Business investment activities in Vietnam are extremely diverse and abundant. That is, investors invest capital to carry out business activities through the establishment of economic organizations; investment in capital contribution, purchase of shares or capital contributions of economic organizations; Investment in the form of contracts or execution of investment projects.

In particular, to establish a 100% foreign-owned enterprise in Vietnam or a joint venture enterprise, an Investment Registration Certificate is required. The post below Thanh Do Lawfirm would like to introduce Consulting Foreign Investment Procedures from A to Z.

I. LEGAL GROUNDS

Law on Investment 2014;

Enterprise Law 2014;

Decree 118/2015/ND-CP guiding the Investment Law;

Decree 78/2015/ND-CP guiding the Enterprise Law and Decree108/2018/ND-CP amending a number of articles of Decree 78/2015?ND-CP;

Circular 16/2015 TT-BKHDT regulating the forms for carrying out investment procedures and reporting on investment activities in Vietnam, promulgated by the Minister of Planning and Investment ;

Circular 02/2019/TT-BKHDT guiding business registration.

II. SOME BASIC DEFINATIONS

2.1. What is a foreign investor ?

Investors according Article 3 of the 2014 investment law means individuals and organizations conducting business investment activities, including domestic investors, foreign investors and foreign-invested economic organizations. Inside:

– Foreign investors include individuals with foreign nationality and organizations established under foreign laws that carry out business and investment activities in Vietnam.

– Domestic investors are individuals who have Vietnamese nationality, economic organizations without foreign investors being members or shareholders.

– Foreign-invested economic organizations are enterprises, other organizations with foreign investors are members or shareholders.

Note : When registering the procedure of granting the certificate of foreign investor registration, it is required to provide a valid passport (individual investor) and certificate of establishment (institutional investor)

Foreign documents must be consular legalized if they are to be used in Vietnam. Refer to the article What is consular legalization ?

2.2. What is an investment registration certificate ?

Investment registration certificate means a paper or electronic document recording information of an investor’s registration of an investment project.

2.3. What is an enterprise registration certificate ?

An enterprise registration certificate is an electronic document issued by a business registration agency to an enterprise, recording information on enterprise registration.

III. FORMS OF INVESTING FROM FOREIGN INTO VIETNAM

3.1. Establishing foreign-invested economic organizations

Types of economic organizations that foreign investors are allowed to establish include:

– Joint stock company

– Limited liability company

+ One member limited company

+ Limited liability company with two or more members

– Partnerships

– Private enterprise

Before establishing an economic organization, a foreign investor must have an investment project and follow the procedures for issuance of an investment registration certificate under Article 37 of the 2014 Investment Law.

3.2. Foreign investors contribute capital, buy shares or contribute capital to economic organizations in Vietnam

Foreign investors may contribute capital to economic organizations in the following forms:

(1) Purchase of shares issued for the first time or additionally issued by joint stock companies

(2) Capital contribution to limited liability companies and partnerships

(3) Contributing capital to other economic organizations not falling into cases (1) and (2)

Foreign investors may purchase shares or capital contributions of business organizations in the following forms :

(1) Buy shares of a joint stock company from the company or its shareholders

(2) Purchase of equity interests of limited liability company members to become members of the limited liability company

(3) Purchase of equity interests of partnerships to become partners of the partnership

(4) Purchase of equity interests of other economic entities that are not in the case of (1) (2) (3)

3.3. Investment in the form of PPP contract

– What is PPP contract?

PPP contract – an investment contract in the form of public-private partnership is a contract signed between competent state agencies and investors, project enterprises to execute investment projects.

3.3. Forms of investment under PPP contracts

Project investors and enterprises enter into PPP contracts with competent authorities to execute new construction investment projects or renovate, upgrade, expand, manage and operate infrastructural works. tiered or public service delivery

The Government shall detail the fields, conditions, and procedures for project implementation in the form of public-private partnership. Refer to Decree 63/2018 / ND-CP on public-private partnership investment

3.4. Investment in the form of a BCC contract

3.4.1. What is a BCC contract?

BCC contract – A business cooperation contract is a contract signed between investors in order to conduct business cooperation for profit distribution and product distribution without establishing economic organizations.

