Setting up a company in Vietnam for Foreign Investors

1. Project Location Requirements

The scale of the project location is determined by the specific nature of each investment, as competent authorities do not mandate a fixed size for every kind of project. However, the selected site must be demonstrably suitable for the project's operational needs, and investors are required to provide a detailed justification in the Application for Investment Registration.

To verify the project's location, the following documentation must be submitted:

• A certified copy of the Land Use Rights Certificate or ownership documents.

• A certified copy of the leasing contract or other valid instruments identifying the right to use the location for the execution of the investment project.

It is important to note that foreign investors are strictly prohibited from using virtual offices for the purpose of registering an investment project in Vietnam.

2. Business Sectors and Lines of Business

Investor business activities must strictly exclude any industries or trades found on the List of Banned Sectors under the Law on Investment 2020 and other relevant specialized regulations.

Vietnam continues to encourage foreign direct investment (FDI) in several high growth sectors, particularly in major hubs like Danang and Ho Chi Minh City. Common sectors for foreign investment include:

• Information Technology (IT) and Software Development

• High Technology and Innovation

• Renewable Energy

• Manufacturing and Logistics

• Healthcare and Pharmaceutical Services

• Education and Vocational Training

• Food and Beverage (Restaurant services)

• Retail and Distribution

• Tourism and Hospitality

3. Project Capital and Financial Capacity

Foreign investors must demonstrate their financial capacity to establish a commercial presence in Vietnam. The competent authorities in Danang, Ho Chi Minh City, and neighboring provinces require specific evidentiary documents based on the investor's legal status.

Individual investors are required to provide a recent bank balance certificate confirming sufficient funds are available in their personal account. For corporate investors, the dossier must include audited financial statements for the last two years, a formal commitment of financial support from the parent company, or a guarantee from a recognized financial institution.

Under the Law on Investment 2020, there are generally no universal minimum capital requirements for foreign investment. However, the charter capital typically cannot be less than approximately 30% of the total investment amount. Investors must provide a clear explanation of their capital expenditure plan. If the proposed investment is deemed insufficient to sustain the project's scope, the competent agency may decline the application.

4. Investment and Enterprise Registration Procedures

4.1 Application for the Investment Registration Certificate (IRC) The first phase involves submitting a dossier to the investment registration authority to obtain the IRC. This process typically takes 15 days from the date of receipt of a valid dossier. The required documents include:

1. An official application form for the execution of the investment project, including a commitment to incur all costs and risks if the project is not approved.

2. Documents verifying the investor’s legal status, such as valid passports or a Company Registration Certificate.

3. Proof of financial capacity, such as bank balances for individuals or audited financial statements for the last two years for enterprises.

4. A certified copy of the Land Use Rights Certificate or a valid leasing contract identifying the right to use the location for the project.

Please note that all foreign documents must be legalized and translated into Vietnamese to be valid for use in Vietnam.

4.2 Application for the Enterprise Registration Certificate (ERC) Following the issuance of the IRC, the second step is to obtain the ERC, which serves as the company's formal birth certificate. This step is generally more straightforward and takes approximately 05 working days. The foreign investor must prepare:

1. An application for company registration using the forms prescribed by the Law on Enterprises.

2. The company’s Charter (Articles of Association).

3. Documents verifying the legal status of the investors and the legal representative.

4. A formal List of Investors or Shareholders.

5. A copy of the previously granted Investment Registration Certificate.

The dossier can be submitted in person at the Department of Financial (DF) or through the national business registration portal.

5. Frequently Asked Questions (FAQs)

a. How long does it take to set up a company in Vietnam?

The timeline varies depending on the business type and specific conditions. Generally, the entire process takes between 30 to 45 days to fully establish a company.

b. Which authority grants the Investment Certificate in Vietnam?

For most projects in Danang, Ho Chi Minh City, and other provinces, the Department of Financial is the competent agency responsible for issuing the Investment Registration Certificate.

How much capital is required for setting up a company in Vietnam?

While the law does not specify a minimum capital for non-conditional sectors, the competent agency may reject a project if the capital is not feasible for the scale of operation. Specific sectors like real estate, banking, and finance do have mandatory minimum capital requirements.

Where should I register the business address in Vietnam?

The project address must be a physical location with a valid leasing agreement. The owner of the building must have the legal right to operate the premises as an office or commercial space. Virtual offices are not accepted for investment registration purposes.

6. Summary

Establishing a business in Vietnam requires careful planning and a deep understanding of local administrative procedures. DB Legal is committed to supporting foreign investors throughout the registration process in Danang, Ho Chi Minh City, and neighboring economic zones. We ensure that your project meets all legal standards for a successful market entry.

With the reduction of the administrative barrier, foreign investors can establish an enterprise in Viet Nam with a short time and with simple documents. However, foreigners have to comply with the Laws of Viet Nam for the process to establish an enterprise. Foreign investors should ask Vietnamese lawyers to assist in carrying out investment and Enterprise registration procedures to save time and efficiency in preparing the dossiers.