In case client would like to set up a foreign invested trading company (hereinafter referred to as the “NewCo”) in Ho Chi Minh City, we would like to provide some information as follows:
1. Executive Summary about Vietnam law on Investment.
Under Vietnam Law on Investment, in order to obtain an Investment Certificate for establishment of a foreign invested company, 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.
Thus, procedure for establishment of a foreign invested company in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2005 is only 20 – 45 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to valuate the investment project.
2. Specific comments
Under Vietnam’s WTO Commitments regarding to importation, exportation right and trading right (hereinafter referred to as “Distribution right”), from the year of 2009, restriction of foreign ownership in a foreign invested company conducting the distribution right in Vietnam shall be totally removed.
Based on our practical experience on similar previous cases, we would like to have some comments as follows:
– At present, term of Investment Certificate granted to the Foreign Invested Company operating in the field of import, export and trading is 05 years only. However, this validity term can be extendable. Accordingly, based on the actual business result of the NewCo as well as law compliance of the NewCo, the competent authority shall permit the NewCo to extend its Investment Certificate;
– You shall need to inject about 100,000USD (One hundred thousand US Dollar) as the charter capital of the NewCo in order to obtain the Investment Certificate for the NewCo regardless of that Vietnam Law does not require for minimum capital on this business field;
3.Our services in this regard will include:
|Description of Scope of Work||Note|
1. Preparation of the application documents :
|The first draft documents will be available within two to three weeks upon receipt of full information and feedback.|
|2. Assistance in arranging the translation and certification
We can assist you in arranging translation and certification after the documents have been duly legalized.
| 3. NewCo Charter
||The first draft NewCo Charter will be available within two weeks upon receipt of your information.|
4. Licensing procedures
|The timeframe will depend on the scale and scope of business of the NewCo|
|Upon issuance of the investment certificate, the NewCo is required to carry out immediate administrative procedures. Our services include:
||These procedures for the post licensing procedures usually take about two weeks to complete.
Our scope of work shall not be inclusive of following work items:
– Negotiation with other parties on behalf of Client.
– Translating documents provided by Client from English into Vietnamese.
4. Our deliverables.
The Deliverables will include documents prepared in Vietnamese as required for submission to licensing bodies. You will review, approve and where necessary sign these documents. S&B Law may provide English translations of these documents (or extracts thereof), but the translated documents should be used for reference other the purposes of discharging your responsibility for the positions taken and the underlying company information.