ESTABLISHMENT OF 100% FOREIGN INVESTED ENTERPRISE

5 things to know about Joint Venture Company Establishment Procedures

In the integrated economy, the form of joint venture is no longer strange to domestic and foreign investors. Because this is a type of cooperation to implement projects between domestic and foreign enterprises. To learn about the procedures for establishing a joint venture company, you need to pay attention to the 5 things shared below:

Is it understood that a joint venture company is a company with foreign investment?

Joint venture is a special form of business in Vietnam. Although under the new regulations, this form of investment has been removed from the list of business types selected when registering for a license. However, in essence, the following cases can still be considered as joint ventures under the old regulations:

A joint venture is a type of cooperation between domestic and foreign enterprises to carry out projects together.

1. Joint stock company with a part of capital contribution from foreign investors.

2. A limited liability company with two or more members has a portion of capital contributed by foreign investors.

3. A single-member LLC with a portion of capital contributed by a foreign investor (equivalent to converting the type of enterprise).

4. In case a Vietnamese investor transfers all capital contributions of a Vietnamese economic organization to a foreign entrepreneur, the model will be converted into a company with 100% foreign investment capital.

5. In case a foreign trader contributes capital with a Vietnamese investor to establish an independent economic organization.

From the above cases, it can be understood and said that: A joint venture company is a company with foreign investment capital . The investment capital can be 100%, or it can be a limited ratio depending on the industry according to regulations. To better understand the conditions and procedures for establishing a joint venture company, please continue to follow the content of the article with Viet Tin. 

What conditions must be met to invest in a joint venture?

Just like other types of business, to cooperate in joint ventures, enterprises need to ensure that they meet the following conditions according to the 2014 Enterprise Law:

1. Conditions on investment entities:

• If an individual: Must have full civil capacity, not be a prisoner, and not be subject to other administrative penalties as prescribed.

• If it is a legal entity (economic organization): Must be legally established, fully comply with the law and still be operating at the time of investment.

2. Financial conditions:

• The investor must commit to responsibility for the contributed capital, bear the risks in the contributed capital, and ensure that financial capacity must correspond to the committed capital invested in the project.

• The bank holding the investment money in the company must be a legal bank and licensed to operate in Vietnam.

3. Registering the company's legal capital according to Vietnamese law on joint venture companies

4. Comply with the provisions of Vietnamese law (investment law, enterprise law, etc.), international treaties that Vietnam has signed or recognized (WTO commitments, etc.) and other relevant regulations.

Conditions for establishing a joint venture company (with foreign investment)

Three common cases when establishing a joint venture company

Case 1: The company only needs to carry out procedures to change business registration when:

• Foreign investors purchase capital contributions, invest in capital contributions or purchase shares of Vietnamese economic organizations operating in industries without conditions (industries not listed in Appendix 04 of the Investment Law 2014).

•  Foreign traders' equity capital accounts for 49% or less.

Case 2: It is necessary to carry out procedures to apply for an investment registration certificate when:

• Foreign investors purchase capital contributions, invest in capital contributions or purchase shares of Vietnamese economic organizations operating in conditional industries (industries listed in Appendix 04 of the 2014 Investment Law).

•  Foreign traders' equity accounts for 51% or more.

Case 3: It is necessary to carry out procedures to apply for an investment registration certificate and business license when a foreign trader invests 100% of capital in Vietnam for the purpose of carrying out commercial activities.

Procedures for establishing a joint venture company in Vietnam

Step 1: Complete legal documents for each specific form according to regulations

• The Vietnamese partner needs to prepare: (i) Business registration certificate, (ii) Identity card/Certificate of Vietnamese capital contributor.

• For foreign partners who are legal entities: (i) Certificate of operation in the host country; (ii) Audited financial statements of the last 2 years or documents proving full compliance with tax obligations; (iii) Charter of operations; (iv) Decision to implement investment in Vietnam; (v) Identity documents of the representative.

Steps to establish a joint venture company

Step 2: Draft legal documents according to regulations (contact us to receive the form)

Step 3: Submit application for license to competent authority

Each case mentioned above will submit the application to a different agency:

• Case 1: Submit at the Domestic Investment Department of the Department of Planning and Investment.

• Case 2: Submit at the Foreign Investment Department of the Department of Planning and Investment.

• Case 3: Submit at the Business Registration Office under the Ministry of Industry and Trade.

Step 4: Get results and operate normally

The above is just an overview of the steps to be taken when establishing a joint venture company. Because the procedures require high specificity, each type has its own requirements. Therefore, the optimal solution to help businesses save time, effort, and avoid mistakes in the procedures for establishing a joint venture company is to seek the services of HLA.

HLA is a legal entity providing services for establishing businesses and joint ventures for nearly 10 years. Therefore, we thoroughly understand the difficulties of customers and have experience in handling difficult documents and making them easier for businesses. 

As a customer, your company can choose a full service package from the stage of consulting and preparing documents to receiving results, or a part of HLA's service. In particular, businesses will receive free advice on initial legal procedures. In addition, we commit to processing documents quickly, neatly and in accordance with the agreement between the two parties.