How to Set up Business Venture in Vietnam?

How to Set up Business Venture in Vietnam?

To help foreigners start a business in Vietnam, we would like to introduce the service to assist in setting up business venture in Vietnam.

Foreign investors could make direct invest in Vietnam through setting up 100% (100 percent) capital of foreign investors, or setting up joint venture  between domestic and foreign investors or putting resources into the legally binding types of: BTO, BTO, BT, BCC, and BO.

Types of enterprise for foreign investors to invest in Vietnam are as following:

Limited Liability Company (LLC)

A limited-liability company  (LLC) may not issue securities to mobilize capital.

Joint Stock Company (JSC)

The main difference between Joint Stock Company (JSC) and Limited Liability Company (LLC) is the Joint Stock Company (JSC) can raise funds by offering shares or securities.

In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company (JSC).  Management system of JSC is more complicated than LLC.

Partnership

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets.  Meanwhile, Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

Representative Office of Foreign Trader

Representative Office  is not permitted to straightforwardly lead benefit making exercises in Vietnam (i.e: the execution of agreements, deal or acquisition of products, or provision of services...

Branch of Foreign Trader

In accordance with the law of Vietnam and any international treaty that the Socialist Republic of Vietnam is a member of, the Branch of Foreign Trader is permitted to carry out activities such as the purchase and sale of goods and other commercial activities with its license for establishment.

Investing by Signing Contracts

BBC contract (Business co-operation contract) means the investment form signed between financial backers to co-work in business and to share benefits or products without creating a legal entity.

Fabricate work move contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; furthermore, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

BTO contract (Build-transfer-operate contract) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; however, upon completion of construction, the investor shall transfer the facility to the State of Vietnam. Then the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

BT contract (Build-transfer contract) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam. Then the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance following an agreement in the Build-transfer contract.

Foreign investors may sign BT contract, BTO contracts and BOT contract with a competent State body to implement infrastructure construction projects in Vietnam. Especially, The contracts are for projects in the fields of electricity production, drainage, transportation, water supply, and waste treatment...

At ANT Lawyers - a law firm in Vietnam, Our English speaking lawyers help clients overcome cultural barriers and achieve their strategic and financial outcomes, and regulatory compliance while doing business in Vietnam. 

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Company formation in Vietnam- How to proceed?

Company Formation in Vietnam?

Foreign investors may put resources into the type of 100 % funding to set up company  in Vietnam, being joint stock company, limited liability company, partnership company. In recent years, the openness policy of the Vietnamese government has made company formation in Vietnam easier.

To receive investment registration certificates, first-time foreign investors in Vietnam must have investment projects and complete investment registration or examination procedures at state investment agencies.

Business registration certificates shall concurrently be investment certificates. Company with 100% foreign capital has established and operated from the date of issuance of the business registration certificates

Vietnam company formation dossiers

-Registration/Request for issuance of Investment Certificate;

-A report on financial capability of the investor;

-Draft of the company’s charter;

-List of members of company;

-Copy of the people’s identity card, passport or other lawful personal certification, for individual members;

-Copy of the business registration certificate or establishment decision, or other equivalent document, for member organizations;

-Copies of the people’s identity card, passport, the authorization document, or other lawful personal certification, for authorized representatives.

-Within three months of the date of submission of the business registration dossier, copies of the foreign member organizations' business registration certificates must be authenticated by the organizations' registered agencies;

-Written authorization of the investor in case investor is organization and valid copy of  the legitimate individual affirmation of the approved delegate. Documents in foreign languages must be converted into Vietnamese, authenticated and legalized;

-The Business Cooperation Contract (BCC) or the joint-venture contract

-Other documents required by Vietnam law

Vietnam company formation would take anywhere from 30 days. If the investment area is conditional or the State government must examine the investment project, additional time may be required.

Special licenses, minimum capital or other conditions might be required in certain investment projects.

How a law firm in Vietnam would help with company formation in Vietnam?

While the process of company formation in Vietnam is straight forward more often than not, there are numerous circumstances which it would be better that the client draws in a law firm in Vietnam to help with record planning, legitimate interpretation, legally approbation, and verification of utilization dossiers. 

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Ryan Reynolds Hollywood actor invests in a technology company

Ryan Reynolds Hollywood actor invests in a technology company

Nuvei is a company that gives installment administrations to sports wagering. It recently received investment from the well-known actor and investor Ryan Reynolds.