3.4.2. Form of investment under BCC contracts

BCC contracts signed between domestic investors comply with civil law

BCC contracts are signed between: domestic investors – foreign investors; foreign investors – foreign investors follow procedures for issuance of Investment Registration Certificate in accordance with laws.

IV. CONDITIONS FOR IMPLEMENTING INVESTMENT ACTIVITIES FROM FOREIGN INTO VIETNAM

4.1. Conditions of project name

The Investment Law does not provide for naming specifications for projects. The investor can name the project in Vietnamese, English or international transliteration of that language. The content of the project name must be transparent and consistent with Vietnamese fine customs and traditions. Usually, investors usually use the company name to name the project

For example:

COMPANY NAME: TAEHWA VINA CO., LTD

PROJECT NAME: TAEHWA VINA CO., LTD

4.2. Conditions of Investors

If a foreign investor is not a member of a country participating in an international treaty to which Vietnam is a signatory, and has committed to open the market, the investment registration agency shall consult with relevant agencies. Before issuing, changing the registration of that activity in the relevant papers in accordance with the Investment Law and the Enterprise Law.

4.3. Conditions of Investment Capital

Foreign investors may own an unlimited charter capital in an economic organization, except for the following cases:

(1) Ownership ratio of foreign investors in listed companies, public companies, securities trading organizations

(2) The ownership ratio of foreign investors in equitized or transformed state owned enterprises in other forms complies with the law on equitization and conversion of state enterprises.

(3) Ownership ratios of foreign investors outside the provisions of (1) and (2) comply with other relevant laws and treaties to which Vietnam is a contracting party.

4.4. Conditions of Investment Field in Vietnam

Currently, investors are allowed to invest in industries that are not prohibited by the Vietnamese government. Therefore, it can be understood that the state has a list of prohibited industries as prescribed by law in order to ensure sustainable economic development, national defense and security, social order and morality. Some examples of industries that are invested are narcotics, plants / wildlife, prostitution …

Reference: List of industries and industries banned from investment in Vietnam

In addition, the current regulation also stipulates a number of conditional industries when investing in Vietnam, so investors can register business in this field but need to meet the following requirements. This minimum condition may be licensed before operating. For example, there are a number of conditional investment sectors, such as pawnshop service, restaurant business, wine and tobacco trading, etc.

Reference: List of conditional investment sectors in Vietnam

Vietnam is currently prioritizing development in a number of potential areas such as high-tech products, electronic materials, education, medical examination and treatment, etc. in order to develop the country in public fields. technology, education and medical examination and treatment so as to ensure the stability of the country and strongly develop economic fields. For these industries, the State has investment incentives for business activities in this field in order to create the most favorable conditions for enterprises doing business in this field.

4.5. Conditions on locations of investment projects

Location of an investment project is a place where production, business activities and implementation of an investment project work by an investor in Vietnam.

Currently, the location for implementing an investment project is divided into three main groups as follows:

No Location of investment project Conditions on locations of investment projects
1 Outside export processing zones, industrial parks, hi-tech parks and economic zones (hereinafter referred to as “out-of-zone”) Meet the conditions for leasing, the function of the building of the lessor. If the investor executes an investment project for production outside the zone, it will meet the conditions on the policy of establishing an out-of-area production project of the People’s Committee of the province / city.
2 In export processing zones, industrial parks, hi-tech parks and economic zones (hereinafter referred to as “Inside zone”) Complying with the regulations on locations of export processing zones, industrial parks, hi-tech parks and economic zones

 

4.6. Conditions of investment term

The investment duration is proposed by the investor and approved by the investment registration agency

– For small and medium-sized commercial and production projects: The investment duration is 10 years in Hanoi and 20-30 years in other provinces / cities.

