Question: We are foreign company and would like to invest in Vietnam, kindly provide us with the guidelines and procedure along with your best quotation for Incorporation Services in Vietnam.
Thanking you in advance for your valuable time.
Answer: This is reference to email dated 25th November 2015, from which, we understand that youwould like us to provide (i) an outline of difference entry modes for foreign companies inVietnam and (ii) general quotation for establishment of Foreign Invested Company inVietnam. We are grateful to present you hereinafter our Legal Services Proposal for yourreview and consideration.
1.OUT LINE OF ENTRY MODE FOR FOREIGN COMPANIES IN VIETNAM
Under Vietnam Law, foreign companies can either set up (i) Foreign Invested Company; (ii) Branch Office or (iii) Representative Office in order to expand its market to Vietnam.
1.1.Foreign Invested Company
In Vietnam, Foreign Invested Company (FIC) can be divided into two following forms: (i) Wholly Foreign Owned Company wherein Foreign Investors shall own 100% capital of the Company and (ii) Joint Venture Company wherein Foreign Investor shall jointly setup company with at least one local partner.
Generally, foreign investor is freely to determine suitable form of FIC to run their business in Vietnam. However, in several specific sectors such as tourism, transportation, advertisement etc in which foreign ownership is restricted, only Joint Venture Company is allowed.
Nevertheless, the matter of Wholly Foreign Owned Company and Joint Venture Company does not impact on tax regime or investment incentive applicable to FIC.
With respect to corporate management structure of FIC, it can be structured as Limited Liability Company (LLC) or Joint Stock Company (JSC). LLC including LLC with 01 member and LLC with two members upward shall allow the members to restrict rights on transfer of capital.
With LLC, the members may also adopt Call Option and Put Option in order to optimize their business goals. Meanwhile, with JSC, after three years from establishment of company, shareholders are free to transfer their common shares on market.
Thus, LLC is generally adopted by Foreign Investors who intend to run a business for a long term in Vietnam.
1.2. Branch Office
Under Vietnam Law, foreign company can also establish the Branch Office to carry out business activities in Vietnam. However, this form is not very popular in practice except for branch office of foreign law firms, foreign bank and insurance company.
With respect to the foreign trade companies and foreign tourist companies, despite of that Vietnam Commercial Law and Vietnam Tourism Law clearly stipulates conditions and procedures for setting up branch office of foreign trade companies and foreign tourist companies, foreign investors are recommended to setup FIC as an alternative option in practice due to that under VietnamWTO Commitment, Vietnam does not commit to permit foreign investor to setup branch office in trade and tourism.
1.3. Representative Office
Representative Office is an option for Foreign Investor who wishes to conduct market research, trade promotion etc in Vietnam. Depending on business sector of the parent companies abroad, conditions and procedure for setting up representative office in Vietnam may be different.
Up to now, Vietnam Law only stipulate conditions and procedures for setting up Representative Office for foreign companies operating in the field of trade, trade related services, sale and purchase of goods; education; tourism; banking, law; securities and airline only.
Generally, a Representative Office shall be permitted to conduct following activities: - Operate as contact office of the Company in Vietnam;
- Promote cooperation projects of the Company in Vietnam;
- Research market to push up chances to purchase commodities, supply and consume commercial services of the Company in Vietnam;
- Supervise implementation of the Company’s contracts signed with Vietnamese partners or related to Vietnam market;
The Representative Office shall not be allowed to conduct business activities for profit making purpose in Vietnam. 3
2. OUTLINE ON LICENSING PROCEDURE IN VIETNAM
2.1. Licensing Procedure for setting up FIC
In order to setup a FIC, Foreign Investor must undergo following steps:
Step 1: Obtainment of Investment Certificate Procedure for obtainment of Investment Certificate shall very much depend on scope of business activities of the FIC in Vietnam. Particular as follows:
- Nuclear power plants; Projects that change purposes of land in national parks, wildlife sanctuaries, landscape sanctuaries, experimental forests of 50 hectares or larger; headwaters protective forests of 50 hectares or larger; protection forests meant for protection against wind, sand, waves, land reclamation, environmental protection of 500 hectares or larger, production forests of 1,000 hectares or above; Projects that change purposes of land meant for rice cultivation with two or more crops of 500 hectares or larger; Projects that require relocation of 20,000 people or more in highlands; 50,000 people or more in other areas; and Projects that require special policies decided by the National Assembly must obtain the approval of National Assembly on investment policies before granting the Investment Certificate. Within 05 working days from obtainment of approval on Investment Policies from the National Assembly, the Investment Registry Office shall be required to grant the Investment Certificate
- Projects that require relocation of 10,000 people or more in highlands; 20,000 people or more in other areas; Construction and operation of airports; air transport;Construction and operation of national seaports; Petroleum exploration, extraction,and refinery; Betting and casino services; Cigarette production; Development ofinfrastructure of industrial parks, export-processing zones, and specialized sectors ineconomic zone; and Construction and operation of golf courses must obtain theapproval of Prime Minister on investment policies before granting the InvestmentCertificate. Within 05 working days from obtainment of approval on InvestmentPolicies from the Prime Minister, the Investment Registry Office shall be required togrant the Investment Certificate.