The business has operations in approximately 50 nations and was founded in Montreal, Canada, in 2003. Customers from the crypto and gaming industries can use its payment services. Reynolds joked about the CEO's low profile in comparison to other US tech executives, but he did not specify how much he invested.

Reynolds has previously invested in Aviation Gin and Mint Mobile, a low-cost mobile phone service, among other businesses. 

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Areas prohibited to set up company in Vietnam

 Vietnam encourages investors to set up company in Vietnam

With the public authority's endeavors in working on the venture and business climate, which is good for homegrown financial backers as well as unfamiliar financial backers, Vietnam's monetary, political and social circumstance has consistently stayed stable and accomplished extraordinary advancement, over the course of the time including the post-Coronavirus period, while laying out reciprocal exchange relations with numerous nations the world. In an effort to open up the economy, the government keeps changing its policies to support business development and improve the business environment. Specifically, the public authority resolves to energize unfamiliar financial backers carrying on with work in Vietnam: to start a business, build a factory, or buy shares in a Vietnamese company, or to invest in Vietnam in various sectors that will benefit the economy.

In general, foreign investors are permitted to establish a business and invest in Vietnam. Up until the end of 2022, the capital for Foreign Direct Investment (FDI) registered is USD 439 billion, and the FDI attracted in 2022 alone is USD 27,7 billion. In practice, a significant number of them have established businesses in Vietnam and have made substantial investments in manufacturing and production, real estate, energy, technical fields, wholesale and retail product trading, and other related industries.

Areas prohibited to set up company in Vietnam

It should be noted that the following are prohibited areas of business in Vietnam: i) dealing in illegal drugs; ii) minerals and chemicals are traded; iii) exchanging examples of plants and wild creatures; iv) the prostitution industry; v) buying and selling people, tissues, organs, human hatchlings; vi) human cloning-related business practices; vii) exchanging fireworks; viii) Businesses that provide debt collection services, including debt collection services, which were recently added to the prohibited list in the beginning of 2021 due to the negative social impact that debt collection companies in Vietnam have had.

The general requirement for both domestic and international investors is that they are permitted to engage in business investment activities in trades and industries that are not prohibited by law. The remaining trades and industries are divided into conditional and ordinary business lines, with the exception of the trades that are prohibited from business investment. In normal business lines, financial backers can openly enter without boundaries. Interestingly, contingent business lines set conditions that should be met assuming the financial backers wish to join. Understanding the lawful condition to work in a particular industry and business line is the initial step for financial backers to enter the market to set up organization in Vietnam.

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How to start a business in Vietnam as a foreign investor?

 How to start a business in Vietnam as a foreign investor?

Vietnam is one of the fastest-growing economies in Southeast Asia, with a young and dynamic population, a favorable business environment, and a strategic location. Additionally, Vietnam's government has been increasingly enacting more preferential policies to facilitate foreign investors' entry into the country to do business in Vietnam. If you are interested in starting a business in Vietnam, here are some steps you need to follow:

Step 1: Choose a business entity type

There are different types of business entities in Vietnam, such as limited liability company joint-stock company partnership, branch office, representative office, etc. Each type has its own advantages and disadvantages, depending on your business goals, capital, and legal requirements. You should consult a local law firm in Vietnam to help you decide which entity type suits your needs best.

Step 2: Register your business in Vietnam

After chosing your business entity type, you need to register your business with the relevant authorities in Vietnam. This involves submitting various documents, such as: business name, address, charter capital, shareholders, directors, tax code, etc. Depending on the type and scope of your business, you may also need to obtain additional licenses or permits from other agencies, such as the Ministry of Industry and Trade, the Ministry of Health, the Ministry of Planning and Investment, etc.

Step 3: Open a bank account in Vietnam

You need to open company’s bank account after registering your business. You will need to provide your business registration certificate, tax code certificate, and other documents to the bank. You can choose from various local or foreign banks operating in Vietnam, depending on your preferences and needs.

Step 4: Hire staff and set up your office in Vietnam

The next step is to hire staff and set up your office in Vietnam. You will need to comply with the labor laws and regulations in Vietnam, such as: minimum wage, social insurance, health insurance, working hours, etc. You will also need to find a suitable location for your office and equip it with the necessary facilities and equipment.

