Doing Business In Viet Nam – Enterprise Establishment Procedures

enterprise establishment

Doing Business In Viet Nam – Enterprise Establishment Procedures

There is a only business Law system for both local local and foreigner investors to do business in Viet Nam, deals with the establishment, organization, restructuring, dissolution, and relevant activities of enterprises, including limited liability companies, joint-stock companies, partnerships, sole proprietorships, and groups of enterprises. We would like to introduce to you four of key topics to know about the business regulations in Vietnam:

  • General terms and conditions.
  • Establishment procedures.
  • Form of enterpises – advantages and disadvantages, how to choose your best form.
  • Restructuring, dissolution, and bankruptcy of enterprises.

It would be our pleasures to share with you for any query or question about the terms and conditions as well as practical cases which we have been experiencing since years 2000, where the first law on enterprise has allowed private sector to born and blooming.

enterprise establishmentDOING BUSINESS IN VIET NAM

PART 2 – ENTERPRISE ESTABLISHMENT PROCEDURES

1. The right to establish enterprises, contribute capital, purchase shares/stakes, and manage enterprises

Every organization and individual is entitled to establish and manage enterprises in Vietnam in accordance with the law, except for the cases:

  • Government agencies, armed force units using state-owned property to establish enterprises for self-seeking purposes.
  • Officials and civil servants defined by regulations of law on officials and civil servants;
  • Commissioned officers, non-commissioned officers, workers and civil servants working at units of the army; commissioned officers, non-commissioned officers working at police units, except for those appointed as authorized representatives to manage state capital contributed to other enterprises;
  • Executive officers of state-owned companies, except for those appointed as authorized representatives to manage state capital contributed to other enterprises;
  • Minors; people that are legally incompetent; organizations without legal status;
  • Any person facing criminal prosecution, serving a prison sentence, undergoing drug rehabilitation, sent to a reform school; or banned from doing business, holding a certain title or doing a certain job by the court; and other cases prescribed by regulations of law on bankruptcy and anti-corruption.

The applicant for enterprise registration must submit the criminal record to the business registration authority at its request.

Every organization and individual is entitled to contribute capital, buy shares/stakes in joint-stock companies, limited liability companies, and partnerships in accordance with the law, except in the following cases:

  • Government agencies, armed force units using state-owned property to establish enterprises for self-seeking purposes;
  • The entities banned prohibited from contributing capital to enterprises as prescribed by regulations of law on officials and civil servants.

2. Contracts prior to business registration

  • The founder of the enterprise may sign contracts serving the establishment and operation of the enterprise before and during the process of business registration.
  • If the enterprise establishment is permitted, the enterprise shall keep performing the duties and rights under the concluded contracts, unless otherwise agreed by the parties.
  • If the enterprise registration is not granted, the person who enters into the contract shall take responsibility, or the founder of the enterprise shall take joint responsibility for the implementation of the contract.

3. Application for registration of a sole proprietorship

  • An application form for business registration.
  • Copies of the ID card or other ID papers of the owner of the sole proprietorship.

4. Application for registration of a partnership

  • An application form for business registration.
  • The company’s charter.
  • A list of partners.
  • Copies of the ID card or other ID papers of the partners.
  • A copy of the Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

5. Application for registration of a limited liability company

  • An application form for business registration.
  • The company’s charter.
  • A list of members.
  • Copies of:
    – Copies of the ID card or other ID papers of members being individuals;
    – Decision on Establishment, Certificate of Business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of members being organizations. If a member is a foreign organization, the copy of the Certificate of Business registration or an equivalent document must be consularly legalized.
    – The Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

6. Application for registration of a joint-stock company

  • An application form for business registration.
  • The company’s charter.
  • A list of founding shareholders and shareholders being foreign investors.
  • Copies of:
    – Copies of the ID card or other ID papers of founding shareholders and foreign investors being individuals;
    – Decision on Establishment, Certificate of Business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of founding shareholders and foreign investors being organizations. If shareholders are foreign organizations, the copy of the Certificate of Business registration or an equivalent document must be consularly legalized.
    – The Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

