This is reference to the discussion from which, we understand that your Client (hereinafter referred to as “Client”) is now seeking legal advices for establishment of Wholly Foreign Invested Company (hereinafter referred to as “WFIC”) for office subleasing service in Vietnam.
We therefore are grateful to present you our Legal Services Proposal for your review and consideration.
1. BRIEF INTRODUCTION ON ESTABLISHMENT OF WFIC
The establishment of a WFIC 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 WFIC 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 2014 is only 15 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.
With respect to several cases that involves with relocation of 10,000 people or more in highlands; 20,000 people or more in other areas or requirement for changes of land purposes or project in several special field such as Construction and operation of airports; air transport; Construction and operation of national
seaports; Petroleum exploration, extraction, and refinery etc, it shall require for approval from the National Assembly, Prime Minister or Provincial People Committee before starting the licensing process. In this case, we assume that your case is not subject to such requirement for approval. However, we reserve our right to re-quote our professional fee and amend the work schedule if your case is subject to approval of the National Assembly, Prime Minister or the Provincial People Committee. In order to setup a WFIC, it shall require you 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. For granting the 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:
– Legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well asthe master economic development plan of the city or province that the WFIC shall register its head-office.
– Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
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 WFIC for office sublease service
Office sublease service is classified to real estate business – a conditional investment sector.
Under Vietnam Law on Real Estate Business 2014 which becomes effective from 1st July 2015, foreign investor is allowed to involve with office sub-lease business in Vietnam.
For conducting office sub-lease business in Vietnam, the WFIC must have at least 20,000,000,000VND (Twenty billion Vietnam Dong) which is about 1,000,000USD (One million US Dollar) as charter capital.
Regarding to the Building for sub-lease, it must satisfy following conditions:
– The ownership of the building on land is registered in the Certificate of land use right (hereinafter referred to as Certificate of land). Regarding an off-the-plan building in the real estate project, it is only required to have the Certificate of land as prescribed in regulations of law on land;
– There is no dispute about the land and ownership of the building on land;
– The building is not distained;
– The building must satisfy other conditions applicable for office lease as stipulated under Vietnam Law.
For securing possibility of obtaining Investment Certificate for WFIC, we highly recommend Client to carefully consider following matters:
– Capital: Vietnam Law stipulates that the minimum capital amount for this industry is 20,000,000,000VND (Twenty billion Vietnam Dongs). However, according to our practical experience in previous case, an amount of 1,500,000USD upward should be reasonable;
– Parent Company must have positive business operation result in at least 02 recentyears. This must be evidenced by audited Financial Statements for 01 recent year and bank account statement.
– The Building must be compliant with master plan of Vietnam.
The roadmap for the incorporation of the WFIC can be described in following steps 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 and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 8 working days.
b. Licensing Procedure:
– 02 working days from receipt of documents duly signed and sealed from Client, we shall submit the application dossier for starting the licensing procedure. It shall take about 02 months from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate1
– 03 working days from receipt of Investment Certificate issued by the competent authority, we shall submit the application dossier for obtainment of Certificate of Business Registration. We shall obtain the Certificate of Business Registration within 05 working days from the submission date.
c. Post licensing: Within 15 working days we shall complete the post licensing procedures such as publishing the WFIC in News Paper, obtaining seal.