Vietnam has become a promising market, attracting numerous foreign individuals and organizations aiming to set up businesses. But what are the legal provisions for foreigners looking to start a company in Vietnam? This article by Viet An Law provides an overview of the regulatory conditions foreign individuals must meet to establish a company in the country.

Market Access Conditions for Foreign Individuals Establishing Economic Organizations

Article 9 of the 2020 Investment Law outlines the market access conditions for foreign investors in Vietnam. These investors must refer to the List of industries and occupations with restricted market access, which includes:

• Sectors where market access is prohibited;
• Industries with conditional market access.

The conditions for foreign investors in sectors with restricted market access are as follows:

• Foreign ownership percentage in economic organizations;
• Form of investment;
• Scope of permitted investment activities;
• Investor qualifications and capability, as well as the partners involved in investment;
• Additional conditions as stipulated by Vietnamese laws, National Assembly resolutions, Government decrees, and international agreements Vietnam is party to.

Based on these rules, there are three scenarios regarding market access for foreign individuals wishing to establish a company in Vietnam:

1. Foreigners are prohibited from establishing companies in industries or professions where market access is barred.

2. If a foreign individual seeks to establish a company in a restricted industry, they must meet the specific conditions outlined above.

3. For industries outside the restricted list, foreign investors must meet the same market access conditions as domestic investors.

The list of prohibited or restricted industries for foreign investors is published in Appendix I of Decree 31/2021/ND-CP.

Additionally, once an Enterprise Registration Certificate or an equivalent legal document is issued, the company formed by the foreign investor will proceed with the investment project as per the Investment Registration Certificate.

Moreover, foreign investors are required to have an investment project and follow the procedures for obtaining and amending the Investment Registration Certificate. This requirement does not apply to cases involving the establishment of innovative small and medium-sized startups or startup investment funds, which are governed by the laws supporting small and medium-sized enterprises.

Procedures for Establishing Business Organizations by Foreign Investors in Vietnam

According to Article 63 of Decree 31/2021/ND-CP, the process for foreign investors to establish business organizations and execute investment projects in Vietnam involves the following steps:

1. Establishing a New Business Organization:

   - For new investment projects, the foreign investor must:

• Obtain approval for the investment guidelines.
• Follow the procedures for issuing the Investment Registration Certificate (IRC) for the new project.
• Complete the procedures for establishing a business organization in accordance with the laws applicable to the specific type of organization being formed.

2. Acquiring an Existing Investment Project and Establishing a Business Organization:

   - For investors acquiring an existing investment project, the following steps must be completed:

• If the project does not already have an IRC, the foreign investor must apply for one.
• If the project already has an IRC, the investor must apply for an adjustment of the certificate.
• Afterward, the investor must complete the procedures for establishing the business organization according to the legal requirements for that type of business entity.

3. Legal Documentation and Procedures:

   - The documentation and steps for establishing a business organization must comply with Vietnamese law on enterprises or other applicable laws for each type of business organization.

4. Charter Capital vs. Investment Capital:

• The charter capital of a business organization formed by a foreign investor for executing an investment project does not have to match the total investment capital of the project.
• The business organization can contribute its own capital and secure additional funding from other sources to meet the investment requirements, following the timeline laid out in the IRC.

See more:  Vietnam foreign investment laws

Do Foreign Individuals Establishing a Company in Vietnam Need to Apply for a Work Permit?

According to Decree 152/2020/ND-CP, foreign individuals working in Vietnam generally require a work permit. However, there are exceptions where a work permit is not needed, including:

1. Owners or capital-contributing member of a limited liability company with a capital contribution of 3 billion VND or more.

2. Chairmen or members of the Board of Directors of a joint-stock company with a capital contribution of 3 billion VND or more.

3. Individuals moving within an enterprise operating in one of the 11 service sectors listed in Vietnam's WTO commitments, such as business, education, healthcare, tourism, and transportation.

4. Entering Vietnam to provide professional or technical consulting services for research, development, project appraisal, or managing ODA (Official Development Assistance) programs.

