The process to establish/incorporate a company in Vietnam can be somewhat different to other jurisdictions, with the terms used and specific requirements often confusing or difficult to interpret. We have highlighted 9 questions that we regularly receive from foreign investors during their research or establishment processes in Vietnam, and have provided answers to assist investors accordingly.
1.What is an IRC?
IRC stands for INVESTMENT REGISTRATION CERTIFICATE. The first step for a foreign investor seeking to establish a company in Vietnam is to register an “investment project”, with this project becoming the purpose of the foreign investor’s company. The resulting Investment Registration Certificate permits the foreign investor to commence the establishment of their company in Vietnam. The IRC is akin to the concept of “Foreign Investment Approval” in other jurisdictions.
2. What is an ERC?
ERC stands for ENTERPRISE REGISTRATION CERTIFICATE, and certifies the business registration information of a company established in Vietnam. An ERC usually contains the following information: company number, establishment date (and all amendment times), address of the company, company owner information and legal representative information. This document is akin to the “Certificate of Incorporation” in other jurisdictions.
3. What is a Legal Representative? Do I have to Reside in Vietnam if I am a Legal Representative?
A Legal Representative of an enterprise is an individual who can exercise the rights and obligations for and on behalf of that enterprise. Generally, only a Legal Representative can sign contracts for the company with other parties, although Power of Attorney’s can be issued to delegate certain powers to others in the organisation.
A company can have more than one Legal Representative, however the Law requires that at least one Legal Representative resides in Vietnam. If all Legal Representatives are outside of Vietnam for more than 30 days, they must authorise another party to exercise their rights.
4. Can I use a private house, virtual office or my lawyers office as my Vietnam company’s registered address?
All companies in Vietnam require a fixed place of business (the registered address) for registration and ongoing compliance. Using a private house can be permitted for company registration (depending upon the business lines and purpose), however apartments cannot be used. Virtual offices will usually not be satisfactory to the authorities, although a dedicated desk within a serviced office space is ordinarily sufficient to meet the requirements. Lawyers and other service providers can lease out part of their offices for clients where they hold permission to sub-lease and have a real-estate leasing license, but this is not common in Vietnam.
Documents required from a landlord for Vietnamese company establishment:
a. Lease contract between the investor and the landlord
b. Certificate of the Land Use Right of the leased property
c. An agreement signed between the landlord and the property owner according to which the landlord has the right to lease the office in case the landlord is the sub-lessor
d. Business Registration Certificate reflecting that the landlord is entitled to lease the premises if the landlord is a legal entity (ie, a company).
5. How long does it take for an IRC to be issued?
Authorities are required to issue the Investment Registration Certificate within 15 days from the receipt of the valid application. Time also needs to be allowed for collation of documents and completion of application forms, which can take quite some time to facilitate.
6. How long does it take for an ERC to be issued?
When an investor has received their IRC, their ERC will be processed by the Business Registration Division of the Department of Planning and Investment. The authority is to issue the certificate within 3 working days from the receipt of completed application, but again the application documentation and forms can add time to process.
7. What Documents are Required in order to Establish a Company in Vietnam
The key documents that need arranging are detailed below. Note that “Legalised” documents require different processes in different countries, with a Vietnamese Embassy abroad generally required to be part of the process when documents are processed outside Vietnam.
|Corporate Investor||Individual Investor|
|Legalisation of the company's legal documents (Certificate of Incorporation, Charter, Business profile, etc)||Notarised passport of the owner(s) by People’s Committee in Vietnam/ Legalised passport|
|Original bank statement/bank letter/audited financial statements||Original bank statement(s)/bank letter|
|Notarised passport/ID Card of the legal representative of the Vietnam Company by People’s Committee in Vietnam/ Legalised passport||Lease Contract|
|Notarised passport/ID Card of representative(s) who is (are) authorised by the investing company by People’s Committee in Vietnam/Legalised passport||Documentation in relation to the leasing right of the landlord|
|Documentation in relation to the leasing right of the landlord|
8. When are Investors Required to Contribute their Charter Capital?
Upon establishing a company in Vietnam, investors are required to contribute their Charter Capital (akin to share capital, although there are no formal “shares” issued for limited liability companies in Vietnam) within 90 days from the date of issuance of the ERC.
For foreign investors, the capital must come from their bank account abroad, and this needs to be sent to a Direct Investment Capital Account (“DICA”) opened by the Vietnamese company, before it can be transferred to the company’s operating account and used for operating purposes.
9. What are the Immediate Post Licensing Requirements of a Company in Vietnam?
After establishing a company in Vietnam, there are a number of post-licensing procedures that are required to be completed. These can be divided into two elements:
a) Corporate Finalisation:
- Application for making public notification of the establishment of the new company
- Purchasing a Company Seal
- Application for announcement of the seal specimen to the relevant authority
- Draft Decision of appointment of the General Director/Director
b) Compliance & Registration
- Appointment/Registration of Chief Accountant with Authorities
- Payment of annual Business Licence Fee
- Opening of Bank Accounts, and registration of accounts with Authorities
- Tax Registrations, including VAT registration and e-invoice application.
- Registration of accounting system, Chart of Accountants and associated elections
- Labour Registrations
Source: Our partner: Domicile Corporate Services
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