Things you should know about 100% foreign invested business in Vietnam

A. Law on Investment

1. A better definition of a foreign investor:

The Law introduces a simpler and clearer definition of foreign investor and also clarifies the differences between “foreign investor” and “foreign-invested economic organization” which replaces the term “foreign-invested enterprise” in the 2005 Law.

A foreign investor is now defined as an individual holding a foreign nationality or an organization established under foreign laws and making business in Vietnam.

A foreign-invested economic organization (FIEO) is broadly defined as an economic entity that has any member or shareholder is a foreign investor.

Under the Law, an FIEO shall be subject to more stringent licensing requirements and other restrictions applicable to foreign investors if: (i) 51% or more of its charter capital (i.e. share capital) is held by foreign investors, or the majority of the general partners are foreigners if the business organization is a partnership; (ii) 51% or more of its charter capital is held by an economic organization under paragraph (i) above; or (iii) 51% or more of its charter capital is held by a foreign investor and an economic organization under paragraph (i) above.

2. New classification of investment types:

Investment in Vietnam is no longer classified into direct or indirect investment, but depends on either of the following forms: (i) Establishment of an economic organization for an investment project; (ii) Capital contribution, purchase of shares or contributed capital in an economic entity. (iii) Investment under cooperation contract (Public-Private Partnership; Business Cooperation Contract).

3. Relaxation of licensing requirements:

Under the Law, an Investment Certificate (IC) has been replaced by an Investment Registration Certificate (IRC), and an FIEO is only required to obtain an IRC if it falls into one of the three circumstances stated above.

The application process is now a two-stage process, with the time period to complete the licensing process reduced to 15 days: (i) Obtain IRC; (ii) Obtain Enterprise Registration Certificate (ERC))

However, for M&A activities, unless the foreign investors invest in a conditional investment project, the M&A activity may be conducted solely under the Enterprise Law. As such, the requirement to obtain an IC to close an M&A deal, the most troublesome condition under the current law, is abolished.

4. Opening up of investment sectors:

The number of prohibited business activities is reduced from 51 to 6 activities, and the number of conditional business activities also decreases from 386 to 267 activities. Notably, the Investment Law takes an initiative approach that allows investors to do investment and business activities in fields not prohibited by the Investment Law.

5. Dispute settlement:

Under the new law, only foreign investors or FIEO with 51% or more of chartered capital can choose foreign arbitration and/or international arbitration to settle their dispute over business investment.

6. Transitional provision:

Any investor who was granted IC before July 1st 2015 may keep executing their investment project without the need of registering for a new IRC. However, a new IRC shall be granted if requested by the investor.

 

B. Law on Enterprises

  1. The new definition of foreign investors’ holding: the Law defines foreign investors’ holding as the total holding of voting capital of all foreign investors in a Vietnamese company, instead of total holding of charter capital specified under the 2005 law.
  2. Simplification of license requirements: The new law removes the scope of business activities of an enterprise and the list of founding shareholders of a joint stock company (JSC) from the ERC. The business activities of enterprises will be posted on the National Business Registration Portal. If an enterprise changes its business activities, founding shareholders or foreign shareholders, it must notify the corporate registration authority to update its corporate registration records, but does not need to register for an update of its ERC as required under current laws.
  3. Enterprise’s seal: Under the new law, an enterprise is entitled to decide the form, quantity and contents of its seal. The management, usage and retention of the seal must be stated in the company’s charter. Before using the seal, an enterprise must send the seal design to the business registration authority to be posted on the National Business Registration Portal.
  4. More than one legal representative permitted: The Law allows a JSC or limited liability company (LLC) to have more than one legal representative and only one of them is required to reside in Vietnam. If a JSC has more than one legal representative, the chairman and the general director must both be legal representatives.
  5. Change of requirements on charter capital of LLC: Under the Law on Enterprises, a one-member LLC is not permitted to reduce its charter capital. The New Law now permits a one-member LLC to reduce its charter capital in certain circumstances. Additionally, full payment of the registered charter capital of an LLC must be made within 90 days of the issuance of the ERC (in contrast to the 36 months period under the old Law on Enterprises) or the actually paid charter capital must be registered as adjusted charter capital.
  6. Lower quorum and voting thresholds: In multi-member LLCs, the quorum of the meeting of the Board of members and the voting threshold for circular resolutions are reduced to 65% of the charter capital from the current 75% requirement.
  7. In JSCs, the quorum of the general meeting of shareholders (GMS) and voting threshold for circular resolutions of shareholders is reduced to 51% of the voting shares from the current 65% and 75% requirement respectively. At a GMS, the voting threshold is reduced to 51% of the voting shares of attending shareholders from the current 65% for ordinary matters and to 65% of the voting shares from the current 75% for reserved matters.
  8. The new definition of State-owned Enterprises (SOE): The new Law defines an SOE to be an enterprise wholly owned by the State, thus, allowing former SOEs to operate as private or JSCs subject to new rights and obligations.

