In Which Form The Foreign Investors Can Establish Their Commercial Presence?

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Foreign investors can constitute their commercial presence in Vietnam under the form of business cooperation contracts, foreign-invested enterprises, branches, or representative offices.

1. Business cooperation contracts (BCC)

For foreign enterprises in particular, the commercial presence under the form of business cooperation contracts will not result in establishing any new business organisation. According to the 2014 Law on Investment, business cooperation contracts are agreement between foreign investors and domestic enterprises or among foreign investors in which the parties will carry out business activities, contribute capital, distribute profits, and bear risks together without setting up a new legal entity. The commercial presence under this form will save a lot of time and effort for investors.

Under this form of commercial presence, despite operating with independent legal status to solve any problem flexibly, the parties can also support each other in the process of production and trading. Nevertheless, since there will be no new legal entity established, PLF hereby makes a note for enterprises that the signatories of the BCC should have clear agreements on the project management, selected company’s stamp, rights of representation for signing contracts, etc. to steer clear any dispute arising in the process of corporation.

2. Foreign-invested enterprise

Depending on the fields of business, the Government permits foreign investors to establish enterprises with 100% foreign capital or joint ventures with domestic enterprises following the certain percentage of foreign capital. In case of the joint ventures, the investors are entitled to contribute capital, buy shares or capital contribution from a  Vietnam ese trader following statutory proportion and in accordance with international treaties which Vietnam has signed.

3. Branches and representative offices

Foreign investors can institute their branches or representative offices in Vietnam as the last form of the commercial presence. According to provisions of Decree No. 72/2006/ND-CP, the foreign investors acknowledged as lawful enterprises by their countries of business registration shall be granted Licenses for establishment of representative offices if operating for no less than 01 year or Licenses for establishment of branches if operating for no less than 05 years

PLF Law Firm 

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