7. Contents of the application form for business registration

  • Name of the enterprise.
  • Address of the enterprise’s headquarter; phone number, tax number, and email address (if any).
  • Business lines.
  • Charter capital; capital invested by the owner of the sole proprietorship.
  • Types of shares, face value of each type of shares and total authorized shares of each type if the enterprise is a joint-stock company.
  • Tax registration information
  • Number of employees.
  • Full name, signature, permanent residence, nationality, number of the ID card, passport, or another ID paper of the owner if the enterprise is a sole proprietorship, or those of the partners if the enterprise is a partnership.
  • Full name, signature, permanent residence, nationality, number of the ID card, passport, or another ID paper of the legal representative if the enterprise is a limited liability company or joint-stock company.

8. The company’s charter.

The company’s charter consists of the charter upon registration and amendments made to the charter throughout the enterprise’s operation. Main contents of the company’s charter:

  • Name, address of the headquarter of the enterprise; names, addresses of its branches and representative office (if any);
  • Business lines;
  • Charter capital; total shares, types of shares, and nominal values of each type of shares if the enterprise is a joint-stock company;
  • Full names, addresses, nationalities, and other information of general partners if the enterprise is a partnership; of the owners or members if the enterprise is a limited liability company; of founding shareholders if the enterprise is a joint-stock company; stakes of each member if the enterprise is a limited liability company or partnership; the quantity of shares, types of shares, and nominal value of each type of the founding shareholders; Rights and obligations of members/partners if the enterprise is a limited liability company/partnership; of shareholders if the enterprise is a joint-stock company;
  • Organizational structure;
  • The legal representative if the enterprise is a limited liability company or a joint-stock company;
  • Method for ratifying the enterprise’s decisions; rules for resolution of internal dispute;
  • Bases and methods for determination of wages and bonus for managers and controllers;
  • Cases in which a member is entitled to request the enterprise to buy his/her stake (if the enterprise is a limited liability company) or shares (if the enterprise is a joint-stock company);
  • Rules for distribution of post-tax profit and handling of business loss;
  • Cases of dissolution; procedures for dissolution and asset liquidation;
  • Rules for making amendments to the company’s charter.

When applying for business registration, the charter must bear the full names and signatures of the following persons:

  • General partners if the enterprise is a partnership;
  • The enterprise’s owner being an individual or the legal representative of the enterprise’s owner being an organization (if the enterprise is a single-member limited liability company);
  • Members being individuals or legal representatives or authorized representatives of the members who are organizations (if the enterprise is a multi-member limited liability company);
  • Founding shareholders being individuals and legal representative or authorized representative of founding shareholders being organizations if the enterprise is a joint-stock company.

The amended charter must bear the full names and signatures of the following persons:

  • The President of the Member assembly if the enterprise is a partnership;
  • The owner, legal representative of the owner, or the legal representative if the enterprise is a single-member limited liability company;
  • The legal representative if the enterprise is a multi-member limited liability company or joint-stock company.

9. List of members of a limited liability company, general partners of a partnership, founding shareholders of a joint-stock company

The list of members of a limited liability company, general partners of a partnership, founding shareholders of a joint-stock company must have the following information:

  • Full names, signatures, addresses, nationalities, permanent residence, and other information about members/general partners being individuals if the enterprise is a limited liability company or partnership; of founding shareholders and foreign investors being individuals if the enterprise is a joint-stock company;
  • Names, enterprise identification number, and addresses of members/general partners being organizations if the enterprise is a limited liability company or partnership; of founding shareholders and foreign investors being organizations if the enterprise is a joint-stock company;
  • Full names, signatures, addresses, nationalities, permanent residences of authorized representatives or legal representatives of members being organizations if the enterprise is a limited liability company; of founding shareholders and foreign investors being organizations if the enterprise is a joint-stock company;
  • Stakes, types, quantity and value of each type of contributed assets, time limit for making capital contribution of each member/general partner if the enterprise is a limited liability company or partnership; quantity of shares, types of shares, types, quantity and value of each type of assets contributed by each founding shareholders and shareholders being foreign investors if the enterprise is a joint-stock company.