- Projects that use land allocated or leased out by the State without auction or biddingor transfer; projects that require changes of land purposes and Projects that usetechnologies on the List of technologies restricted from transfer prescribed byregulations of law on technology transfers must obtain approval on investmentpolicies from the Provincial People Committee before granting the InvestmentCertificate. Within 05 working days from obtainment of approval on InvestmentPolicies from the Provincial People Committee, the Investment Registry Office shallbe required to grant the Investment Certificate.
- Other remained Investment Project shall be granted Investment Certificate within 15days from receipt of application dossier by the Investment Registry Office.
Step 2: Obtainment of Business Registration Certificate
After obtainment of Investment Certificate, the Foreign Investor is required to obtain theBusiness Registration Certificate in order to setup FIC. According to the Vietnam Law onEnterprise, within 03 working days from receipt of application dossier the LicensingAuthority shall grant the Business Registration Certificate. Until now, Vietnam Law is nowstill silent on time gap limit between Obtainment of Investment Certificate and Obtainment ofBusiness Registration Certificate.
2.2. Setting up Branch Office
Since the procedure for setting up Branch Office of Foreign Companies is not popular inpractice, we do not include outline on procedure for setting up Branch Office here.
2.3. Setting up Representative Office
For foreign companies operating in field trade, trade related services, sale and purchase of goods, it shall take about 15 working days from submission of application dossier to thelicensing authority for granting the License for establishment of Representative Office. TheLicense for establishment of Representative Office shall be valid within 5 years.
The validityterm of such License can be renewable. However, the validity term of License forestablishment of Representative Office must not exceed validity term of Business License of the Parent Company.
3. DELIVARABLES
The Deliverables will include documents prepared in English and Vietnamese as required for submission to licensing bodies. Client will review, approve and where necessary sign these documents.
4. PROFESSIONAL FEE
SB Law professional fees shall be based on the actual time our lawyers/consultants work on the services(s) for which we have been retained. Our Lawyer and Consultations keep track their time in minutes to the nearest 10 minutes and record their time daily. Time record notations are made for any and all work performed, including but not limited to, office conferences, legal research and preparation of legal instruments, telephone and personal trips to and from the offices to relative places or client’s offices.
Where SB Law offers an estimate for services based on hourly rates, such estimate may not adequately reflect the amount ultimately undertaken by SB Law in order to deliver the services. In case the actual amount of work required by SB Law exceeds our initial estimate, SB Law will advise of any possible excess such estimate. Our current standard hourly rates are follows:
Director & Partner: 250-300USD
Senior Associate: 100-200USD
Associate: 80USD
Trainee 30USD
SB Law also provides services on a fixed basis for many projects. For your ease of reference, we estimate our service package fee for setting up FIC and Representative Office as follows:
·Setting up FIC in non-conditional investment sections: 4,500USD
·Setting up FIC in conditional investment sections: Minimum 7,000USD.
·Setting up Representative Office for companies operate in trade or trade related services: 1,500USD.
Our fee is exclusive of 10% VAT, cost for translation of documents of Client from English into Vietnamese (10USD/150 words) and actual cost for accommodation and traveling (applicable to locations out of territory of Hanoi or Ho Chi Minh City).
Any work or additional work which is not covered by the scope of work as agreed upon will be billed in accordance with our standard hourly rates.
If you would like further information on Incorporation Services Procedures, Guidelines and Quote Request in Vietnam, please either email to our Partners at: info@sblaw.vn or call to our Office:
Ha Noi Office: +84 (4) 62 62 0246
HCM Office: +84 (8) 35 208 101.
