Client: Good morning. We are a consultancy company based in Hongkong and would like to open offices in Hanoi.
Could you please send me information on how to set a 100% foreign owned company in Vietnam, procedures, times requirements, costs and your fees?
Thank you,
Lawyer of SBLAW: This is reference to email between us, from which, we understand that your company (hereinafter referred to as “Client”) is now seeking legal advices for establishment of wholly foreign invested company (hereinafter referred to as “FIC”) for providing business management consultation services in Vietnam.
We therefore are grateful to present you our Legal Services Proposal for your review and consideration.
1. BRIEF INTRODUCTION ON ESTABLISHMENT OF FIC
1.1. General Introduction
The establishment of a FIC in Vietnam requires an Investment Certificate from the licensing authority. Depending upon 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).
We would like to clarify that the procedure for establishment of a FIC 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 45 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to evaluate the investment project.
Under Vietnam Law on Investment, for incorporating a foreign invested company (Hereinafter referred to as “FIC”), you are required to propose an Investment Project initially to obtain Investment certificate. The relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:
a. the legal framework 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 FIC shall register its head-office.
b. Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
c. Head office of the FIC should be in line with master plan of the City.
We also would like to note that we also would like to note that in the year of 2014, Vietnam National Assembly adopted a new law on Investment and Enterprise which shall becomeeffect from 1st July 2015. Accordingly, the licensing procedure for setting up FIC shall have to undergo two following steps:
– Step 1: Obtainment of Investment Certificate. The Law requires that within 15 working days from submission of the application dossier the competent authority shall have to issue the Investment Certificate for Foreign Investor. However, having preliminarily discussed with the Licensing Authority, we do not much expect that the licensing authority can comply with this requirement in practice, especially, those relating to conditional investment sectors
– Step 2:After obtainment of Investment Certificate, Client shall be required to obtain the Certificate of Business Registration. The Law requires that within 05 working days from submission of application dossier, the competent authority shall have to issue the Certificate of Business Registration for forming the Foreign Invested Company.
2. Setting up FIC for providing business management consultation service Business management consultation service is classified to CPC 865. Under Vietnam-WTO Commitments, Foreign Investor is allowed to setup wholly foreign owned company in Vietnam for conducting business management consultation service. China is a Member of WTO. Thus, Client is allowed to establish wholly foreign invested company for providing above consultation service in Vietnam.
According to our practical experience in similar cases, in order to secure the high success possibility of the case, following key factors should be taken in account:
– Capital: Vietnam Law does not stipulate minimum capital amount for this industry. However, according to our practical experience, an amount of 80,000USD upward should be reasonable.
– Parent Company must have positive business operation result in at least 02 recent years.
This must be evidenced by audited Financial Statements for 01 recent year.
– Parent Company must be experienced in the field at least 03 years.
– Head office address of the FIC in Vietnam must be compliant with master plan of Vietnam.
3. OUR SCOPE OF WORK
In light above, following works are proposed based on the request of Client. However, depending on the specific position/situation of Client, several work items may not benecessary. Meanwhile, other works may be required. However, any additional works shall not fall under the scope of this Legal Service Proposal, but could be provided upon request. Preparation of the application documents:
Notifying application documents required in accordance with Vietnamese law;
Drafting application documents required for submission purpose in English language;
Liaising with you to discuss the draft application documents;
Amending the application documents based on your comments;
Obtaining preliminary comments from the licensing authority on the draft application documents;
Finalizing the application documents following comments from the licensing authority; and
Translating the final version of the application documents into Vietnamese for execution. Licensing procedures:
Submitting the application dossier to the licensing authority on your behalf;
Monitoring and following up with the relevant authorities on the approval process;
Keeping you updated on the developments and additional requirements, if any; and
Assisting you in obtaining Investment Certificate. Post-licensing procedures:
Placing an announcement on establishment of FIC in the newspaper;
Obtaining Tax Code Registration for FIC;
Obtaining Seal Sample and Certificate of Seal Sample Registration. With the reference to road map for obtaining IC, it can be described as follows:
a. Preparing the application dossier: We shall collect necessary information and documents from you. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority andsend the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 7 working days. The prepared documents shall then be sent to you for review, signing and seal.
b. Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority. It shall take about 2-3 months from submission of application dossier for the provincial licensing authority to grant the IC.
c. Post licensing: Within 15 working days we shall complete the post licensing procedures such as placing establishment of FIC on News Paper, Tax code registration and obtaining Seal Sample.
d. For avoidance of any doubt, in practice, the administrative procedure can be longer due to that the competent authority must consult relevant ministries before granting License. In such case, SBLaw shall try its best to accelerate the progress in order to obtain the approval at the soonest.
4. DELIVARABLES
The Deliverables will include documents prepared in English. Vietnamese Version shall be provided if the document is required for submission to licensing bodies. Client will review, approve and where necessary sign these documents.
