Procedures for establishing a joint venture company with foreign investment capital

What are the procedures for establishing a foreign-invested joint venture company? What are the conditions for establishing a joint venture company? Let fdiinvietnam.com answer in this article

What is a joint venture?

A joint venture company is not a type of enterprise, but it is a phrase used to refer to enterprises established in Vietnam by two or more parties cooperating on the basis of:

• Joint venture contract or Agreement between Vietnam and foreign countries;
• Or established by foreign individuals or organizations in cooperation with Vietnamese individuals or organizations.

Therefore, joint venture companies are also known by names such as foreign joint venture enterprises, foreign invested companies, foreign invested enterprises or FDI enterprises.

A joint venture company can be established in the form of a limited liability company, a joint stock company or a partnership; has legal status under Vietnamese law and is allowed to operate from the date of being granted an investment registration certificate.

Conditions for establishing a joint venture company

1. Conditions for entities establishing joint ventures

Individuals and organizations establishing foreign-invested companies must meet the following conditions:

• Investors are individuals: Must have full civil capacity, not be serving a prison sentence or not be subject to other administrative penalties as prescribed;
• Foreign investors are organizations: Having legal status, being legally established and still operating at the time of investment cooperation.

2. Conditions on capital to establish a joint venture company

• Each joint venture party shall be legally responsible within the scope of its committed capital contribution to the legal capital of the enterprise and ensure that its financial capacity must correspond to the capital committed to invest in the project;
• The legal capital of a joint venture company must be at least 30% of the investment capital;
• For investment projects in areas with business incentives, it may be lower but must not exceed 20% of the investment capital and must be approved by the licensing authority; 
• Depending on the business line, the joint venture company registers legal capital in accordance with the scale and laws of Vietnam.

3. About the profession

• Joint venture companies are only allowed to register for business lines permitted by Vietnamese law, and are not allowed to register for business lines on the list of business lines with restricted market access for foreign investors as prescribed in Decree No. 31/2021/ND-CP. 
• In addition to the above conditions, when establishing a joint venture company, other basic conditions must also be ensured according to the provisions of the Enterprise Law. 

Procedures for establishing a joint venture company

Establishing a joint venture company is establishing a company with foreign investment capital, so investors can establish a joint venture company in the following two ways.

Method 1: Establish a joint venture company directly with capital from foreign investors

When done this way, the joint venture company will be granted an investment certificate and a business registration certificate. 

The process of establishing a joint venture company in this way includes 2 steps:

➨ Step 1: Apply for an investment certificate for the joint venture company

Note:

(*) Legal documents of investors are specified as follows:

• For individual investors: Notarized copy of CCCD/ID card/passport;
• For institutional investors: Copy of business registration certificate/establishment decision of the institutional investor, accompanied by a copy of ID card/CCCD/passport of the representative of the capital contribution of the organization.

(**) Documents proving the financial capacity of the investor are specified as follows:

• For individual investors: Document verifying the foreign investor’s bank account balance, proving that the investor has financial capacity equivalent to or greater than the amount of capital committed to be invested by the investors (both Vietnamese and foreign);
• For institutional investors: Audited financial statements for the most recent fiscal year or other equivalent documents of the foreign organization.

Investor documents issued abroad such as business licenses, audited financial reports, bank account balance verification documents, etc. must be notarized, translated into Vietnamese and consularized at the Vietnamese Embassy abroad according to regulations.

After preparing the documents, the investor submits the documents directly to the Investment Department – Department of Planning and Investment of the province/city where the joint venture company’s headquarters is expected to be located.

Within 15 working days from the date of receipt of complete and valid application, the Investment Department will issue an investment certificate to the joint venture company.

➨ Step 2: Procedures for establishing a joint venture company

After preparing the documents, the legal representative of the joint venture company or the authorized person can submit the documents directly to the Business Registration Office – Department of Planning & Investment of the province/city where the joint venture company’s head office is located or submit them online on the National Business Registration Information Portal. Currently, most major cities and provinces such as Hanoi, Ho Chi Minh City, Binh Duong can submit documents online. 

After 3 – 5 working days from the date of receiving complete and valid company establishment documents, the Business Registration Office will issue a business registration certificate to the joint venture company.

Method 2. Establishment by contributing capital, buying back shares, capital contributions in Vietnamese enterprises

When establishing a joint venture company in this way, the joint venture company will not be granted an investment certificate but only a business registration certificate.

The specific implementation process is as follows:

➨ Step 1: Establish a business with 100% capital contribution from Vietnamese investors

Where to submit documents: Enterprises can submit documents online on the National Business Registration Portal or submit documents directly at the One-Stop Department of the Business Registration Office – Department of Planning and Investment of the province or city.

Processing time: After 3 – 5 working days from the date of receiving valid documents, the Business Registration Office – Department of Planning and Investment of the province will issue a business registration certificate.

➨ Step 2: Apply for a document of eligibility to contribute capital/buy back shares for foreign investors

Submitting documents: Enterprises submit documents directly at the One-stop-shop department of the Investment Department – Department of Planning and Investment of the province/city where the company’s headquarters is located.

Processing time: Within 10 working days from the date of receiving valid documents, the Investment Department staff will check the documents and issue a Notice on meeting the conditions for capital contribution/share purchase of foreign investors.

➨ Step 3: Change business license (update information of capital contributors)

At this step, Vietnamese enterprises and foreign organizations sign contracts to transfer capital and shares. 

Then, the enterprise carries out procedures to change the business license at the Department of Planning and Investment to be granted a new business registration certificate. 

After completing this procedure, the foreign investor becomes a co-owner of the company and the 100% Vietnamese-owned enterprise will be called a foreign-invested joint venture enterprise (also known as a foreign-invested joint venture enterprise).

Note: 

In case of transferring capital to a foreign organization that leads to a change in the type of enterprise, it is necessary to supplement the dossier for changing the license similar to the initial establishment. Enterprises can refer to the dossier for changing the type of company in the article on procedures for changing the type of enterprise of fdiinvietnam.com.

After preparing all documents, the enterprise submits online on the National Business Registration Portal. Within 5-7 working days from the date of receiving valid documents, the Business Registration Office will check the documents and issue a new business registration certificate to the joint venture enterprise.

>> See more: Service of establishing a foreign-invested company – 15,000,000 VND.

Some questions about procedures for establishing a joint venture company