Formation of company providing foreign language training service

SBLaw would like to provide legal advice on possibilities of setting up a foreign invested company providing foreign language training services in Vietnam as follows:

1.BRIEF SUMMARY OF BACKGROUND AND OUR COMMENTS

It is our understanding that you are now considering possibilities of setting up a foreign invested foreign language training institution in Vietnam.

Foreign Language Training Services under Vietnamese law can be classified to short term training services. According to the Decree No. 73/2012/ND-CP dated September 26, 2012, on foreign cooperation and investment in education, you are entitled to setup a wholly foreign invested Foreign Language Training Institution in Vietnam.

In order to setup a Foreign Language Training Institution in Vietnam, you must satisfy following conditions:

(a) Investment Capital: Capital investment must be at least at least 20 million VND (about 1,000USD) per student (exclusive of the expense on land tenancy). The total minimum capital is calculated based on the total quantity of students when the estimated education scale is greatest;

(b) Facilities and equipment:

– The light, furniture, and teaching equipment in classrooms must be appropriate;

– The minimum average area for teaching must be 2.5 m² per students;

– Having offices for the Board of Directors, teachers, libraries, and other functional rooms;

-Having necessary equipment serving the teaching and management.

(c) Education program

– The education program must demonstrate the educational target, without damaging the national security and public interests; without spreading religion, distorting history; without negatively affect the cultures, ethics, and traditional customs of Vietnam, and must ensure the connection between the levels and grades.

(d) The teaching staff

– The teachers must have college degrees, or the equivalent, in the profession suitable for the subjects that they teach;

– The maximum ratio of students to teachers is 25 students per teacher.

– Foreign Teachers must have at least 5 years experience in the field and must be recognized by the Ministry of Education and Training in Vietnam.

Establishment of Foreign Language Training Institution in Vietnam must undergo three phases, i.e. (i) obtaining Investment Certificate; (ii) Approval for establishment of Foreign Language Institution and (iii) Approval for provision of education services.

2.   PROCEDURES FOR ESTABLISHMENT OF FOREIGN LANGUAGE INSTITUTION IN VIETNAM.

2.1.    Obtaining Investment Certificate:

Before establishing a Foreign Language Training Institution in Vietnam, Foreign Investor is required to setup a Foreign Invested Company (hereinafter referred to as “FIC”) which shall manage and operate the Foreign Language Training Institution. The establishment of the FIC 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 FIC 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 evaluate the investment project.

Under Vietnam Law on Investment, for incorporating a 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 factors:

– The Investment Project must be in conformity with the socio-economic development and the educational institution network planning approved by competent State agencies;

– Pre-feasibility study on the establishment of the educational institution;

– Available land in the locality to give or to lease out, or the agreement on leasing available facilities;

– Your financial ability, investment capital to put in the Investment Project, and human resources serving the implementation of such investment project in Vietnam.

The roadmap for the incorporation of the FIC for trading activities can be described in following steps as follows:

– 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 05-07 working days.

– 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 45 workings days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate. In some case the process can be longer as it takes time to consult relevant Ministries such as Ministry of Industry and Trade, Ministry of Planning and Investment, Ministry of Finance and Ministry of Training and Education.

– Post licensing: Within 13 working days we shall complete the post licensing procedures such as publishing the New Company in News Paper, obtaining seal and tax code registration.

2.2 Approval for establishment of Foreign Language Training Institution

After obtaining Investment Certificate from the competent authority, you must submit application dossier for approval for establishment of Foreign Language Training Institution to the Provincial Department of Education and Training. In this phase, you must prepare detailed project of the establishment of the educational institution, specifying name, name, educational targets; qualifications and certificates being issued; the designed structure of the managerial mechanism and the detailed plan for the development and scale of the educational institution in each period, specifying the fulfillment of the conditions for facilities and equipment, education programs, and teaching staff.

Within about 45 working days from the date of submission of valid application dossier to the competent authority, the provincial People Committee shall grant Decision on establishment of Foreign Language Training Institution.

2.3.Approval for provision of education services

Within 24 months from being issued with the Decision on approving the establishment of the Foreign Language Training Institution, you must apply for approval for providing education services.

The approval for providing education services shall be granted upon the satisfaction of following conditions:

• The organizational structure of the educational institution or its campus has been completed;
• The Regulation on organization and operation of the educational institution is conformable with law;
• The conditions of capital, facilities and equipment, education programs, and teaching staff are satisfied;
• The conditions for establishing new faculties are satisfied, applicable to educational institutions that establish new faculties.

Within 27 working dates from the submission of application dossier, the competent authority shall approve the provision of education services. Then, your Foreign Language Training Institution can officially provide training courses to students.

3. Scope of works

 4.       DELIVARABLES

The Deliverables will include documents prepared in Vietnamese as required for submission to licensing bodies. You will review, approve and where necessary sign these documents.

SBLaw may provide English translations of these documents (or extracts thereof), but the translated documents should be used for reference other the purposes of discharging your responsibility for the positions taken and the underlying company information.