“After determining the business sector, orientation, goals, investment scale and preparing the necessary factors such as capital, location, facilities, equipment, etc., investors move to the stage of business establishment from when the set goals are realized.
Following the series of articles related to investment activities in Vietnam, in this article, we provide you with an overview of the process of establishing a new investment project and an enterprise in Vietnam.”
Investors are organizations and individuals carrying out investment and business activities, including domestic investors, foreign investors and foreign-invested economic organizations having the right to establish and manage enterprises in Vietnam according to the provisions of the ‘Law on Enterprises’ and the ‘Law on Investment’. Here, foreign investors are individuals with foreign nationality or an organization established under foreign jurisdiction that conducts business investment activities in Vietnam.
Foreign investors, when choosing to do business in Vietnam by establishing an enterprise should note that business establishment procedure and investment project establishment procedure should be carried out as explained below in order to do business in Vietnam.
Setting-up an enterprise is a registration procedure at a competent state agency, like the Department of Planning and Investment, (and the Management Board of industrial parks, export processing zones, high-tech zones, and economic zones of the respective province if the project is located in industrial parks, export processing zones, or high-tech zones). This is considered as the birth registration procedure for the company, the first step for doing business in Vietnam.
An important factor for setting up a business is the issuance of an ‘Enterprise Registration Certificate’. By obtaining this certificate, the enterprise officially becomes an independent business entity, having legal rights and obligations under the provisions of the ‘Law on Enterprises’, the ‘Law on Investment’ and relevant laws of Vietnam. Such an entity is recognized and protected by the state and the law.
Before registering the enterprise and applying for the enterprise registration certificate, Vietnamese law requires foreign investors to register the investment project. Therefore, investors also have to carry out additional procedure for establishing, obtaining an Investment Registration Certificate. Only then, they will be able to register their business which will be granted an enterprise registration certificate.
Accordingly, the process of establishing a foreign company usually includes 2 steps corresponding to 2 procedures (establishing an investment project and establishing an enterprise).
Management boards of industrial parks, export processing zones, hi-tech zones and economic zones are competent to grant investment registration certificates for the following investment projects:
The investment registration agencies, specifically the Departments of Planning and Investment, have the authority to issue the investment registration certificate for investment projects outside industrial parks, export processing zones, high-tech zones, economic zones and economic zones and the following cases:
Step 1: The investors submit one set of application for obtaining the investment registration certificate to the investment registration agency as mentioned in Section 3.1 of this article. The dossier includes the following main documents and contents:
Step 2: The investment registration agency appraises the application and issues an Investment Registration Certificate to the investor. The processing time of this step is 15 days from the date of receiving the valid application. However, some localities with open-door policies to attract foreign investors, cut out administrative procedures. So this time limit can be shorter by upto 30% (Example: In Ho Chi Minh City, the time limit for processing the application for the establishment of an investment project is 10 working days)
An investment project must satisfy the following conditions to be granted the Investment Registration Certificate:
Step 3: After reviewing and appraising the application, the competent state agencies are consulted (if any). In case the conditions mentioned in Step 2 are satisfied, the licensing agency shall issue the investment registration certificate to the investor, which must include the following main contents: name, code, information of the investor(s), area, implementation location, objectives, scale, investment capital, duration and operation progress of the investment project.
After establishing the investment project as mentioned in Section 3 and obtaining an investment registration certificate, foreign investors must conduct business as explained in this section.
Domestic investors setting-up enterprises can directly follow the following process without requiring to establish investment projects.
Step 1: The investors must submit a set of application to the business registration agency to register the enterprises and obtain the enterprise registration certificate. In the context of this article, the business registration agency is the ‘Business Registration Division’ under the ‘Department of Planning and Investment’ of the respective province. Depending on each case and the type of business that the investors choose, the composition of the application will be different. However, the application usually includes the following documents and records:
Step 2: Within three working days from the date of application’s receiption, the business registration agency shall consider the validity of the application and grant the enterprise registration certificate. (i) In case the application is not valid, the business registration agency shall notify in writing about the contents that need to be amended or supplemented to the applicant. (ii) In case of refusal to register an enterprise, they shall notify in writing to the applicant and clearly state the reasons of refusal. (iii) In case the application is valid, the business registration agency shall approve the application, issue the enterprise registration certificate and notify the investor.
The investors shall be granted an enterprise registration certificate when they fully meet the following conditions:
Step 3: The business registration agency grants the Enterprise Registration Certificate upon successful application. This document is concurrently the tax registration certificate of the enterprise, which records the following information: name, code, head office address, charter capital of the enterprise, full name, contact address, nationality, number of legal papers of the individual or the legal representative in case of limited liability companies and joint stock companies, or general partners in case of a partnership company including full name, contact address, nationality, number of legal papers of the individual, and name, code and address of the head office if the member is an organization for a limited liability company.
After obtaining the enterprise registration certificate, the company is recognized by Vietnamese law and can operate its business. However, an enterprise registration certificate is not a business license. Therefore, in case a company does business or operates in the sectors that require business license(s), the company must obtain such license(s). After obtaining the enterprise registration certificate, the company needs to carry out few procedures such as contributing charter capital, opening a bank account, registering a digital signature and declaring taxes, initial labor, etc. For more details on the procedures which must be performed by the Company after establishment, please refer to the article: Procedures after establishment of the company
The article is based on the current law at the time of recording as above and may no longer be relevant at the time readers access this article due to changes in applicable law and specific cases that the reader wants to apply. Therefore, the article is for reference only.
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