CHOOSING THE FORM OF ESTABLISHMENT A FOREIGN-INVESTED ENTERPRISE IN VIETNAM

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Foreign investors, when establishing a company in Vietnam, can choose one of the following two common forms:

FORM 1: Establishing a foreign-invested company where the investor contributes capital from the outset.

Details of the steps are as follows:

Step 1: Investment Registration

A Certificate of Investment Registration is issued by the competent authority.

Step 2: Enterprise Registration

After obtaining the Certificate of Investment Registration, the procedure for applying for a Enterprise Registration Certificate is carried out.

Step 3: The company opens an investment capital account and a capital contribution account.

Step 4: The investor makes capital contributions.

FORM 2: Establishing a foreign-invested company through capital contribution, share purchase, or acquisition of capital contributions from a company that already has a business registration certificate. This form will not require an investment registration certificate.

Details of the steps are as follows:

Step 1: Complete the procedures for establishing a 100% Vietnamese-owned company.

Step 2: Complete the procedures for registering capital contribution or acquisition of capital contributions by foreign investors.

Step 3: The company opens an investment capital account.

After the competent authority approves the capital contribution, share purchase, or acquisition of capital contributions by foreign investors, the company opens an investment capital account.

Step 4: Foreign investors contribute capital and pay for the equity stake.

Step 5: Complete the business registration change procedure (transfer capital from Vietnamese contributing members to foreign investors).

Investors who want simpler procedures and lower costs should choose to invest through capital contribution, share purchase, or acquisition of equity stakes in Vietnamese companies.

When foreign investors establish a company through capital contribution or share purchase, they will have the following benefits:

1) Upon establishment, foreign investors do not need to provide documents proving financial capacity (bank deposit balance confirmation); they do not need to provide documents regarding the business address;

2) When operating, the procedure for changes is easy: Only the information on the Business Registration Certificate needs to be changed; the procedure for changing information is similar to that of businesses with 100% Vietnamese capital, and the cost for foreign investors will be lower than with Form 1.

If a foreign investor establishes a company through the Investment Registration Certificate application (Form 1), the procedure for changes will be more complex when operating: Changes will be made to both the Investment Registration Certificate and the Business Registration Certificate, therefore the cost will be higher.

Are you a foreigner looking to establish a company in Vietnam?

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