The foreign company establishes a subsidiary in Vietnam

Foreign investors can invest in Vietnam through many different forms. Especially for investors who are foreign companies, they can invest in one of the following forms: Establishment of a 100% foreign owned company, Joint venture with domestic investors, investment in accordance with business cooperation contract… In fact, one of the investment forms that foreign companies often choose is to establish subsidiary companies in Vietnam.

Please contact VN Law Firm (luatvn) for the best advice and support. hotline / Zalo number; 0763387788 -luatvn.vn02@gmail.com

Thành lập công ty con tại Việt Nam
Thành lập công ty con tại Việt Nam

Legal grounds

• WTO commitments;
• Evfta;
• Relevant Free Trade Agreements;
• Law on investment 2014;
• Enterprise Law 2014

Holding company subsidiaries

First of all, we must understand the parent company and subsidiary company like? Unlike a branch or representative office of a foreign company, the parent company – subsidiary company is two independent entities with separate legal status. However, the parent company has a certain economic interest in the subsidiary (the capital contribution of the parent company in the subsidiary); Depending on the legal type of the subsidiary, the parent company exercises its rights and obligations as a member, owner or shareholder in the relationship with the subsidiary; The parent company has the right to dominate the decisions of the subsidiary in many forms.
Under the provisions of the Enterprise Law 2014, a company is considered the parent company of another company if it falls into one of the following cases:
• Owning more than 50% of the charter capital or total common shares of that company;
• Have the right to directly or indirectly decide to appoint the majority or all members of the Board of Directors, Director or General Director of that company;
• Have the right to decide on any amendment or supplement to the company’s Charter.

Procedures for setting up subsidiary companies in Vietnam

A foreign company setting up a subsidiary in Vietnam is usually a form of capital contribution to establish economic organizations in Vietnam. Procedures for setting up a subsidiary in Vietnam are as follows:

Step 1: Procedures for issuance of Investment Registration Certificate

A foreign company that establishes a subsidiary in Vietnam, whether the company holds 1% or up to 100% of the company’s capital in Vietnam, must also carry out the procedures for issuing an Investment Registration Certificate. An application for an investment registration certificate includes:
• Proposal for project implementation;
• Investment project proposal;
• Notes to financial capacity with confirmation of the balance of the investment bank accounts according to the declared charter capital or financial statements of foreign companies (with interest in proportion to the charter capital contributed in Vietnamese companies. Male)
• The justification meets the condition;
• Decide to establish;
• Certificate of land use rights, house lease contract
• Copy of the foreign company’s business registration;
• Foreign company charter;
• Investor’s representative passport;
• Referral filing.

Step 2: Business registration certificate issuance procedures

The foreign company (parent company) submits the application for subsidiary establishment to the Department of Planning and Investment of the province where the subsidiary is headquartered. Establishment documents include:
• Application form for Subsidiary establishment registration.
• The decision to Establish a subsidiary of the parent company;
• Parent company Establishment Minutes;
• Notice of establishment of subsidiary company of parent company;
• Draft of Company’s charter;
• A document certifying the legal capital of a competent agency or organization for companies conducting business lines that are required by law to have legal capital.
• List of members, copy of ID card, passport or other legal personal identification of each member.
• Practicing certificate of company members and other individuals, for companies conducting business lines that are required by law to have practice certificates.
The Department of Planning and Investment receives and checks the records. Within 10 days from the date of receipt of a complete and valid dossier, the Department of Planning and Investment shall issue a business registration certificate to the subsidiary.
Thành lập công ty con tại Việt Nam
Thành lập công ty con tại Việt Nam

Step 3: Procedure to engrave the legal entity seal and publish the company’s seal sample

Time limit to complete from 02 – 03 working days
Some note
• Subsidiaries are not allowed to invest in capital contribution or purchase shares of the parent company. Subsidiaries of the same parent company are not allowed to contribute capital or purchase shares to cross-own each other;
• Subsidiaries with the same parent company that owns at least 65% of state capital are not allowed to contribute capital to establish an enterprise in accordance with the Law on Enterprises.
• The parent company has limited liability to its subsidiary;
• The parent company has basic rights and obligations toward the subsidiary as prescribed in Article 190 of the 2014 Law on Enterprises.
Above is the advice of Vietnam Law Firm (luatvn). If you have any questions or need to use legal services, please contact VN Law Firm (luatvn) for the best advice and support. hotline / Zalo number; 0763387788 – luatvn.vn02@gmail.com

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