Embark on a strategic business endeavor by establishing a Joint Venture Company in Vietnam. A land of thriving opportunities, Vietnam welcomes collaborative ventures. With a robust economy and a dynamic market, forming a Joint Venture here offers immense potential for growth and success.
Navigating the intricacies of Vietnamese business regulations can be challenging, but our expert team at Inventive Legal is here to guide you. Tailored solutions, legal expertise, and efficient processes are the pillars of our service. Let's embark on this journey together and unlock the vast possibilities of a Joint Venture in Vietnam. Choose success, choose collaboration, choose Inventive Legal.
What is a Joint Venture Company in Vietnam?
In reality, there is no comprehensive definition of a joint venture company in existing documents, so here we refer to the concept that people commonly adopt.
A joint venture company is an enterprise established in Vietnam through collaboration between two or more parties based on a joint venture contract or an agreement signed between the Government of the Socialist Republic of Vietnam and the government or enterprise with foreign investment cooperating with a Vietnamese enterprise.
- The joint venture company is established in the form of a limited liability company or a joint-stock company, with each party being responsible within the scope of the committed capital in the statutory capital of the enterprise.
- The joint venture company holds legal personality from the date of obtaining the investment license.
- Statutory capital of the joint venture company: The statutory capital must be at least equal to 30% of the total investment.
For projects involving the construction of infrastructure, projects investing in encouraged areas, forest plantation projects, projects with large scales, this ratio may be lower, but not less than 20% of the total investment and must be approved by the licensing authority.
The capital contribution ratio of the parties in the joint venture company is based on agreement, but it must not be lower than 30% of the statutory capital of the joint venture company.
- In the operation of the joint venture company: There is a coordination and capital contribution in the investment and business production of foreign and Vietnamese investors. The level of participation in business management, the proportion of profits enjoyed, and the risks each party bears in the joint venture depend on the capital contribution ratio of the parties involved.
Conditions for Establishing a Joint Venture Company in Vietnam
According to the provisions of the 2020 Enterprise Law, certain conditions must be met for investors to establish a joint venture company. Here are some conditions for establishing a joint venture company:
- Regarding the Subject (Investors):
- Individuals: Must have full capacity for civil acts, not under the execution of imprisonment or other administrative penalties as prescribed.
- Legal entities: Legally established and still in operation at the time of investment.
- Financial Aspects:
- Financial capacity: The investor's financial capacity must correspond to the committed capital for the investment project. In other words, the investor must be financially capable of fulfilling the committed capital.
- Bank: The bank holding the invested amount in the company must be a legal and authorized bank operating in Vietnam.
- Legal Capital of the Company:
- The company's legal capital must meet the requirements according to Vietnamese laws on joint venture companies.
- Compliance with Vietnamese Laws and International Treaties:
- The establishment must comply with Vietnamese laws and international treaties to which Vietnam is a signatory or a participant.
In addition to these specific conditions for establishing a joint venture company, enterprises must ensure compliance with other conditions for establishing a company as per legal regulations.
Documents Required for Establishing a Joint Venture Company
Establishing a joint venture company involves contributions from both Vietnamese and foreign investors. The required documentation can be categorized as follows:
Documentation from Foreign Investors:
- Business registration certificate
- Company charter
- Audited financial report of the most recent fiscal year
- Bank confirmation related to the account balance equivalent to the contributed capital
- Decision of the company regarding investment and appointment of a representative to manage the contributed capital
- Passport of the legal representative (if appointed as the Director) or the representative managing the contributed capital.
Documentation from Vietnamese Investors:
- Business registration certificate
- Company charter
- Bank confirmation related to the account balance equivalent to the contributed capital
- Minutes of meetings, decision of the company related to participation in contributing capital to establish the company in Vietnam, and appointment of a representative to manage the contributed capital
- Identification document (ID/passport/citizen ID) of the legal representative (if appointed as the Director) or the representative managing the contributed capital.
Additional Documents to Prepare:
The investment certificate application dossier for establishing a joint venture company includes the following documents:
- Investment certificate application letter as per the prescribed form by the competent authority
- List of company members, along with notarized copies of personal identification papers, and the legally authorized representative's power of attorney
- Notarized and legalized translation of documents for foreign companies intending to invest in the joint venture
- Company charter
- Documents specifying the legal capital
- Notarized copy of the certificate of professional practice of the company's head as per legal regulations in cases where the company's establishment has specific conditions
- Lease contract for the company's main office location
- Notarized copy of the land use right certificate for the rented location (for land lease) or documents proving the business address with office functions (for other addresses)
Note: Foreign companies registering for the first time to invest in a joint venture in Vietnam need to submit an investment certificate application dossier.
Procedure for Establishing a Joint Venture Company in Vietnam
Due to the diverse nature of joint venture company stakeholders, the procedures and documentation for establishing a joint venture differ from those for establishing a company with only Vietnamese individuals or organizations. The following outlines the stages and necessary steps to establish a joint venture company in Vietnam:
Stage 1: Registration for Joint Venture Company Establishment
Once the conditions for establishing a joint venture company, as stipulated by the Enterprise Law and Investment Law, are met, the process for establishing a joint venture company can be initiated in two scenarios:
► Scenario 1: The company is established from the outset with the participation of both foreign and Vietnamese investors.
