Establishing a 100% Foreign-Owned Company – What You Need to Know

A 100% foreign-owned company is a Vietnamese legal entity but 100% of its charter capital is contributed by foreign investors to conduct business in Vietnam. A 100% foreign-owned company is established and operates in accordance with the provisions of the Law on Investment, the Law on Enterprises, and other relevant legal documents.

1. Some business sectors where foreign investors can establish 100% foreign-owned companies

2. Process for establishing a 100% foreign-owned company

2.1. Registering investment policy with competent authorities to establish a 100% foreign-owned company

Foreign investors entering Vietnam to implement a project must apply for an Investment Registration Certificate. However, before applying for the Investment Registration Certificate, in some cases, investors must register their investment policy under the authority of the Prime Minister or the Provincial People’s Committee.

Only the following projects require investors to register their provincial-level investment policy:

• Projects where the State allocates land, leases land not through auction or bidding, or receives land use rights transfer; projects requiring a change in land use purpose;
• Projects using technology on the List of Technologies Restricted from Transfer under the provisions of the law on technology transfer.

Application dossier for approval of provincial-level People’s Committee investment policy includes:

• Written request for project implementation;
• For individual investors: Copy of identity card, citizen identification card or passport
• For organizational investors: copy of establishment certificate or other equivalent document certifying legal status;
• Investment project proposal including: investor, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment progress, labor demand, proposal for investment incentives, assessment of socio-economic impact and efficiency of the project;
• Copy of one of the following documents: Financial statements for the two most recent years of the investor; Commitment of financial support from the parent company; Commitment of financial support from a financial institution; Guarantee of the investor’s financial capacity; Documents explaining the investor’s financial capacity;
• Proposal for land use demand; if the project does not request the State to allocate land, lease land, or permit change of land use purpose, a copy of the land lease agreement or other document certifying the investor’s right to use the location for project implementation must be submitted;
• Explanation of technology use including: technology name, origin of technology, technology process diagram; main technical parameters, usage status of main machinery, equipment and technology lines for projects using technology on the List of Technologies Restricted from Transfer
• BCC contract for investment projects in the form of a BCC contract.

Cases requiring investment policy decision by the Prime Minister

In cases where a foreign investor’s project is in business sectors such as sea transportation, telecommunications services with network infrastructure, afforestation, publishing, journalism, establishment of science and technology organizations, 100% foreign-owned science and technology enterprises. Accordingly, if establishing a 100% foreign-owned company that relates to these issues, an investment policy must be registered with the Prime Minister in accordance with the Law on Investment 2020.

Application dossier for approval of investment policy by the Prime Minister includes:

• Documents similar to those for provincial-level People’s Committee investment policy registration
• Land clearance, relocation, and resettlement plan (if any);
• Preliminary assessment of environmental impact, environmental protection solutions;
• Assessment of the socio-economic impact and efficiency of the investment project.

Cases requiring investment policy decision by the National Assembly

• Nuclear power plants;
• Investment projects requiring conversion of special-use forest land, upstream protection forest, border protection forest of 50 hectares or more; wind-break, sand-break protection forest and wave-break, land reclamation protection forest of 500 hectares or more; production forest of 1,000 hectares or more;
• Investment projects requiring resettlement of 20,000 people or more in mountainous areas, or 50,000 people or more in other areas;
• Investment projects requiring resettlement of 20,000 people or more in mountainous areas, or 50,000 people or more in other areas.

Application dossier for approval of investment policy by the National Assembly includes:

• Land clearance, relocation, and resettlement plan (if any);
• Preliminary assessment of environmental impact and environmental protection solutions;
• Assessment of the economic, social impact and efficiency of the project;
• Proposals for specific mechanisms and policies (if any).

2.2. Applying for an Investment Registration Certificate for a 100% foreign-owned company

If projects do not involve land use (in other words, directly lease land from the state) and do not use technology on the list of restricted transfers, then step 1 above is not required).

In the following cases, investors must carry out procedures for applying for an Investment Registration Certificate:

• Investment projects by foreign investors;

Investment projects by the following economic organizations:

• Having foreign investors holding 50% or more of the charter capital or having a majority of general partners being foreign individuals for partnership companies;
• Having economic organizations as specified above holding 50% or more of the charter capital;
• Having foreign investors and economic organizations as specified above holding 50% or more of the charter capital.

