Establishment a 100% Owned Foreign Company
What is wholly foreign-owned company?
Under the WTO commitments, foreign individuals and/or organizations may own all the capital of a company in Vietnam, which is 100% foreign owned.
Legal services:
- Establish the company: apply for requesting the competent authority in Vietnam to grant the Investment Registration Certificate (IRC) and/or the Enterprise Registration Certificate (ERC)
- Adjust content of IRC, ERC: (increase or decrease of investment capital, addition or change of business lines or fields of investment, change of investment location, update of investors, legal representatives, change the type of company from Limited Liability Company to Joint-Stock Company or vice versa, …)
- Extend Investment projects;
- Terminate Investment projects;
- Register tax, provide tax services, accounting, labor, bank accounts and other licenses after establishing a company.
How to proceed?
- Our lawyers will discuss with you through our CRM system or phone or email or meet directly to understand your investment requirements and targets in Vietnam;
- We will provide investment trends, strengths, and limitations of investment locations in Vietnam, expense, the expected time you receive IRC, ERC, other licenses for you to consider making the decision;
- Our lawyers will recommend a suitable investment model for you including business lines, capital structure, type of company, location of investment and the conditions you need to meet when investing in Vietnam;
- We will provide a list of documents and legal forms that we have translated from Vietnamese to English for you to prepare to complete the application for licenses (if you agree to use our services);
- Provide an account for you to access our CRM system to monitor and speed up the process of applying for your licenses;
- Delivery of licenses to you and provide guidance documents to prepare you to perform the order of work after establishing the company.
Registering a 100% foreign-owned company in Vietnam is possible. However, foreign investment is subject to regulatory limitations applied on each specific business sector.
In most cases, investors shall implement the following steps to establish a company:
Step 1: Obtaining an Investment Registration Certificate, abbreviated IRC (if any non-Vietnamese investors).
Step 2: Obtaining an Enterprise Registration Certificate, abbreviated ERC or BRC for Business Registration Certificate.
The company is established but the following steps are required for regulatory compliance:
Step 3: Post establishment procedures.
Step 4: Obtaining sub-licenses (if any).
IRC stands for Investment Registration Certificate which shall be obtained (in most cases) when a foreign investor wants to set up a project (such as establishing a company) in Vietnam at the beginning.
ERC stands for the Enterprise Registration Certificate which every company in Vietnam must have. In other jurisdiction it is sometimes referred to as the “Incorporation Certificate” or “Company Certificate”.
Joint Stock Company (“JSC”) and Limited Liability Company (“LLC”) are the most common types of company in Vietnam since they offer the following advantages:
- Limitation in liabilities of their shareholders/ members/ proportionate to their capital contribution;
- Flexible management structure;
- Conversion from JSC to LLC and conversely is possible.
In general, there is no minimum capital required by law when registering a company in Vietnam. Only some conditional business sectors such as real estate trading, banking or education have specific capital requirements.
However, the capital shall be sufficient in light of the intended business sectors and scale of operation.
For non-conditional business sectors, we usually need from 6 to 8 weeks to setup a foreign-invested company and 1 week for a Vietnamese-invested one.
However, especially for foreign-owned companies, the time can be extended due to various reasons such as additional requirements from the licensing authorities.
Yes. Foreign investors are entitled to have 100% ownership of a Vietnamese company, except for conditional business sectors in which the foreign ownership ratio is limited as stipulated in (i) the Schedule of Specific Commitments in Services of the General Agreement on Trade in Services (the “Schedule”) and (ii) the laws and regulations of Vietnam.
The applicable laws do not particularly impose a minimum capital to foreign investors. However, for some business sectors, either foreign or domestic investors are obligated to meet the minimum capital (known as “legal capital”). Therefore, foreign investors should check beforehand to estimate the fund required for the investment.
In business sectors in which the legal capital is not applicable, foreign investors can estimate the capital required by considering the budget needed to set up and sustain a business such as rental charged on business location, salary budget, procurement costs, service charges…
Yes. Competent authorities may refuse to grant the Investment Registration Certificate (“IRC”) for foreign investors on the ground of the low investment capital. In case the IRC already granted, a low investment capital, which is insufficient to sustain business operation, may hinder the company’s financial status, accounting balance sheet…
Yes. It is compulsory for companies to have at least one legal representative resident in Vietnam.
If the company has one legal representative, that person must be resident in Vietnam. The legal representative must issue a power of attorney for another person to perform his rights and obligations under the laws prior to his exist of Vietnam.
Yes. Some tax incentives, e.g., exemption/reduction of corporate income tax, import tax, land use levy… may be awarded to the foreign investors satisfactory to the conditions stipulated by the laws. Those tax incentives shall be awarded by the competent authorities based on certain criteria such as, sector, location, term, size, application of technologies…
Yes. When applying for IRC, foreign investors are required to demonstrate their financial capacity to competent authorities by submitting supporting documents such as, financial statements, undertaking of the parent company to provide financial support, documents demonstrating financial capacity of the foreign investor…