10. Procedures for business registration

  • The founder of the enterprise or an authorized person shall submit the application for enterprise registration prescribed in this Law to the business registration authority
  • The business registration authority shall consider the legitimacy of the application for enterprise registration and issue the Certificate of Business registration within 03 working days from the day on which the application is received. If the application is rejected, a written notification must be sent to the founder. The notification must provide explanation and necessary adjustments or additions.
  • In the procedures and documents for business registration, there is cooperation among regulatory bodies in issuance of Certificate of Business registration, employment registration, social insurance, and online business registration.

11. Issuance of the Certificate of Business registration

The enterprise shall be granted the Certificate of Business registration when the following conditions are satisfied:

  • The registered business lines are not banned;
  • The enterprise’s name is conformable with regulations;
  • The application for business registration is satisfactory;
  • The fee for enterprise registration is fully paid as prescribed by regulations of law on fees and charges.

If the Certificate of Business registration is lost or damaged or otherwise destroyed, the enterprise shall have it reissued and pay fees as prescribed by law.

12. Contents of the Certificate of Business registration

  • Name and identification number of the enterprise.
  • Address of the enterprise’s headquarter.
  • Full name, signature, permanent residence, nationality, number of the ID card, passport, or another ID paper of the legal representative if the enterprise is a limited liability company or joint-stock company; or general partners if the enterprise is a partnership; of the owner if the enterprise is a sole proprietorship; full names, permanent residences, nationalities, ID/passport numbers of members being individuals, or names, enterprise identification numbers and addresses of headquarters of members being organizations if the enterprise is a limited liability company.
  • Charter capital.

13. Enterprise identification number

  • Enterprise identification number is a series of number created by the National Business Registration Information System which is issued to the enterprise when it is established and written on the Certificate of Business registration. Each enterprise has a sole enterprise identification number and it shall not be issued to any other enterprise.
  • The enterprise identification number is used when fulfilling tax obligations, following administrative procedures, and performing other rights and obligations.

14. Registration of changes to the Certificate of Business registration

  • The enterprise must register with the business registration authority when contents of its Certificate of Business registration are changed.
  • The legal representative of the enterprise must register the changes to the Certificate of Business registration within 10 days from the day on which such changes are made.
  • The business registration authority shall consider the legitimacy of the documents and issue a new Certificate of Business registration within 03 working days from the day on which the application is received. If the application is rejected, a written notification must be sent to the applicant. The notification must provide explanation and necessary adjustments or additions.
  • Changes to the Certificate of Business registration according to a decision of the court or arbitration shall be registered following the procedures below:
    – The applicant for changes to the Certificate of Business registration shall submit the application to the business registration authority within 15 working days from the effective date of the judgment or decision. The application must be enclosed with a copy of the effective judgment or decision;
    – The business registration authority shall consider and issue a new Certificate of Business registration according to the effective judgment or decision within 03 working days from the day on which the application is received. If the application is rejected, a written notification must be sent to the applicant. The notification must provide explanation and necessary adjustments and additions.

15. Notification of changes to the business registration information

The enterprise must notify the business registration authority when making any of the changes below:

  • Changing the business lines;
  • Changing the founding shareholders if the enterprise is a joint-stock company and shareholders being foreign investors, unless the enterprise is a listed company;
  • Making other changes to the application for enterprise registration.

The legal representative of the enterprise shall notify changes to business registration information within 10 days from the day on which such changes are made.

