We were requested to advise on possibility of setting up a foreign invested company (hereinafter referred to as the “Company”) in Hanoi to manufacture electrical devices in Vietnam.
We, therefore, are grateful to present you our legal service proposal for your review and consideration.
1. BRIEF SUMMARY OF BACKGROUND
Under Vietnam Law, foreign investors will be issued Investment Certificate from licensing authority when they invest into Vietnam. Depending on 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 Zone).
We understand that upon establishment, the Company shall manufacture electrical devices in Vietnam and situate in Hanoi.
2. PRELIMINARILY COMMENT OF S&B LAW
2.1. Executive Summary
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 plan of economic development of the city or province that the Company 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 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. 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.
2.2. Specific comments
2.2.1. Pre-licensing procedure
Under Vietnam Law on Investment, before starting the licensing procedure for obtaining the Investment Certificate for setting up the Company to manufacture electrical devices in Vietnam, you must proceed necessary works for obtain in-principle approval for land use right to ward the land lot wherein you would like to locate the factory.
In case you locate the factory out side of the Industrial Zone, three following main works shall be required:
- Consulting and obtaining an in-principle approval on the Land Use Right toward the proposed land lot from the People’s Committee of the relevant city or province (the “People’s Committee”);
- Consulting and obtaining the support letter for the whole project from the People’s Committee; and
- Consulting and obtaining the Planning Certificate of the proposed project from the Planning and Architecture Department of the relevant city of province (the “Architecture Department”).;
a. In-principle approval on the land from the People’s Committee (applicable when you leased the land from the State):
Before submitting the application for the Investment Certificate from the Licensing Authority, foreign investors need to consult and negotiate with the existing land user of the proposed land and the People’s Committee relation to the land to be used for the project. The value of the LUR to be contributed into the proposed project will be negotiated between the parties who may involve a valuation expert.
b. Letters of support from the People’s Committee for the proposed project
The letters of support from the People’s Committees of relevant province where the real estate is developed should be addressed to the Licensing Authority and all relevant State authorities. The letters of support should include the following (i) a statement that the proposed project is compatible with the resources and needs the relevant city or province; and (ii) undertakings of the People’s Committee to support the project. It usually takes about 01 to 02 months to obtain these letters from the People’s Committee.
For the convenience to obtain the support letter from People’s Committees, you must provide a sufficient explanation on the feasibility of your investment project. Scope of investment project and the Investment Capital shall be carefully evaluated to grant the final conclusion.
c. Planning Certificate issued by the Architecture Department
A Planning Certificate (or the “red-line demarcation”) issued by the Architecture Department, will be required for any building or civil work. The issue of the Planning Certificate usually takes up to 2 months after the submission of relevant documents.
An application for the Planning Certificate will include (i) details of the investment project, (ii) the scale of construction works; (iii) the requirements for land and the demand for use of technical infrastructure. The Planning Certificate must be obtained before or at the same time as the application file for the Investment Certificate is submitted to the Licensing Authority.
However, you can ignore the above stated steps in case you would like to lease a land lot from an existed Industrial Zone. In such case, the Investor of Industrial Zone shall need to provide you an in-principle land lot lease agreement. .
2.2.2. Licensing Procedures
a) Obtaining Investment Certificate
After completing above works, you shall be required to prepare an application dossier for submitting to the People’s Committee/ Management Board of Industrial Zone for the issuance of the Investment Certificate.
Generally, it shall take you about 01 month to obtain the Investment Certificate. However, you can save much your time if you would like to establish the Company in the Industrial Zones.
The Investment Certificate shall be treated as the Certificate of Business Registration or Certificate of Incorporation of the Company.
b) Publishing the establishment of Company, obtaining Seal and Certificate of Seal Sample Registration, Tax Code Registration.
After obtaining the Investment Certificate, it is required the Company to publish the establishment of the Company on newspaper, obtain Seal, Certificate of Seal Sample Registration and Tax Code Registration.
c) Issuance of the Land Use Right Certificate (applicable when you lease the land from the State)
After the Investment Certificate has been issued by the Licensing Authority to a foreign invested company, the procedure for land lease shall be as follows:
- issue of the Chairman of the People’s Committee’s formal approval on land lease;
- signing of a land lease;
- Payment of the land rental to the State; and
- Issue of the Land Use Right Certificate.
3. SBLAW’s QUALIFICATION
We believe that SB Law is well-positioned to assist youin obtaining the Investment Certificate for the establishment of the Company in Vietnam for following basis:
n Highly skilled and experienced consultants and lawyers with high ability to assist client regarding to approach business goals in Vietnam.
n Experience of SBLaw in assisting client for obtaining license for Investment Certificate in Vietnam.
n SBLaw has successfully assisted a large number of Foreign Investor to run their investment project in Vietnam.
- Scope of works
Our services in this regard will include:
| Description of Scope of Work | Note |
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The first draft documents will be available within two to three weeks upon receipt of full information and feedback. |
We can assist you in arranging translation and certification after the documents have been duly legalized. |
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The first draft Company Charter will be available within two weeks upon receipt of your information. |
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The timeframe will depend on the scale and scope of business of the Company |
Upon issuance of the investment certificate, the Company is required to carry out immediate administrative procedures. Our services include:
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These procedures for the post licensing procedures usually take about two weeks to complete.
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Our scope of work shall not be inclusive of following work items:
– Negotiation with other parties on behalf of Client.
– Translating documents provided by Client from English into Vietnamese.
– Preparing technical explanation for the Project
– Obtaining approval on Lease of Land Use Right.
5. 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.
