The Guide: Four Steps Set Up New Business For A Foreigner

While Vietnam is a highly attractive investment destination for foreign investors, it still has a complex legal process for establishing a company. We discuss the different set up procedures for companies that want to begin operations in the country. We also recommend professional assistance to guide companies through the myriad of laws and procedures in Vietnam.

Step 1 – Pre-investment approval

For some types of investment, companies need to seek the approval of Vietnamese authorities prior to starting establishment procedures. As a result, it is important to understand if an investment will require approval, and if so, preparing requisite documentation and working against the application processing times.

Step 2 – Investment Registration Certificate application

The first step in the Vietnamese corporate establishment process is an application for an Investment Registration Certificate (IRC). This is required of all 100 percent foreign owned investment projects, and establishes the right of the foreign enterprise to invest within Vietnam.

To apply an investor must:

  • Application for implementation of investment project (this should include details of the project in Vietnam);
  • Proposal of investment project (should include the details of the investment project, including lease agreements or land use needs);
  • Financial statements (to be provided for the last two years of a company’s operation; additional information may be required to prove financial capacity).

Timeframe: 15 days from the date when documents are submitted.

Step 3 – Enterprise Registration Certificate application

The Enterprise Registration Certificate (ERC) is required for all projects that seek to set up new entities within Vietnam. When obtained, the ERC will be accompanied by a number that will double as the tax registration number of the entity.

As part of the application process, the following information should be prepared:

  • Application for enterprise registration;
  • Company charter;
  • List of all board members;
  • List of legal representatives;
  • Letters of appointment and authorization.

Any foreign documents or supporting information provided will need to be notarized, legalized by consular officials, and translated into Vietnamese by competent authorities.

Timeframe: Three days from the date when documents are submitted. It should be noted that applications for the ERC and IRC can be processed concurrently; both can be obtained within 15 days when applied for concurrently.

Step 4 – Post licensing procedures

Once the IRC and ERC have been issued, additional steps have to be taken to complete the procedure and start business operations. This includes:

  • Seal carving;
  • Bank account opening;
  • Labor registration;
  • Business license tax payment;
  • Charter capital contribution;
  • Public announcement of company establishment.

A closer look at charter capital

Charter capital can be used as working capital to operate the company. It can be combined with loan capital or constitute 100 percent of the total investment capital of the company. Both charter capital and the total investment capital (which also includes shareholders’ loans or third-party finance), along with the company charter, must be registered with the license issuing authority of Vietnam.

Investors cannot increase or decrease the charter capital amount without prior approval from the local licensing authority.

Capital contribution schedules are set out in foreign-invested enterprise (FIE) charters (articles of association), joint venture contracts and/or business cooperation contracts, in addition to the FIE’s investment certificate. Members and owners of a limited liability company (LLC) must contribute charter capital within the capital contribution schedules set out in these documents and within the contribution timeframes established by the Law on Enterprises, 2014.

To transfer capital into Vietnam, after setting up the FIE, foreign investors must open a capital bank account in a legally licensed bank. A capital bank account is a special purpose foreign currency account designed to enable tracking of the movement of capital flows in and out of the country. The account also allows money to be transferred to current accounts in order to make in-country payments and other current transactions.

Investments and projects requiring approvalAgencyRequisite documentationTime
(days)
– Projects which currently make use of technology outlined in the Law on Technology Transfer
– Projects where government land is obtaine without the use of the tendering process
Provincial
People’s Committees
Application
Financial statements
Detailed use of restrictedtechnology
Proposed use of land
35
– Relocations of local populations (10,000–20,000 people)
– Petroleum exploration
– Seaports
– Airports
– Gambling
– Development of Infrastructure in economic zones.
– Sea Transport
– Telecommunications
– Press and publications
– Science or technological enterprises with 100% foreign owned capital
Various
government
agencies
All documents listed above in addition to:
Environmental impact assessment
Socioeconomic efficiency evaluation
60
– Projects involving nuclear power plants.
– Projects involving the mass relocationof local populations (20,000-50,000).
– Projects involving protected environmental areas.
– Projects that repurpose land for rice cultivation.
National
Assembly
All documents
listed above in
addition to:
Relocation plan (if applicable)
Should be
submitted 150
days before
the start of national assembly sessions