Dossier for Investment Registration Certificate for a 100% foreign-owned company

• Written request for project implementation;
• Documents on the legal status of the investor

• For individual investors: Copy of identity card, citizen identification card or passport
• For organizational investors: copy of establishment certificate or other equivalent document certifying legal status;

• Investment project proposal including: investor, investment objectives, investment scale, investment capital and capital mobilization plan, location, duration, investment progress, labor demand, proposal for investment incentives, assessment of socio-economic impact and efficiency of the project;
• Copy of one of the following documents:

• Financial statements for the two most recent years of the investor;
• Commitment of financial support from the parent company;
• Commitment of financial support from a financial institution;
• Guarantee of the investor’s financial capacity;
• Documents explaining the investor’s financial capacity;

• Proposal for land use demand; if the project does not request the State to allocate land, lease land, or permit change of land use purpose, a copy of the land lease agreement or other document certifying the investor’s right to use the location for project implementation must be submitted;
• Explanation of technology use including: technology name, origin of technology, technology process diagram; main technical parameters, usage status of main machinery, equipment and technology lines for projects using technology on the List of Technologies Restricted from Transfer
• BCC contract for investment projects in the form of a BCC contract.

Agency for submitting application dossier for Investment Registration Certificate for a 100% foreign-owned company at the investment registration authority

• If the company is headquartered in an industrial park, it is the Management Board of industrial parks.
• If the company is headquartered outside an industrial park, it is the Department of Foreign Economic Relations – Provincial Department of Finance.

Processing time for Investment Registration Certificate for a 100% foreign-owned company

• For investment projects not subject to investment policy decision: 15 – 20 working days from the date of receipt of complete dossier
• For investment projects subject to investment policy decision: 05 – 10 working days from the date of receipt of the investment policy decision document.

2.3. Establishing an enterprise and issuing an Enterprise Registration Certificate for a 100% foreign-owned company

After obtaining the Investment Registration Certificate, the investor needs to prepare the dossier for enterprise establishment.

Dossier for establishing a 100% foreign-owned LLC

• Application for enterprise registration;
• Company charter;
• List of members;
• Copies of the following documents: Citizen identity card, Identity card, Passport or other legal personal identification of individual members;
• Establishment decision, Enterprise registration certificate or other equivalent documents of the organization and power of attorney; Citizen identity card, Identity card, Passport or other legal personal identification of the authorized representative of organizational members;
• For foreign organizational members, the copy of the Enterprise registration certificate or equivalent document must be consularly legalized;
• Investment registration certificate for foreign investors according to the provisions of the Law on Investment.

Dossier for establishing a 100% foreign-owned joint-stock company

• Application for enterprise registration;
• Company charter;
• List of founding shareholders and foreign investor shareholders (list of authorized representatives if any);
• Copies of the following documents: Citizen identity card, Identity card, Passport or other legal personal identification of individual members;
• Establishment decision, Enterprise registration certificate or other equivalent documents of the organization and power of attorney; Citizen identity card, Identity card, Passport or other legal personal identification of the authorized representative of organizational members;
• For foreign organizational members, the copy of the Enterprise registration certificate or equivalent document must be consularly legalized;
• Investment registration certificate for foreign investors according to the provisions of the Law on Investment.

Agency for submitting application dossier for enterprise registration certificate for a 100% foreign-owned company

Business Registration Office – Provincial Department of Finance.

Processing time for enterprise registration certificate for a 100% foreign-owned company

05 working days from the date of receipt of complete and valid dossier

2.4. Announcing the establishment of a 100% foreign-owned company

After being granted the Enterprise Registration Certificate, the enterprise must publicly announce it on the National Business Registration Portal according to the prescribed procedures and pay fees.

The content of the announcement includes the contents of the Enterprise Registration Certificate and the following information:

• Business lines;
• List of founding shareholders and foreign investor shareholders for joint-stock companies.

Executing agency: Announcement section of the Business Registration Authority – Provincial Department of Finance.

2.5. Engraving the seal of a 100% foreign-owned company

• After obtaining the Enterprise Registration Certificate and having proceeded with the announcement of enterprise establishment, the enterprise will engrave its seal at one of the licensed seal-engraving units. The enterprise independently decides the number and form of seals within the legal limits.
• According to the provisions of the Law on Enterprises 2020, effective from January 1, 2021, enterprises engrave their own seals and are responsible for the use of the company’s legal seal. Therefore, 100% foreign-owned companies, like Vietnamese-owned companies, no longer have to announce their seal mẫu ( mẫu con dấu – seal specimen) as before. This is also a very new point of the Law on Enterprises 2020 but also a point of concern for many enterprises regarding self-management and use of company seals without supervision from state management agencies related to seals.

3. Questions related to establishing a 100% foreign-owned company