Legal advices for establishment of wholly foreign invested company

Question: We are operating a company in Singapore. Mainly dealing with trading of industrial machinery (New and Used) around the globe. Presently working with companies in Japan. We want to set up a unit in Vietnam. Please quote.

Answer:

We understand that Client is now seeking legal advices for establishment of wholly foreign invested company (hereinafter referred to as “FIC”) for import and distribution of industrial machinery in Hanoi. We therefore are grateful to present you our Legal Services Proposal for your review and consideration.

1.       BRIEF INTRODUCTION ON ESTABLISHMENT OF FIC

1.1 General Introduction

The establishment of a FIC in Vietnam requires an Investment Registrartion Certificate and Enterprise Registration Certificate from the licensing authority. For above said purpose, it shall require Client to undergo three following steps:

Step 1: Obtainment of Investment Registration Certificate. The Law requires that within 20 working days from submission of the application dossier the competent authority shall have to issue the Investment Registration Certificate for Foreign Investor. For granting the Investment Registration Certificate, the relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project on the following basis:

• Legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office.
• Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.

Step 2: After obtainment of Investment Registration Certificate, Client shall be required to obtain the Enterprise Registration Certificate. The Law requires that within 05 working days from submission of application dossier, the competent authority shall have to issue the Enterprise Registration Certificate for forming the FIC.

Step 3: For import and trading activities, FIC shall be required to obtain Business License. It shall take you about 45 working days from submission of application dossier to the competent authority to complete.

1.2       Setting up FIC for import and distribution of industrial machinery

According to the Item 1, Article No. 4 of Decree No.23/2007/ND-CP dated 12 February 2007 of the Government providing regulation for implementation of commercial law regarding purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam (Hereinafter referred to as “Decree No.23/2007/ND-CP”), foreign investors who satisfy following conditions shall be entitled to license for activities of trading in Vietnam:

-It is an investor belonging to a country or territory participating in an international treaty of which the Socialist Republic of Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods;

- The form of investment is consistent with the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member and is consistent with the law of Vietnam;

- The goods and services in which business is conducted are consistent with Vietnam’s undertaking to open the market and are consistent with the law of Vietnam;

- The scope of operation is consistent with Vietnam’s undertaking to open the market and is consistent with the law of Vietnam;

- It has approval from the State body authorized in Vietnam.

In addition, under Vietnam WTO’s Commitments, from the year of 2009, foreign investor is entitled to join goods trading activities in Vietnam. India has been a member of WTO. Thus, Client is entitled to setup a FIC for import and distribution of latex pillows and mattresses in Vietnam.

We also would like to note that, trading goods is considered as conditional investment sector in Vietnam and therefore following key factors shall be taken in account:

-Capital: Vietnam Law does not stipulate minimum capital amount for this industry.

However, according to our practical experience in previous case, an amount of 250,000USD upward should be reasonable. The Vietnam Government can also recommend you to increase the Capital Amount if the number of goods to be registered is large;

-Head office address of the FIC in Vietnam must be compliant with master plan of Vietnam;

- Goods to be imported into Vietnam should be brand new. Used products shall not be encouraged.

2.       OUR SCOPE OF WORK

In light above, following works are proposed based on the request of Client. However, depending on the specific position/situation of Client, several work items may not be necessary. Meanwhile, other works may be required. However, any additional works shall not fall under the scope of this Legal Service Proposal, but could be provided upon request.

3.            PROFESSIONAL FEE

The Price for performing the SB Law services as mentioned in item 2 above will be as follows:

-For preparing application dossier including Application for Investment Registration Certificate, Corporate charter, Board resolution, Explanation letter for satisfaction of investment condition, Application for business license and Power of attorney and conducting name search: 1,500USD (One thousand and five hundred US Dollar);

- For licensing procedures: 2,130USD (Two thousand and one hundred thirty US Dollar).

- For post-licensing procedures: 2,150 USD (Two thousand one hundred fifty US Dollar);

- The fee is exclusive of 10% VAT and cost for translating Client’s documents from English into Vietnamese (10USD/150 words).

- For the avoidance of doubt, the abovementioned pricing are offered together as a bundle and cannot be purchased separately.