The company must send a written notification to the business registration authority of the administration division where the enterprise’s headquarter is located from the day on which shareholders being foreign investors, whose names are in the enterprise’s shareholder register, are changed. The notification must specify:

  • The enterprise’s name, enterprise identification number, address of the headquarter.
  • With regard to shareholders being foreign investors who transfer their shares (the transferors): Names and addresses of foreign shareholders being organizations; full name, nationalities, addresses of shareholders being individuals; their holdings and quantity of shares, types of shares; quantity and types of transferred shares;
  • With regard to shareholders being foreign investors who receive shares transfer (the transferees): Names and addresses of foreign shareholders being organizations; full name, nationalities, addresses of shareholders being individuals; quantity and types of shares received; quantity of shares and corresponding holdings in the company;
  • Full name and signature of the company’s legal representative.

The business registration authority shall consider the legitimacy of the documents and change business registration information within 03 working days from the day on which the notification is received. If the changes are rejected, a written notification must be sent to the applicant. The notification must provide explanation and necessary adjustments and additions (if any).

Changes to business registration information according to a decision of the court or arbitration shall be registered following the procedures below:

  • The applicant for changes to business registration information shall submit the notification of changes to a competent business registration authority within 10 working days from the effective date of the judgment or decision. The notification must be enclosed with a copy of the effective judgment or decision;
  • The business registration authority shall consider and change the business registration information according to the effective judgment or decision within 03 working days from the day on which the notification is received. If the changes are rejected, a written notification must be sent to the requester. The notification must provide explanation and necessary adjustments and additions.

16. Announcing business registration information

After being granted the Certificate of Business registration, the enterprise must make an announcement on the National Business Registration Portal and pay the fee as prescribed. The announcement shall contain the information on the Certificate of Business registration and the following information:

  • The business lines;
  • A list of founding shareholders and shareholders being foreign investors if the enterprise is a joint-stock company.

If business registration information is changed, the changes must be announced on National Business Registration Portal by the deadline prescribed in the law, the announcement of the information must be  within 30 days from the day on which it is disclosed.

17. Provision of business registration information

  • Within 05 working days from the day on which the Certificate of Business registration is issued or business registration information is changed, the business registration authority shall send the business registration information or the changes to business registration information to the tax authority, statistical agency, labor authority, and social insurance authority; periodically send business registration information and changes to business registration information to another regulatory body of the same level, the People’s Committee of the district where the enterprise’s headquarter is located.
  • Every organization or individual is entitled to request business registration authorities to provide information that must be announced by enterprises as prescribed by law.
  • Business registration authorities must provide information sufficiently and in a timely manner.

18. Contributed assets

  • Contributed assets may be Vietnam Dong (VND), convertible foreign currencies, gold, value rights to use land, value of intellectual property rights, technologies, technical secrets, and other assets that can be assessed in VND.
  • Intellectual property rights contributed as capital include copyrights and relevant rights, industrial property rights, plant variety rights, and other intellectual property rights prescribed by regulations of law on intellectual property. Only the organizations and individuals who are legitimate owners of the aforementioned rights may contribute such assets as capital.

19. Transfer of ownership of contributed assets

Members of limited liability companies, general partners of partnerships, and shareholders of joint-stock companies must transfer the right to ownership of assets contributed as capital as follows:

  • If asset ownership registration is mandatory or the asset is land use right, the capital contributor must follow procedures for transferring the ownership of such asset or land use right to the company at a competent authority. The transfer of ownership of contributed assets shall not incur registration fee;
  • If asset ownership registration is not mandatory, the capital contribution shall be recorded in writing. The transfer record must specify the name and headquarter address of the company; Full name, permanent residence, ID/passport number, establishment decision number or registration number of the contributor; the types and quantity of assets contributed; total value of contributed assets and ratio of contributed assets to the company’s charter capital; the date of transfer; signatures of the contributor or the contributor’s authorized representative and the legal representative of the company;
  • Shares or stakes in the form of assets other than VND, convertible foreign currency, and gold are considered transferred after the legal ownership of such assets is transferred to the company.

