Question:
I am a foreigner and would like to consult you the following legal advice.
Objective & background:
I intend to set up a small limited liability trading company in Vietnam. The share structure will be 30% for Vietnamese local partner (natural person), while the remaining 70% for myself.
The business nature will be importing goods from overseas and latter resale in Vietnam local market via the channel of retail and wholesale. The trading commodity may deal in animal feed additives, animal medicine and antibiotics, acidifiers, pro-biotic and other similar related goods.
Some Question to seek for your advice:
1、 Can a foreigner (foreign company or foreign natural person) own a local trading nature business company (joint venture share structure--- 30% for local partner and 70%for foreigner) in Vietnam? Any restriction such as: shareholding structure, initial minimum paid up capital, business nature and other requirement? This is the first set up option 1.
2、 Is it very complicated for the foreigner to set up a JV trading nature company with local partner?
3、 If the requirement for first set up option 1 is too complicated , the second set up option will be arranged as per follow:
Initially set up a 100% share owned by local natural person company with the understanding that the 70% share will be owned by me but hold under the trust deeds of local partner. When it is the right time, among the 100% share local owned company will be transferred its 70% share to me (a foreigner or to my nominated foreign company).
4、 For the set up option 2, is there any legal ways that can protect my share interest and safe control? It means if my local partner refuses transfer the 70% share to me, I can use the legal way and successfully get back my share via court litigation. Is there any legally allow way that I can made agreement with my local partner in advance in accordance to Vietnam law to cover and prevent my future risk? Such as my local partner pre transfer the 70% share to me in advance or we enter an agreement with call option rights? Besides that can I request my local partner sign a legal binding agreement for not infringe my benefits?
5、 What is the suitable time to set up the company if refer to the above paragraph 4? It means if the pre transfer share or call option method is workable, then we need to set up the company first or sign the pre transfer share or call option agreement first or do both of them simultaneously?
Answer:
I am Lawyer of SB Law. I was entrusted to provide you legal advice regarding to your questions here under:
- Yes, it is possible. There is no limitation on ownership percentage or structure if you wish to carry out trading activities.
- It is rather complicated for setting up a JV for carrying out trading activities in Vietnam. Total time for setting up such company can last in 03 months from submission date of application dossier to the competent authority.
- Yes, we can assist you to prepare a set of agreement between you and your trustee in order to protect your right and interest under Vietnam Law.
- You shall setup the company referred in Item 4 first. Then, two parties shall enter into agreement in order to protect your right and interest under Vietnam Law.