– For projects with land leased from the State: The duration of investment activities is equal to the duration of land lease

V. ORDER AND PROCEDURES FOR IMPLEMENTING INVESTMENT ACTIVITIES FROM FOREIGN INTO VIETNAM

5.1. For investment in establishing foreign-invested economic organizations

When a foreign investor establishes an economic organization in Vietnam, a foreign investor must carry out the following procedures:

Step 1Procedures for applying for investment policy decision

Depending on the size, industry , technology, related to land lease of the state, … will have to ask for investment policy decision. According to the current regulations on investment procedures, there are 3 agencies competent to decide on investment policies: the National Assembly, the Prime Minister, and the provincial People’s Committees.

Refer to the article: The cases must apply for a decision on investment policy

Note: If it is not the case that the investment policy is subject to the above decision, the foreign investor is not required to carry out this procedure.

Step 2: Procedures for applying for an investment registration certificate

– Prepare an application for an Investment Registration Certificate;

– Submit application to the investment registration authority:

+ Department of planning and investment

+ Industrial zone management board

+ High-tech park management board

– Explanation on application file and licensing conditions (if any)

– Receiving the result is the Investment Registration Certificate / Notice of not being granted an Investment Registration Certificate

Step 3: Carry out business registration procedures

– Prepare application for certificate of enterprise registration;

– Submit application to the business registration authority: Business Registration Office of the province / city directly under the Central Government;

– Explanation and provision of other documents (if any);

– Receiving the result is the Certificate of Enterprise Registration / Notice of refusal to grant an enterprise registration certificate;

Step 4: Carry out the procedures after being granted an investment registration certificate and enterprise registration certificate

– Declaring and paying business license tax;

– Implement procedures for issuing invoices;

5.2. Procedures for contributing capital, buying shares and capital contributions to business organizations in Vietnam

Step 1: Submit application for approval of capital contribution, share purchase, capital contribution

Step 2: The investment registration agency shall issue a notice of approval of capital contribution, share purchase and capital contribution;

Step 3: Submit application for procedures for changing business registration content

Step 4: The provincial / municipal business registration bureau grants an enterprise registration certificate to the investor;

5.3. Investment in the form of PPP contract

Case of the project proposed by the investor

Step 1: The investor prepares an investment project proposal and submits it to a competent agency

Step 2: Agencies competent to appraise and decide investment policies

Step 3: Publicize the project proposed by the investor

Step 4: Organize the selection of investors (if there are 02 or more investors submit a proposal)

Step 5: Sign the contract, implement the project, finalize the project and transfer the project. Other cases: Guided by Decree 68/2018 / ND-CP on public-private partnership investment

5.4. Investment in the form of a BCC contract

Step 1: The parties sign a BCC contract

Step 2: Follow the procedures to apply for an Investment Registration Certificate

Step 3: Establish an office to run the project (if any)

Step 4: Implement the project

Follow procedures for issuance of an investment registration certificate according to Article 37 of the 2014 Law on Investment.

VI. DOSSIERS OF APPLICATION FOR GRANT OF INVESTMENT LICENSES FROM OVERSEAS INTO VIETNAM

6.1. Dossiers for Investment in establishment of foreign-invested economic organizations

6.1.1. Application file for the Investment Registration Certificate

(1) Written request for implementation of investment project, made according to Form;

(2) Copies of identity card, identity card or passport for individual investors, copies of establishment certificates or other documents for institutional investors;

(3) Proposal of an investment project covering the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital raising plan, location, duration, progress level of investment, labor demand, proposal of investment incentives, impact assessment, socio-economic efficiency of the project;

– For an investment project that has been operationally operated, the investor submits the dossier in accordance with the above provisions, in which the investment project proposal is replaced by a report on the status of investment project implementation from the time of deployment up to the time of applying for the Investment Registration Certificate.

(4) Copy of one of the following documents: financial statements of the last 2 years of the investor; financial commitment of the parent company; financial institutions’ commitment to financial support; guarantee of financial capacity of the investor; documents explaining the financial capacity of the investor;

(5) Proposal of land use demand; In cases where the project does not request the State to allocate, lease land or permit the change of land use purposes, a copy of the venue lease agreement or other documents certifying that the investor is entitled to use the site for execution present investment projects;

(6) Explanation on technology use for the project using technology on the List of technologies restricted from transfer under the law on technology transfer including the following contents: technology name, origin technology, technological process diagram; main specifications, use status of main machines, equipment and technology lines;

(7) BCC contracts for investment projects in the form of BCC contracts.

