FORMS OF INVESTMENT: HOW TO START A BUSINESS IN VIETNAM?
The laws of Vietnam provide numerous forms of investment for the foreign investors to set up the business in Vietnam, namely (i) incorporating the legal entity; (ii) contributing or acquiring the capital contribution, the shares in the available legal entity; and (iii) cooperating under the business cooperation contract (the “BCC”).
For your overview of the basic steps to invest in Vietnam, we hereby brief the forms as follows:
Incorporating the legal entity
Under such form, the foreign investors can select to set up either (i) 100% foreign-owned company; or (ii) a joint venture between the foreigner and the Vietnamese investors.
It is highlighted that the foreign investors must have the project and conduct the procedures to register the investment for such project before any business entity to be established.
- Contributing or acquiring the capital contribution, the shares in the available legal entity
It saves time and cost for the foreign investors to start the business by contributing or acquiring the shares or capital in the business entity existed in Vietnam since the commercial strength of the business entity can be utilized effectively.
Please note that the foreign investors must obtain the Approval for their capital contribution or acquisition from the licensing bodies before being recognized as the equity members/ the shareholders/the owner of the business entity if falling into any of the following cases:
- The investment leads to the ratio of shares held by the foreign investors in the business entity accounting for 51% or more; or
- The investment takes place in the conditional business lines applicable to foreign investors.
- Investing under the BCC
The investment under the BCC is the structure where the parties enter into a contract for business cooperation and distribution of profits, products without establishment of a new business organization. Such investment form is popular in the real estate area.
The foreign investors are required to register the investment procedure for the BCC where the foreign investors carry out the BCC with their partner.
Mr. Nguyen Danh Cong
Partner of DIMAC Law Firm
Email: [email protected] Phone: (+84) 985 820 703