution into the NewCo as committed.
– The NewCo must be a firm wholly owned by company of foreign investors or a joint venture company established by the investor’s company and a local partner:
– The capital to put in the NewCo should be at least 300,000 USD.
Kindly noted that an amount of 300,000 USD is the investment capital for running the company in Vietnam.
Under Vietnam Law, investment capital shall include (i) charter capital and (ii) loan capital.
Charter capital is an amount of money that the investors have to contribute to the NewCo in Vietnam, and it should be at least 150,000USD.
These amount money shall be used for settling expenditures for running the NewCo in Vietnam such as salary for employee, management cost, payment to furniture suppliers and so on. Loan capital is only the amount of money that the investors intend to borrow from credit entities or others to finance for operation of the NewCo.
3.Procedures for setting up a foreign invested company in Vietnam to conduct import and export right of furniture in Vietnam.
In general, conducting import right and export right is considered as a conditional investment sector in Vietnam. Thus, the application for establishment of the NewCo must undergo the investment evaluation process.
Accordingly, before the Licensing Competent Authorities must consult Ministry of Planning and Investment, Ministry of Finance and MOIT to determine whether to grant the investment certificate to the companyto setup the NewCo or not.
For ease of reference, hereinafter is an overview roadmap of this procedure as follows:
|Step 1||Step 2||Step 3||Step 4||Step 5|
|Preparation of application dossier||Submission of application dossier to Provincial Department of Planning and Investment||Comments from relevant Ministries||People’s Committee of Province grant the amended Investment Certificate||Publication on News Paper|
|Comments from relevant Provincial Department|
|Step 1||5-7 working days from receipt of necessary information and documents from the investors|
|Step 2||02-03 working days from receipt of signed and sealed documents from investors|
|Step 3||1-2 months from submission of dossier to Department of Planning and Investment|
|Step 4||5-10 working days from receipt of comments from relevant competent authorities|
|Step 5||03 working days from receipt of amended Investment Certificate|
We believe that SBLaw is well-positioned to assist investorsin obtaining the Investment Certificate for the establishment of the NewCo in Vietnam for following basis:
– Highly skilled and experienced consultants and lawyers with high ability to assist client regarding to approach business goals in Vietnam.
– Experience of SBLaw in assisting client for obtaining license for trading right and export, import right in Vietnam.
– SBLaw has successfully assisted a large number of Foreign Investor to obtain License for Distribution and export, import right in Vietnam from the year of 2009.
5. Client Reference of SBLaw:
– Acting for a Japanese Investor (Individual Investor) to obtain license for trading and leasing construction equipment in Vietnam. This includes preparing application dossier, co-ordinating with competent authority to follow the case, responding to actions of competent authority;
– Acting for Malaysian and Singaporean Investors to obtain license for trading, importing and exporting wood floor and pharmaceutical and lab equipments. This includes preparing application dossier, liaising with competent authority to follow the case, updating status of application dossier for client;
– Acting for an Italian Investors to obtain license for importation, exportation and distribution of alcohol in Vietnam. This includes preparing application dossier, liaising with competent authority to follow the case, updating status of application dossier for client.
5.Legal service of lawyer:
Our services in this regard will include:
Preparation of the application documents:
- Notifying Client of the required documents;
- Drafting application documents required for submission purposes including application, technical explanatory statement, financial capacity confirmation, board resolutions, power of attorney;
- Liaising with Client to discuss the draft application documents;
- Amending the application documents based on client’s comments;
- Finalizing and translating the final versions of the application documents into Vietnamese for execution.
- Assistance in arranging the translation and certification
- Monitoring and following up with the relevant authorities on the approval process;
- Update on the developments and additional requirements, if any;
- Prepare additional documents and submit to the licensing authority (if required); and
- Obtaining the investment certificate.
Upon issuance of the investment certificate, the NewCo is required to carry out immediate administrative procedures. Our services include:
- Application for the seal of the NewCo;
- Obtaining a tax code; and
- Public announcement arrangement.
Get in touch with us