Entering into the Vietnamese market involves a lot of paperwork. It requires good understanding of the international business environment and its constantly changing regulatory and compliance requirements. Clockwork Vietnam advises and efficiently manages registration and application processes during all stages of entry into the Vietnamese market.
The timeframe for registration of an LLC or JSC at the Department of Planning and Investment in Vietnam is approximately one to three months from the date all required documents have been submitted. Clockwork Vietnam efficiently prepares and submits all required documents once the following application requirements have been established:
- Legally allowed foreign ownership
The World Trade Organization (WTO) regulates allowed foreign ownership in different lines of business. It is therefore necessary to clarify your business activities to determine the allowed foreign ownership of your company. Most sectors in Vietnam allow 100% foreign ownership buts some require a Vietnamese joint venture partner (e.g. advertising and tourism).
- Investment funding
There is no minimum investment capital requirement in Vietnam. However, the capital contributed should reflect the activities of the company. Approval from the Department of Planning and Investment depends on whether the minimum capital contribution corresponds with actual expenses.
- Registered address
To incorporate a business in Vietnam a registered address is required. This can be a virtual office for serviced based businesses or a physical location for manufacturing or retail businesses.
- Appointment of resident Director
The Director of the business to be incorporated doesn’t need to have residential status at the time of incorporation however they do need a residential address in Vietnam.
Once the above points have been established the procedure for incorporation follows 6 steps:
- Obtain Investment Registration Certificate from the Department of Planning and Investment
- Acquire Business Registration Certificate (BRC)
- Tax Registration and payment of annual business license tax
- Open investment bank accounts and payment of initial capital contribution
- Acquisition of any sub licenses if required
- Follow up activities (e.g. product registration for trading companies)
As Vietnamese-owned businesses do not need a foreign investment license, appointing a local legal representative to act as director for your business could be an option in some cases. Once the foreign owned company has been set up and is in full compliance, the nominee company can merge with the foreign owned company. This solution could also be considered when your line of business can’t be 100% foreign owned.
Appointing a legal representative as director of your business requires the application of a business registration certificate, which takes approximately one week to obtain.
A branch is not a common form of FDI in Vietnam and is only permitted in financial services firms, foreign law firms, computer and computer related services, franchise services and construction service firms. A branch is not an independent legal entity and as such the foreign companies’ head office bears the ultimate responsibility for any liabilities in the name of its Vietnamese based branch.
A branch is allowed to conduct commercial activities in Vietnam.
A representative office is a very common form of registered legal presence in Vietnam. Representative offices may not conduct commercial activities but can undertake market research, act as a liaison office or promote its head office’s business and investment opportunities. A company may have more than one legal representative of which at least one must reside in Vietnam. In case a business has only one legal representative, this person must reside in Vietnam.
A BCC is a signed contract between foreign investors and at least one Vietnamese partner. The contract contains an agreement between all parties to cooperate in business and share profit and/or products. The domestic and foreign investors of the BCC have unlimited liability for any debts of the BCC.
A PPP contract is signed between a Vietnamese government authority and an investor for Vietnamese infrastructure projects and public services. Both public and private investors are encouraged to participate in PPP contracts.
Vietnamese nominee company owners/directors can hold companies on behalf of foreign investors who may otherwise be restricted in their investment activities.
If the process of establishing a business in Vietnam proves to be too cumbersome, a merger or acquisition could provide a solution to many obstacles. M&A is an increasingly popular investment choice with deals reaching US$9.9 billion in 2018 according to the Vietnam Association of Foreign Invested Enterprises. A M&A can give the investor pre-existing access to consumers, location and distribution channels which can prove critical for success in Vietnam’s rapidly changing investment environment.
Since 1 July 2015 a foreigner can own various types of real estate in Vietnam for the duration of the term of their foreign investment license (land or commercial property excluded).
Clockwork Vietnam incorporates offshore companies in Hong Kong, Singapore, the British Virgin Islands, USA, Laos, Australia and India and provides an on going holding service and local corporate address for the Vietnam based company. Offshore accounts can be opened for clients from Ho Chi Minh City.
Clockwork Vietnam assists new businesses with the process of opening a local bank account. Investors and foreign staff will also be required to open a personal account. As anywhere in the world these days, opening a bank account involves many rules and restrictions that our team can help you navigate.