According to Article 37 of the Investment Law 2020, the procedures for obtaining an Investment Registration Certificate are as follows:
- Step 1: Prepare the required documents.
- Step 2: Submit the documents to the Department of Planning and Investment to request an Investment Registration Certificate.
After obtaining the Investment Registration Certificate, foreign investors submit the necessary documents to the business registration office to request a Business Registration Certificate for the joint venture company.
► Scenario 2: A Vietnamese company is established first, followed by additional investment from a foreign investor through the purchase of shares or capital contribution.
According to Articles 24, 25, and 26 of the Investment Law 2020, foreign investors contributing capital or purchasing shares must undergo registration procedures at the provincial Department of Planning and Investment, where the company plans to contribute capital, buy shares, and establish its headquarters.
- Step 1: The investor prepares the necessary documents.
- Step 2: After submitting the required documents, the provincial Department of Planning and Investment will provide feedback within 15 days. If the documents are complete and valid, the registration authority issues a notice approving the capital contribution or share purchase by the foreign investor. If the documents are incomplete or do not meet the requirements, a written notice of rejection, specifying the reasons, will be issued.
- Step 3: Implement changes in the business registration content.
Stage 2: Completion of Subsequent Procedures for Joint Venture Operation
After successfully establishing the joint venture company, the following steps need to be undertaken:
- Announcement of company registration information: The company must announce its registration information in accordance with regulations to avoid administrative penalties. The company should disclose registration information on the national electronic information portal within 30 days from the date of business registration issuance, paying the required fees.
- Seal engraving and publicizing the seal sample: Engraving the company seal is a necessary step that should be performed after obtaining the tax code. The number and form of seals are decided by the company, but it must contain essential company information such as name, telephone number, address, and tax code.
- Obtaining an electronic signature certificate: The company must register to purchase an online signature certificate to facilitate tax closure and online tax declaration. Request the bank to activate the tax payment function for the company's bank account. The company's accountant will use the purchased digital signature certificate to conduct online tax closure for the company in accordance with regulations.
- Opening a bank account for the company and reporting the account number to the Department of Planning and Investment: The company needs to open a bank account for operational activities. The business owner should bring the seal, business registration certificate, and ID card to the bank to register for a business account. Afterward, report the account number to the Department of Planning and Investment.
- Hanging the company signboard and announcing the issuance of invoices: The company should design a signboard and hang it at the business address. The signboard can be large or small, and its form is determined by the company. However, it must contain essential information about the company, such as name, telephone number, address, and tax code. The company needs to announce the issuance of invoices, and the business owner should go to the tax office where the company is located to conduct the initial tax declaration, submit the initial tax declaration dossier, receive the invoice printing notice, and print invoices. Finally, the company can announce the issuance of invoices.
- Contributing capital to the joint venture: Members and shareholders of the joint venture company must contribute capital to the company as committed during the business registration within 90 days from the date of being granted the Business Registration Certificate.
- Hiring an accountant and using accounting services: The joint venture company should hire an accountant for bookkeeping, initial tax payment, and tax declaration according to regulations. However, to save costs, the company may use comprehensive tax accounting services.
Establish a Joint Venture Company in Vietnam with Inventive Legal
Are you considering establishing a joint venture company in Vietnam? Partnering with Inventive Legal ensures a smooth and legally sound process. As experts in Vietnamese business law, we guide you through the complexities of joint venture formation, making the experience efficient and hassle-free.
Why Choose Inventive Legal for Your Joint Venture
- Legal Expertise: Benefit from our in-depth knowledge of Vietnamese business laws and regulations, ensuring compliance and minimizing risks.
- Tailored Solutions: We understand that each joint venture is unique. Our legal experts craft personalized solutions to meet the specific needs and goals of your venture.
- Efficient Processes: Save time and effort with our streamlined procedures. We handle documentation, registration, and legal requirements, allowing you to focus on your business.
- Comprehensive Support: From initial registration to ongoing legal assistance, Inventive Legal provides end-to-end support, fostering a long-lasting and successful joint venture.
Steps to Establish Your Joint Venture
- Initial Consultation: Discuss your venture with our legal experts to assess your needs and understand the legal requirements.
- Document Preparation: Our team will assist in preparing the necessary documentation, ensuring all legal aspects are covered.
- Registration Process: We manage the joint venture registration process, liaising with relevant authorities to secure the required permits and approvals.
- Compliance Assurance: Inventive Legal ensures your joint venture complies with all Vietnamese laws and regulations, safeguarding your business operations.
- Ongoing Legal Support: Beyond establishment, we provide ongoing legal support, addressing any legal challenges and ensuring continued compliance.
Embark on your joint venture journey in Vietnam with confidence. Choose Inventive Legal for a reliable and legally sound partnership. Contact us today to initiate the process and unlock the full potential of your joint venture in Vietnam.