Contributed assets used for the sole proprietorship’s operation is exempt from procedures for ownership transfer. Payments for transfer of shares/stakes, and receipt of dividends of foreign investors must be made through their capital accounts opened at banks in Vietnam, except for payment with assets.

20. Assessing contributed assets

  • Contributed assets other than VND, convertible foreign currencies, gold, must be assessed by members/general partners, founding shareholders, or professional valuation organizations, and expressed in VND.
  • Assets contributed upon the enterprise establishment must be unanimously assessed by members or founding shareholders, or assessed by a professional valuation organization. If assets are assessed by a professional valuation organization, the value of contributed assessed must be concurred with by the majority of members or founding shareholders. If a contributed asset is assessed at a higher value than its true value at the time of contribution, the members or founding shareholders shall contribute an additional amount which is equal to the difference between the assessed value and true value when the valuation is done; and are jointly responsible for the damage caused by deliberate assessment of assets higher values than their actual values.
  • Assets contributed during the operation shall be assessed by the owner, the Board of members (if the enterprise is a limited liability company or partnership), or the Board of Directors (if the enterprise is a joint-stock company) and the contributor or a professional valuation organization. If the asset is assessed by a professional valuation organization, its assessed value must be concurred with by the contributor and the enterprise. If the assessed value is higher than the true value of the asset at the time of contribution, the contributor, the owner, members of the Board of members (if the enterprise is a limited liability company or partnership), or members of the Board of Directors (if the enterprise is a joint-stock company) shall contribute an additional amount which is equal to the difference between the assessed value and true value when the valuation is done; and are jointly responsible for the damage caused by deliberate assessment of assets higher values than their actual values.

21. Enterprise’s name

The Vietnamese name of an enterprise consists of two elements:

  • The type of business entity. The type of business entity is written as “công ty trách nhiệm hữu hạn” or “công ty TNHH” (limited liability company); “công ty cổ phần” or “công ty CP” (joint-stock company); “công ty hợp danh” or “công ty HD” (partnership); “doanh nghiệp tư nhân”, “DNTN” or “doanh nghiệp TN” (sole proprietorship);
  • The proper name is written using the Vietnamese alphabet, the letters, F, J, Z, W, digits, and symbols.

The enterprise’s name must be post up at the headquarter, branches, representative offices, and other business locations of the enterprise. The enterprise’s name must be printed or written on transaction documents, materials, and publications published by the enterprise.

22. Prohibitions when naming enterprises

  • Picking a name that is the same as or confused with another enterprise’s name which has been registered.
  • Using names of regulatory bodies, the armed forces, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations as the whole or part of the enterprise’s proper name, unless otherwise permitted by the organization.
  • Using words or symbols that offend the history, tradition, culture of Vietnam.

23. Enterprise’s name in foreign language and abbreviated name

  • Enterprise’s name in foreign language means the name translated from the Vietnamese name into a foreign language that uses the Latin alphabet. When translated into a foreign language, the enterprise’s name may be kept unchanged or translated into a word or phrase with a corresponding meaning.
  • If the enterprise has a foreign name, it size must be smaller than the enterprise’s Vietnamese name at the headquarter, branches, representative offices, business locations of the enterprise, on the enterprise’s documents and publications.
  • Abbreviated name of a enterprise may derived from the Vietnamese name or the foreign language name.

24. Names of branches, representative offices, and business locations

  • Names of branches, representative offices, and business locations must be written using the Vietnamese alphabet, the letters F, J, Z, W, digits, and symbols.
  • The name of each branch or representative office must bear the enterprise’s name and the word “Chi nhánh” (“Branch of”) or “Văn phòng đại diện” (“Representative office”)
  • Names of branches, representative offices, and business locations must be put up at the branches, representative office, and business locations. The name of the branch or representative office must be smaller than the enterprise’s name on the documents issued by the branch or representative office.