6.1.2. Dossiers of application for enterprise registration certificates

(1) Application form for enterprise registration;

(2) Company charter;

(3) List of founding member / shareholder of the company / shareholder being a foreign investor / authorized representative of member or shareholder being an organization;

(4) A valid copy of one of the personal identification papers (Identity Card / Identity / Passport) for the case that the founder of an enterprise is an individual; Establishment Decision or Certificate of Publication signature of the enterprise or other equivalent document, one of the personal identification papers of the authorized representative and the corresponding authorization document in case the enterprise founder is an organization;

(5) Valid copy of the investment registration certificate

6.2. Procedures for contributing capital, buying shares, or buying capital contributions of business organizations in Vietnam

6.2.1. Dossiers at investment registration agencies

1) The written registration of capital contribution, share purchase or capital contribution comprises the following contents: information about the basket of economic organizations that the foreign investor intends to contribute capital to, buy shares from, or contribute capital to; ratio of ownership of charter capital of foreign investors after contributing capital, buying shares, or buying capital contributions of business organizations;

2) Copies of identity card, identity card or passport for individual investors; copy of the Establishment Certificate or other equivalent documents certifying the legal status for institutional investors.

6.2.2. Profile at business registration office

(1) Notice of changes in business registration information

(2) Decision and valid copy of meeting minutes of the Board of members / General Meeting of Shareholders

(3) List of founding member / shareholder of the company / shareholder being a foreign investor / authorized representative of member or shareholder being an organization;

(4) A valid copy of one of the personal identification papers (Identity Card / Identity / Passport) for the case that the founder of an enterprise is an individual; Establishment Decision or Certificate of Publication signature of the enterprise or other equivalent document, one of the personal identification papers of the authorized representative and the corresponding authorization document in case the enterprise founder is an organization;

(5) Transfer contract, written confirmation of completion of the transfer

(6) Proof of capital contribution of the new member of the company

(7 ) A valid copy of the Department of Planning and Investment’s approval of the foreign investor’s capital contribution, share purchase, or capital contribution in the case specified in Clause 1 Article 26 of the Law on Investment

6.3. Investment file in the form of PPP contract

Investors may propose projects other than those approved by the Ministry, the People’s Committee and the provincial People’s Committee in accordance with Section 1, Chapter III of Decree 68/2018 / ND-CP. . Project proposal includes:

1) A proposal for project implementation, including a commitment to bear all costs and risks if the project proposal is not approved;

2) Pre-feasibility study report or feasibility study report for Group C projects;

3) Documents about the legal status, capacity and experience of the investor;

4) Other necessary documents to explain the project proposal (if any).

6.4. Investment file in the form of BCC contract

(1) Written request for implementation of investment project, made according to Form;

(2) Copies of identity card, identity card or passport for individual investors, copies of establishment certificates or other documents for institutional investors;

(3) Proposal of an investment project covering the following contents: investor implementing the project, investment objectives, investment scale, investment capital and capital raising plan, location, duration, progress level of investment, labor demand, proposal of investment incentives, impact assessment, socio-economic efficiency of the project;

– For an investment project that has been operationally operated, the investor submits the dossier in accordance with the above provisions, in which the investment project proposal is replaced by a report on the status of investment project implementation from the time of deployment up to the time of applying for the Investment Registration Certificate.

(4) Copy of one of the following documents: financial statements of the last 2 years of the investor; financial commitment of the parent company; financial institutions’ commitment to financial support; guarantee of financial capacity of the investor; documents explaining the financial capacity of the investor;

(5) Proposal of land use demand; In cases where the project does not request the State to allocate, lease land or permit the change of land use purposes, a copy of the venue lease agreement or other documents certifying that the investor is entitled to use the site for execution present investment projects;

(6) Explanation on technology use for the project using technology on the List of technologies restricted from transfer under the law on technology transfer including the following contents: technology name, origin technology, technological process diagram; main specifications, use status of main machines, equipment and technology lines;

(7) BCC contracts for investment projects in the form of BCC contracts.