 

Source: https://vietnaminsider.vn/things-you-should-know-about-100-foreign-invested-business-in-vietnam/

Meeting between BeluxCham & Department of Foreign Affairs HCMC

On the afternoon of 16th April 2021, BeluxCham Chairman – Mr. Bart Verheyen has a meeting with Mr. Le Truong Duy – Director of Foreign Service Center (FSC), Department of External Relations HCMC. At the meeting, Mr. Duy has consulted with BeluxCham on organizing events in the European Village in HCMC towards the two-year anniversary of the conclusion of the New-Generation Free Trade Agreement between Vietnam and the European Union – EVFTA. Besides, FSC also seek to strengthen cooperation and connection with BeluxCham. In response to the wishes of the Vietnamese side, BeluxCham proposed that both agencies can organize events/activities together to promote the relations and trade between Belgium – Luxembourg and Vietnam. Furthermore, BeluxCham will support and cooperate with FSC in organizing “European Village” events, which will be organized in October 2021.

 

 

 

Doing Business 2020 – Vietnam

 

Full Book: VNM

 

(Doing Business 2020, a World Bank Group flagship publication, is the 17th in a series of annual studies measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe—and over time.)

Vietnam’s Entry Procedures for Foreign Experts

  1. Apply for Sponsor Letter and the List of experts on entry to Vietnam for the People’s Committee where the company’s head office is affiliated or where the expert is working (Submit to the Department of Invalids and Labor of the commune Association – 33 Street No. 13, Hiep Binh Chanh, Thu Duc, Ho Chi Minh City, for experts entering Ho Chi Minh City)

The application form is available at https://drive.google.com/drive/u/0/folders/1CX4dRUrs2iKD2m89j-M1TaIFJvEBEfmT

*The Provincial People’s Committee reviews the petition and forwards it to the Immigration Department – Ministry of Public Security and notify the results to the company within 20-25 days.

  1. Submit the Sponsor Letter approved by the People’s Committee with the list of the experts to the Immigration Department – Ministry of Police after it has issued a decision on approval from the People’s Committee together with the Immigration Application (NA2)and the Sample Seal Registration Form at the Department of Immigration(Form NA16)

* In case the expert does not have a Visa / Work permit, then Submit the VISA Application (Form NA1) to the Department of Immigration

*The process of returning results at Immigration Department takes 5-7 working days

  1. Apply for Quarantine Accommodation According to Official Letter No. 1441 / BYT-MT dated 20/3/2020 of the Ministry of Health, medical isolation at hotels (with fee) is currently only applicable to foreigners such as experts, business managers, skilled workers, …

The application form is available at https://drive.google.com/drive/folders/175Tz1j9ZZdSEXs0fIRNqFV64_tiwB_Z2?usp=sharing

  1. The company prepares and submits the isolation plan to the local Department of Health for approval (1 day).

* In the Ho Chi Minh City area, there is no need to obtain confirmation from the Department of Health from February 1, 2021. However, the guaranteeing company still has to submit the quarantine plan to the airline

The required documents to send to the Department of Health / Center for Disease Control as following (Not applied for HCMC)

  • List of experts approved by the Provincial People’s Committee / Department of Labor, Invalids and Social Affairs;
  • The Decision of the People’s Committee to propose to the Immigration Department to issue visas to experts. In case, the expert who working in another province desires to be isolated in Ho Chi Minh City, the Expert must have approval from the Ho Chi Minh City People’s Committee.
  • Letter of approval from Immigration Department for the experts;
  • Proposal for Quarantine location – Hotel selection;
  • Scan of confirmation of SARS-CoV-2 test by real-time PCR technique from 3- 7 days before the entry date. The SARS-CoV-2 test must be done at government-approved laboratories or at the World Health Organization (WHO) accredited laboratory system.
  • Having documents, certifying insurance, international insurance of the expert or the host organization inviting the expert to commit to paying treatment costs in case of Covid-19;
  • The Commitment from the Expert’s Organization/Company for ensuring and taking responsibilities to the public safety from the Covid-19 pandemic

5. When you have all the documents, please register to join the Flight to Vietnam

6. After buying the air ticket, please take the Covid-test by PCR system.

7. Please fill out the Medical Declaration / Vietnam Health Declaration form https://tokhaiyte.vn 24 hours before your departure.