Question: We are foreign investor and would like to open company for (1) import and distribution (wholesale and retail, without establishment of wholesale & retail outlet) of cosmetic, functional foods and medical equipment and materials; (2) export of pharmaceuticals, oriental pharmaceuticals, functional foods and foods.
Please advise legal procedure for us.
Answer: We refer with thanks to your request from which we were requested to advise on possibilities of setting up a foreign invested company (hereinafter referred to as “FIC”) for (1) import and distribution (wholesale and retail, without establishment of wholesale & retail outlet) of cosmetic, functional foods and medical equipment and materials; (2) export of pharmaceuticals, oriental pharmaceuticals, functional foods and foods.
Therefore, we are grateful to set our legal services proposal for your review and consideration as follows:
1. BRIEF SUMMARY OF BACKGROUND AND OUR COMMENTS
Under Vietnamese laws on investment and enterprise which have effectiveness on 01st July 2015, for setting up a foreign invested company (hereinafter referred to as “FIC”), investors must apply for Investment Registration Certificate for the project and Business Registration Certificate for the Company.
Under Vietnam Law on Investment, for FIC, investors (the “Client”) is required to propose an Investment Project initially to obtain Investment Registration Certificate. The relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Registration Certificate. After getting the Investment RegistrationCertificate for Investment Project, the investor shall apply for the BusinessRegistration Certificate.
Accordingly, regarding your case, we would like to provide some advice as follows:
(i) Regarding the business of FIC
Under Vietnam law, distribution is one of the conditional businesses, the expected distribution products of the Company are cosmetic, functional foods and medical equipment and materials, oriental pharmaceuticals. These products have been controlling strictly because its effects to health of consumers. Recently, Vietnam’s cosmetic and functional foods market is very complicated and is in chaotic times because there are many faked cosmetic & functional foods were sold out, therefore, the Competent Authorities do not encourage foreign investor import and distributing these products although Vietnam’s Government has commit to open this market.
In order to be issued the Investment Registration Certificate cum Business Registration Certificate in Vietnam, foreign investors must have full conditions as follows:
1.Foreign investors is prestigious & effective trader or manufacturing such products in their countries shown through incorporation certificate, audited financial statements of two last years, catalog, brochure, certificate (if any);
2. Expected head office of the Company in Vietnam must be located in commercial building/office building;
3. Expected retail sale outlet (if any) must be located in one trading center;
We also note that, the duration of time for obtaining the Investment Registration Certificate is at least 45 working days since the official & adequate submission to licensing authority. However, in practice, this time may be prolonged because the licensing authority must get approval/ opinions from other competent authorities such as the Ministry of Industry and Trade, the Ministry of Finance, the Ministry of Investment, the Ministry of Health, Hanoi’s Department of Health before issuing the Investment Certificate.
Please be noted that, since the functional foods and medical equipment and materials products are considered as sensitive products, when importing and exporting and distribution, the FIC must prove the origin and quality of the products. In case the Client shall not operate by itself any wholesale or retail outlet, the Client has to lease a warehouse with full conditions for storage of medical products.
(ii) Location of the head office and warehouse
Location of the head office and warehouse shall be considered as the location of Investment Project. Accordingly, the competent authority shall examine whether such location is in line with the master plan of the province. In addition, the investor must prove that he has the right to use the location as head office and warehouse.
(iii) Legal representative of the FIC
Under Vietnamese laws, the FIC can have one legal representative (individual that exercises the rights and fulfills the obligations on when making transactions on behalf of the enterprise, represents the enterprise) or more. There must always be at least one legal representative that resides in Vietnam. If the enterprise has only one legal representative, such person must resides in Vietnam and authorizes another person in writing to perform the legal representative’s right and obligations when leaving Vietnam.
The roadmap for the incorporation of the FIC for distribution can be described in following steps as follows:
Step 1: Applying for Investment Registration Certificate
- Preparing the application dossier: We shall collect necessary information and documents from the Client. Upon receipt of necessary information and documents from the Client, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to the Client for the Client’s comments. Then, after updating the application dossier based on the Client’s comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for the Client to sign and seal. We anticipate that this phase shall be completed within 10 working days.
- Submission of application dossier:Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority. It shall take about 50 working days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Registration Certificate. In some case the process can be longer as it takes time to consult relevant Ministries as said above.
Step 2: Applying for Business Registration Certificate
- Preparing dossier: Based on the information provided by the Client, we will draft and provide the application dossier in both Vietnamese and English for the Client’s comment. Then, after updating the application dossier based on the Client’s comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for the Client to sign and seal. We anticipate that this phase shall be completed within 03 working days
- Submission of application dossier: Within 01 working day from receipt of duly signed and sealed application dossier and after getting the Investment Registration Certificate, we shall submit the application dossier to the competent authority. It shall take about 07 working days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Business Registration Certificate.
Within 5 working days we shall complete the post licensing procedures such as publishing the establishment information of companyin National Registration Portal, obtaining seal for the FIC.
2. Scope of works
With regards to the establishment of FIC in Vietnam, our scope of work shall be as follows:
|Step 1 and Step 2: Preparation of the application documents |
· Notifying application documents required in accordance with Vietnamese law;
·Drafting application documents required for submission purpose including board resolution, joint venture contract, corporate charter, application etc;
· Liaising with Client to discuss the draft application documents;
· Amending the application documents based on the Client’s comments;
· Obtaining preliminary comments from the licensing authority on the draft application documents;
·Finalizing the application documents following comments from the licensing authority; an
-Translating the final version of the application documents into Vietnamese for execution.
|Step 1 and Step 2: Licensing procedures |
· Submitting the application dossier to the licensing authority on the Client’s behalf;
· Monitoring and following up with the relevant authorities on the approval process;
· Keeping the Client updated on the developments and additional requirements, if any; and
·Assisting the Client in obtaining the Investment Registration Certificate and Business Registration Certificate.
· Obtaining the seal of the FIC and implementing the procedures to declare the seal of FIC;
· Publishing the information of FIC in National Registration Portal
3. PROFESSIONAL FEE
3.1. The fee for SB Law to perform services as mentioned in item 3 and 4 above will be as follows:
(i) For obtaining the Investment Registration Certificate, Certificate Business Registration and the seal of Company, our professional fee shall be US$ 10,000 (Ten thousand United State Dollars) if the location of the newly set-up company is in Hanoi City. In case the location of the company shall be in Ho Chi Minh City, this service fee shall be US$ 12,000 (Twelve thousand United State Dollars)
3.2. Services fee shall be paid to SB Law as follows:
· Within 03 working days from the date of signing the legal service contract, the Client will pay for SB Law an advance payment which equivalent to 40% of the total services fee;
· The Client will pay 30% of the total services feewithin 03 working days from submission of application dossier for Investment Registration Certificate to the competent authority;
· The Client will pay 30% of the total service fee within 03 working days from the date of obtaining Business Registration Certificate.
If you would like further information on Setting up a trading company in Vietnam, please either email to our Partners at: email@example.com or call to our Office:
Ha Noi Office: +84 (4) 62 62 0246
HCM Office: +84 (8) 35 208 101.
Get in touch with us