FAQs

FAQs

FAQS ABOUT INCORPORATION PROCEDURES

The laws on investments stipulate some regulations only applicable in fields in which investment is conditional to foreign - invested projects in Vietnam on a different manner as compared to domestic investment projects. In particular, in addition to the general regulations on the fields in which investment is conditional in Article 29 of the investment Law, Foreign-invested projects investing in fields stipulated in Annex C issued in accordance with Decree 108/2006/ND-CP must satisfy the conditions and international treaties to which Vietnam is a member.

Ender the Enterprise Law, business is to continuously perform One, several or all steps of the investment process (clause 2 Article 4), as such, investment activities are within the definition of business activities; accordingly, sectors/'lines in which business is prohibited are concurrently subject to the Investment Law. Enterprise Law (Article 7) stipulates that enterprises of all economic sectors are entitled to conduct business in sectors; lines not prohibited by law in accordance the specialized laws. including those on investment and Article 4 of Investment Law which stipulate that investors, can invest in fields and sectors/lines not prohibited by law.

Under Decree 108/2006/ND-CP dated 221912006. Clause 2 Article3 stipulates that: "Where Vietnamese laws are issued after Vietnam's membership to International "Treaties provide for more favorable treatments as compared to such International Treaties investors shall have the right to select whether to apply international Treaties or Vietnamese law. Accordingly, if Vietnamese law offers better than international commitments, the investors shall have the right to select to apply domestic law.

The naming of enterprises shall be in accordance with Enterprise Law and Decree No. 88/2006/ND-CP dated 29, i8/2U06 on business registration, in a way not to violate the prohibitions in naming enterprises in Article 32 of the Enterprise Law. Foreign-invested enterprises may use the registered names in foreign languages as a part or the whole of the name of the enterprise in accordance with point b, Clause I Article 10 Decree No. 88/20061/ND-CP.

According to current law, investors are entitled to have discretion in investment and business in accordance with Articles 7, Article 8 of the Enterprise Law. Articles 4 and Article 13 of the investment Law: Accordingly, investors of all economic sectors may set up enterprises, including the establishment of foreign invested businesses to implement an investment project in the sectors/lines not prohibited by law and not subject to limitations on the number of investment projects as well as the number of enterprises. At the time, there have been various potential foreign investors investing in various projects in a number of different fields in different localities.

Under current laws, investors are entitled to do business in sectors/lines not prohibited by law (Article 7 Enterprise Law): and register to do business in one or more sectors/lines and set up enterprises in accordance with the law (Article 13 Investment Law). That foreign investors set up private enterprises shall comply with Article $7 Decree 105/2006/ND-CP that is in accordance with separate regulations of the Prime Minister on the basis of the provisions of the Investment Law and the implementing Decree.

Joint venture enterprises already set up ' under the Investment Certificates cum business registration certificate (or under Investment Licenses issued before 1/7/2006) when setting tip joint venture with domestic enterprises to create new legal persons shall carry out procedures at the investment project dossier receiving agency (in accordance with Article 40 Decree 108/2006/ND-CP) for foreign-invested projects.

The sector of business in real estate falls within the list of business sectors subject to conditions for foreign investors under annex C issued under Decree 108/2006/ND-CP. The specific conditions for doing, business in real estate of foreign investors are stipulated in Article 10, Law on trading in real estate. Accordingly, foreign investors are not subject to restriction on the ratio for capital contribution and share purchase with respect to Vietnamese enterprises conducting business in fields/lines of real estate business.

FDI (100% foreign-owned companies) Pros – More flexibility with its own strategy and policy – Quicker decision-making process Cons – Restriction or prohibition for FDI to operate in certain sectors – little personal connection/local network at the beginning Joint venture with local Vietnamese companies Pros – Full use of personal connection and sales/distribution channel of the Vietnamese partner – Familiarity with local business practice Cons – Time consuming process to reconcile opinions with the Vietnamese partner – Gap in a sense of compliance and business practice

A representative office of foreign companies is not allowed to perform profit-making activities, and their activities are limited to market research and other non-for-profit activities. In case you do not have sufficient information to make a decision to invest in Vietnam yet, it would be suitable foothold in Vietnam. Generally speaking, initial and operating cost of representative office is much lower than the cost of having a subsidiary. On the contrary, having a subsidiary in Vietnam in the form of either Joint Stock Company or Limited Liability Company is a better form of investment for an investor who intends to manufacture products in Vietnam or to conduct sales activities. As long as you follow the regulations in Vietnam, establishing a company in Vietnam gives you more flexibility in business activities.

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