Can Foreign Investor create a Vietnam company with 100% ownership in the field of engineering?

(S&B Law) The answer is yes, it is possible for foreign investor to set up 100% foreign invested company according to Vietnam law. Under Vietnam Law on Investment, in order to setting up a foreign invested company (hereinafter referred to as “NewCo),

 Foreign Investor is required to propose an Investment Project. Investment Project is understood as “a collection of proposals for the expenditure of medium and long-term capital in order to carry out an investment activity in a specific geographical area and for a specified duration”.  Then, relevant competent authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine whether to grant Investment Certificate or not.

Assessment of the legitimacy of an Investment Project shall be based on legal framework of Vietnam, including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the NewCo shall register its head-office.

Meanwhile, a conclusion regarding to the feasibility of an Investment Project shall be based on assessment on the financial ability of the Foreign Investor, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.

Regarding to the establishment of NewCo providing engineering services in Vietnam, in order to optimize client’ success, invetor should consider following matters as suggested by the licensing authorities in Vietnam:

-          The investor must have sufficient financial ability:  the investors must provide sufficient documents showing that they have a stable financial ability to run the business in Vietnam. Accordingly, they should provide a Financial Statement of their company to certify that financial ability is sufficient to make the capital contribution into the NewCo as committed.

-          The capital to put in the NewCo should be about 300,000 USD to 500,000 USD. This amount needs to be fully injected within and no more than 36 months based on schedule of capital contribution that will be submitted along with dossier of company establishment to Department of Planning and Investment.

Procedures for setting up a foreign invested company in Vietnam to provide engineering service.

The application for establishment of the NewCo must undergo the investment registration process. For ease of reference, hereinafter is an overview roadmap of this procedure as follows:

Time frame

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Scope of works regarding establishment of foreign invested company in Vietnam.

1.1.               Licensing Procedures

S&B LAW is ready to provide package service to foreign investors for the purpose of establishing foreign invested company in Vietnam as follows:

-          Providing advices on all legal aspects relating to procedures of obtaining Investment Certificate for the NewCo from competent authority;

-          Preparing Application Dossiers (in both Vietnamese and English) for obtaining Investment Certificate for the NewCo;

-          Representing Client to submit the Application Dossiers;

-          Working with provincial competence authority on behalf of Client to obtain the best support on reviewing and considering the application; providing explanation and/or supplementation of application dossiers per request;

-          Updating information of the approving process to Client;

-          Receive the Investment Certificate and hand it over to Client.

1.2.               Post-Licensing Procedures

For Post Licensing procedures, S&B Law shall assist investors to:

-          Obtain the Seal and Certificate of Seal Sample Registration from Province Department of Police;

-          Register the Tax code number for the NewCo in Department of Tax;

-          Publish the company operation to 3 continuous number of newspapers;