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.
How to proceed?
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:
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…