 VII . POLICY INCENTIVES FOR INVESTMENT AND SUPPORT INVESTMENT

7.1. Investment incentive policies

a) Applying the enterprise income tax rate lower than the ordinary tax rate with a definite term or the whole duration of execution of investment projects; exemption and reduction of corporate income tax;

b) Exemption from import tax on goods imported to create fixed assets; raw materials, supplies and components for executing investment projects;

c) Exemption or reduction of land rental, land use levy, land use tax.

7.2. Investment support policies

a) Support to the development of technical and social infrastructure systems within and outside the project boundary;

b) Support for training and development of human resources;

c) Credit support;

d) Assistance in access to production and business premises; support to relocate production establishments from inner cities and towns;

d) Support for science, technology, technology transfer;

e) Supporting market development, providing information;

g) Support for research and development.

VIII. LEVELS AND HANDLING OF VIOLATIONS IN INVESTING ACTIVITIES FROM ABROAD INTO VIETNAM

8.1. Sanctions in the case of not making investment registration

No.

Violations of investors Penalty level (VND)

1

Not to submit reports to the investment registration authority prior to project implementation (for investment projects that are not required to have investment registration certificates) 1,000,000 – 5,000,000
2 Not to make reports on investment activities, reports on supervision and evaluation of investment projects 5,000,000-10,000,000
3 Dishonest report on investment activities
4 Not to meet the business conditions subject to business conditions as prescribed
5 Establishment of executive offices of foreign investors in BCC contracts but not registered with the investment registration agency
6 Terminating operation of executive offices of foreign investors but failing to notify the investment registration agency
7 Not to carry out the procedures for registering capital contribution, buying shares, or buying capital contributions of business organizations 20,000,000-30,000,000
8 Not to follow procedures for adjusting investment projects
9 To delay the implementation of projects, delay investment but not propose in writing to the investment registration agency or notify without the written approval of the investment registration agency ;
10 Temporarily suspending the operation of an investment project without notifying in writing to the investment registration agency or having a notice without the written approval of the investment registration agency   ;
11 Not to follow procedures for termination of investment projects and procedures for liquidation of investment projects .
12 Do not carry out the investment activities in accordance with the contents of the investment registration dossier (in cases where it is not required to grant an investment registration certificate) or an investment certificate, an investment registration certificate, Decision on investment policy 30,000,000-40,000,000
13 Not to satisfy investment conditions in the form of capital contribution, purchase of shares or stakes of foreign investors ;
14 Business investment in lines prohibited from business investment under the Investment Law .
15 Implemented investment projects without cấ p Gi was registered investment certificates, investment policy decision 60,000,000-80,000,000

8.2. Sanction in case of failure to carry out enterprise registration procedures

– Sanction in case of failure to carry out enterprise registration procedures

– Sanction in case of intentionally making dishonest declarations in enterprise dossiers;

IX. SOME OTHER NOTES

Termination of investment projects

Extend the project implementation schedule, make investment

Renew the certificate of investment registration

Change, update and supplement investor information

Establishment of business locations for foreign-invested enterprises

Open an investment capital account before establishing the project

Transfer profits from Vietnam to foreign countries

Conditions for granting temporary residence cards from 2 years to 5 years for individual foreign investors

X. THANH DO LAWFIRM SERVICES PROVIDE AND SERVICE FEE

The content of the Thanh Do Law work

(1) Consulting enterprises on the necessary conditions, processes, procedures and dossiers for obtaining the investment & enterprise registration certificates at the competent agencies;

(2) Assist customers in preparing the documents and checking provided documents;

(3) Develop and prepare application file for investment registration certificate & enterprise registration certificate;

(4) The representative of the enterprise submits the application to the authorities;

(5) Support for explanation at the authorities regarding the records in accordance with the law;

(6) The representative of an enterprise shall obtain the result of an investment registration certificate and a business registration certificate;

(7) Representatives of enterprises pay state fees and charges according to the regulations of the state;

(8) Support enterprises with the procedures to complete after being granted licenses;

Above is the whole content of advice and quotation related to your request. If you have any questions please contact Thanh Do Law Firm for advice and answers to questions.