25. Used names and confusing names

  • A used name means a Vietnamese name chosen by a enterprise which is exactly the same as the name of another registered enterprise. A name is considered confusing in the following cases:
  • The Vietnamese name chosen by the enterprise is pronounced similarly to the name of a registered enterprise;
  • The abbreviated name chosen by the enterprise is the same as the abbreviated name of a registered enterprise;
  • The foreign language name chosen by the enterprise is the same as the foreign language name of a registered enterprise;
  • The proper name chosen by the enterprise is different from that of a registered enterprise of the same type by only a digit or a letter (in the Vietnamese alphabet, or the letter F, J, Z, W) right after the chosen proper name; The proper name chosen by the enterprise is different from that of a registered enterprise of the same type by only a symbol “&”, “.”, “+”, “-”, “_”;
  • The proper name chosen by the enterprise is different from that of a registered enterprise of the same type by only a the word “tân” (“new”) before or “mới” after the proper name;
  • The proper name chosen by the enterprise is different from that of a registered enterprise of the same type by only a word “miền Bắc” (”Northern”), “miền Nam” (”Southern”), “miền Trung” (”Central”), “miền Tây” (”Western”), “miền Đông” (”Eastern”), or a word with similar meanings.

26. Headquarter

The headquarter of a enterprise is a location in Vietnam with an address, which consists of the house number, street, commune, district, province, phone number, fax number, and email address (if any).

27. Enterprise’s seal

Every enterprise is entitled to decide the form, quantity, and contents of its seal. A seal must specify:

  • The enterprise’s name;
  • The enterprise’s ID number.

Before using the seal, the enterprise must send the seal design to the business registration authority in order for the business registration authority to post it on the National Business Registration Portal.

The management, use, and retention of the seal shall comply with the company’s charter.

The seal shall be used in the cases prescribed by law or agreed by the parties.

28. Branches, representative offices, and business locations of the enterprise

  • A branch is a unit dependent on the enterprise and obliged to perform part or all of the enterprise’s functions, including representation under authorization. The business lines of the branch must be consistent with those of the enterprise.
  • A representative office is a unit dependent on the enterprise and obliged to represent the enterprise’s interests under authorization and protect such interests.
  • Business location is a place where the enterprise does some particular business activities.

29. Establishment of branches, representative offices

  • Every enterprise is entitled to establish a branch or representative office, whether at home or overseas. A enterprise may establish one or multiple branches/representative offices in an administrative division.
  • When establishing a branch/representative office in Vietnam, the enterprise shall submit an application for establishment of the branch/representative office to a competent business registration authority in charge of the administrative division where the branch/representative office is situated. The application consists of:
    – A notification of the branch/representative office establishment;
    – A copy of the Establishment Decision and minutes of the meeting about the branch/representative office establishment; a copy of the ID card/passport or ID paper of the head of the branch/representative office.

The business registration authority shall examine the validity of the application and issue the Certificate of Branch/Representative Office Registration within 03 working days from the day on which the application is received. If the application is rejected, the enterprise must be notified in writing. The notification must provide explanation and necessary adjustments/supplementation (if any)

The business registration authority that issues the Certificate of branch/representative office registration shall inform the business registration authority in charge of the administrative division where the enterprise’s headquarter is situated, send information about registration of the branch/representative office to the tax authority, statistics authority within 05 working days from the issuance date of the Certificate of branch/representative office registration; periodically send information to the People’s Committee of the district where the branch/representative office is situated.

The legal representative of the enterprise shall register changes to the Certificate of Branch/Representative Office Registration within 10 days from the day on which such changes are made.

With more than 10 years of delivering business consultation for more than 1000 foreign representative offices in Viet Nam, Viva Business Consulting is capable to consult and implement any query you have in the most practical way. We prevent your business from any potential risks in advance so you can operate the office in the most simple and cost effective way.

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