WHICH FORM OF INVESTMENT – BRANCH OR COMPANY?

Foreign entities can set-up company or branch offices in Vietnam to carry out business activities.

There are several main different aspects between opening a branch office or establishing a foreign owned company in Vietnam.

1. Conditions

• Permits for establishment of Vietnam-based branches of foreign enterprise shall each have a valid term of five years.
• Foreign enterprise must choose between establishing a 100% foreign capital enterprise or forming a joint-venture with domestic investor or company.

2. Certificate

• The Branch office needs to apply and obtain the operation license of a Branch;
• A foreign owned company will need to apply and obtain the investment certificate (“IC”) to operate in Vietnam.

3. Capital

• Optional, foreign entity will decide how much money to invest in branch. The allocation capital for branch is capital for the subordinate units.
• Mandatory, foreign entity will need to provide minimum capital as required by Vietnam Law in conditional investment area.

4. Obligation of owner

• For branch office in Vietnam, owner takes full responsibility;
• For company, owner takes responsibility within the capital contributed into the company in Vietnam;

5. Other matters

• For branch office setting up in Vietnam, the procedure is less complicated compared to those for the establishment of a 100% foreign owned company;  the branch office is able to carry out trading and some other activities as stipulated by Vietnam laws and the WTO commitments which Vietnam enters.  The business lines of a branch have to be aligned with the business lines of the headquarter of the foreign entity.
• Setting up foreign owned company would be more complicated than the setting up of the branch office, however this form of investment has more flexibility and freedom as it is a stand alone Vietnam entity recognized under Vietnam laws.

Read More

HOW TO SET-UP TRADING COMPANY IN VIETNAM

Investment in setting up trading company in Vietnam is considered as investment in conditional investment areas

Once an underdeveloped country, in the last two decades Vietnam has shown an incredible growth in the world economic scene, especially in the criteria of investment attraction. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam, foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firm throughout the process shall mostly be needed.

Set-up Trading Company in Vietnam

The legal basis for a foreign company to set up a company in Vietnam is stated in the Enterprise Law of Vietnam: foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions.  Foreign investors may invest in the form of 100% foreign- owned capital to establish limited liability companies, joint-stock companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.

The foreign investor shall mostly needs to fulfill the investment registration procedures at provincial-level state agencies in charge of investment in order to be granted the investment certificates, in accordance with Vietnam law in investment. The dossier required for the investment registration shall comprise of an examination dossier, papers showing the capability to satisfy the conditions which the project is required by law to satisfy, for investment projects in conditional investment domains i.e. specific goods to be traded at HS code level, experience in trading area, how the trading procedures would be carried out, potential business in Vietnam.

In particular, for investment capital, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam. In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor should explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.

Our lawyers of foreign investment practice at ANT Lawyers are available to advise and provide client with service and representation in Vietnam.

Read More