Step 5: Start your operations and marketing

You will need to develop a business plan and strategy that suits the local market and culture in Vietnam. You will also need to build relationships with customers, suppliers, partners, and authorities in Vietnam. You can use various channels and methods to promote your products or services, such as: social media,online platforms, events, etc.

Starting a business in Vietnam can be challenging but rewarding. By following these steps and seeking professional advice from the law firm in Vietnam when needed, you can successfully establish and grow your business in Vietnam.

ANT Lawyers is the reliable law firm in Vietnam that will always contact the authorities to obtain legal updates on issues pertaining to do business in Vietnam.

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Forms of Setting up company in Vietnam

 Forms of Setting up company in Vietnam

According the Vietnam Law on Enterprises, there are four common types of companies:

-Private enterprise

-Partnership

-Joint stock company

-Limited liability company

-Private enterprise is a business run by a single person who is responsible for all of its operations and owns all of its assets;

-Partnership is an organization in which (i) at least two partners co-own the business and operate jointly under a single name; There may be limited partners in addition to general partners; ii) A partnership's general partners must be individuals who are fully responsible for the partnership's obligations with their entire property: iii) Limited partners are only responsible for the partnership's debts up to the amount of their capital contribution;

-Joint stock company is an enterprise where i) Its contract capital is partitioned into equivalent bits known as shares; ( ii) Shareholders may be individuals or organizations; the base number of investors will be three and will not be confined to a specific most extreme number; ( iii) Its shareholders are only responsible for the debts and other property obligations of the company up to the value of their capital contribution; ( iv) Shareholders will be free to transfer their shares in accordance with the law;

-Limited liability company (also known as a single-member or multi-member limited liability company). A one-member limited liability company is an enterprise which is owned by one organization or individual (hereinafter referred to as the company owner); Within the company's charter capital, the owner is responsible for the company's debts and other property obligations. A business is a limited liability company if: i) Members may be individuals or organizations; The number of members in total cannot be more than fifty; ( ii) Individuals are answerable for obligations and other property liabilities of the undertaking inside how much capital that they have resolved to add to the endeavor; ( iii) The members' capital shares can only be transferred in accordance with the law.

ANT Lawyers is a law firm in Vietnam with international standards, recognized by IFLR1000 on Financial and Corporate practice. The firm provides a wide range of legal services, including M&A, corporate establishment, business advisory, tax advisory, dispute resolution for multinational and domestic clients.

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Vietnam is an attractive destination for startups

 According to Bloomberg, Vietnam is an attractive destination for startups in 2023

The international press reported that Vietnam's economy has been struggling domestically and internationally in 2023. However, there are still encouraging signs regarding the economy's potential for growth. In the meantime, Vietnam is also focusing on long-term economic growth to encourage startups to start businesses, invest, and do business in Vietnam.

As the boom period of reopening following COVID-19 comes to an end in 2023, the economy is returning to a long-term growth trajectory. Vietnam wants to spend 7% of GDP on infrastructure this year to support economic growth and ensure that FDI will continue to flow into the country for years to come.

In the future, Vietnam's economy is being strengthened by foreign direct investment. Vietnam is an ideal location for tourists and foreign investors to set up company in Vietnam due to its favorable business climate, stable political environment, sustainable macroeconomic development, abundant labor force, and low cost.

According to experts, the situation is very bad all over the world, but Vietnam has been recovering and getting back on track with its development. There will still be obstacles, such as the possibility of a recession and global protectionism, which reduces export demand. However, there will still be many advantages, and foreign investment, investment in human resources, and infrastructure, will drive growth in a variety of ways. In addition, the recovery of consumer and business confidence is expanding rapidly. Domestic demand has returned to normal.

According to Bloomberg, Vietnam is a desirable location for startups due to its abundance of skilled engineers, low labor costs, and rapidly expanding economy. By 2030, Vietnam wants to make Ho Chi Minh City a "magnet" for technology investments and a digital economy.

Vietnam is now a major hub for manufacturing and a crucial link in the global supply chain. As a result, increasing automation is crucial for economies and businesses. One of the primary drivers is the rapid improvement in labor productivity and digitization of the value chain. Vietnam's economy has great potential for rapid growth and digital transformation across all sectors.

Concerning the factors that ensure Vietnam's growth, there is a consensus. These elements incorporate speeding up primary and institutional changes, profoundly taking part in new-age economic alliances, improving unfamiliar speculation fascination, speeding up computerized financial change, and profound mixing into the worldwide store network.

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