5. Those licensed by the Ministry of Foreign Affairs to conduct press or information-related activities.

6. Teachers or researchers sent to Vietnam by foreign entities to work in international schools or under agreements with international organizations, such as the United Nations.

7. Volunteers working in Vietnam under international treaties without a salary.

8. Foreign workers entering Vietnam for less than 30 days or no more than 3 times in one year as managers, executives, experts, or technical workers.

9. Entering Vietnam to implement international agreements signed by central or provincial government entities.

10. Students or interns from overseas institutions with internship agreements in Vietnam, or on internships aboard Vietnamese ships.

11. Relatives of foreign representatives working in Vietnam, as per international treaties.

12. Individuals holding official passports and working for state agencies or political organizations.

13. Those responsible for establishing a commercial presence in Vietnam.

14. Individuals certified by the Ministry of Education and Training to teach or conduct research in Vietnam.

See more:  Vietnam intellectual property office

Documents Required for Foreign Individuals to Establish a Company in Vietnam

Foreign investors must obtain an Investment Registration Certificate (IRC) and follow these steps:

1.Application for Investment Registration Certificate:

• Prepare and submit an application for an IRC.
• Include personal legal documents (ID card, passport, citizen identification) with consular confirmation to verify legal status.
• Submit a financial capacity report, showing the source of the investment capital and proof that the investor has sufficient financial resources. Legal entities must provide financial statements, while individuals must provide a bank account balance confirmation.
• Provide a proposal for the investment project and, if applicable, a proposal on land use (e.g., leased land).

Once these documents are prepared, submit the application to the Department of Planning and Investment, and an Investment License should be issued within 15 days.

2. Application for Enterprise Registration Certificate (ERC):

   After receiving the IRC, the following documents are required for company registration:

• Application for issuance of the Enterprise Registration Certificate.
• A list of members involved in founding the company.
• A draft charter of the company corresponding to the chosen business type, signed by legal representatives, founding shareholders (for joint-stock companies), or members/owners (for limited liability companies).
• Documents proving the legal status of the foreign individual establishing the company (valid ID, passport, or personal identification).
•  An authorization decision (if applicable) for institutional investors, along with notarized identification documents for the authorized representative.
• If state capital is involved, approval from the relevant state agency must be obtained.
• A joint venture contract if the investment involves a partnership between foreign and domestic investors.
• Additional documents may include qualifications and experience of the foreigner and proof of legal use of the company's headquarters (e.g., a rental contract for office space).

The completed documents should be submitted to the Business Registration Office at the Department of Planning and Investment. If the application is valid, the company will receive its business registration license within 3 to 6 days.

By following these steps, foreign investors can establish a company in Vietnam, potentially without requiring a work permit if they meet the specified conditions.

See more:  how can to get work permit in Vietnam

NVCS Law Firm Provides Consulting Services for Company Formation in Vietnam for Foreign Investors

Although the Vietnamese government has introduced policies to encourage investment, it is crucial for foreign investors to fully understand the legal documentation and procedures required in Vietnam. Recognizing the challenges faced by many foreign investors, NVCS Law Firm offers comprehensive consulting services for company formation in Vietnam.

With the support of NVCS Law Firm, establishing a foreign-invested company in Vietnam becomes a seamless process. 

• Our team of lawyers and consultants is highly knowledgeable about Vietnam's legal system and has extensive practical experience.
• We offer professional and dedicated 24/7 consulting, providing tailored solutions for each client.
• Our diverse range of services includes: setting up foreign-invested companies, establishing representative offices for foreign businesses in Vietnam, amending Investment Registration Certificates or Business Registration Certificates for FDI companies, and more.
• We are committed to delivering high-quality services at competitive rates.

If you require consulting services, please contact NVCS Law Firm through the following information: 

Lawyer: Mr. Tony

Phone: +84 919 195 939

Email: tuulawyer@nvcs.vn

Website: nvcs.vn