The establishment of Chinese-invested companies in Vietnam has been developing in recent years. So, what does it mean to establish a Chinese-invested company in Vietnam, and what legal issues are associated with it? NPLaw provides an overview of the current legal regulations on such a matter below.
I. Understanding the establishment of Chinese-invested companies in Vietnam
With its favorable geographical location, abundant human resources, and attractive foreign investment policies, Vietnam has become an ideal investment market for Chinese investors. To set up companies in Vietnam, investors need to take several main steps, including determining the type of company, preparing the legal dossier, and registering the business with the competent authorities.
The sectors that Chinese investors commonly focus on include manufacturing, construction, and trade. Alongside these opportunities, investing in Vietnam may encounter challenges such as cultural differences, market competition, and legal regulations. However, with support from the Vietnamese government, such as tax incentives and other benefits, many Chinese companies have successfully established and developed business operations in Vietnam, contributing to the promotion of trade relations between the two countries.
II. Legal provisions on establishing Chinese-invested companies in Vietnam
1. Understanding the establishment of a Chinese-invested company in Vietnam
Establishing a Chinese-invested company in Vietnam refers to setting up a company in which the capital originates from foreign investors. In Vietnam, such a process typically involves registering an investment, establishing the company, and complying with laws on foreign investment.
2. Conditions for establishing the Chinese-invested company in Vietnam
To establish a foreign-invested company in Vietnam, specifically from China, the following conditions must be met:
- Conditions for capital contribution to establish the foreign-invested company:
Pursuant to Article 24 of the Law on Investment No. 61/2020/QH14, foreign investors must meet the following conditions:
- Complying with market access conditions, meaning foreign investors may only engage in specific business sectors permitted by law and must not participate in prohibited sectors.
- Before establishment, the investor must have an investment project and complete procedures to obtain or adjust the Investment Registration Certificate for company formation.
- Conditions for share purchase or capital contribution:
Pursuant to Article 24 of the Law on Investment 2020, foreign investors must:
- Comply with market access regulations;
- Ensure national defense and security;
- Comply with land law regulations regarding eligibility to acquire land-use rights and use land in communes, wards, townships, border areas, islands, or coastal communes, wards, and townships.
- Conditions regarding investors and nationality:
+ Investors may be individuals over 18 years old or organizations with citizenship from WTO members or countries with bilateral investment treaties with Vietnam.
+ Current law does not impose restrictions on the nationality of foreign investors; investors from any country may invest in Vietnam if they comply with legal regulations and receive approval. - Financial capacity requirements:
+ Investors must have sufficient financial capacity and prove it when investing in Vietnam. Foreign investors must conduct due diligence and comply with regulations applicable to their chosen sector to meet financial requirements before investment. - Company headquarters and project location:
+ Investors must have a project location in Vietnam, demonstrated through a lease agreement and legal documents from the lessor for use as company headquarters and project site. - Capability requirements:
+ Investors must meet the conditions for business sectors with conditional requirements according to the law.
3. Required permits to establish the Chinese-invested company in Vietnam
The dossier for registering the Chinese-invested company in Vietnam includes:
- Application for business registration certificate and business license;
- Company charter;
- Previously issued investment registration certificate;
- Other documents, such as ID card, citizen identification, or passport.
III. Questions regarding establishing Chinese-invested companies in Vietnam
1. Do Chinese investors need to deposit capital when establishing the company in Vietnam?
According to Article 43 of the Law on Investment 2020, for certain investment projects, investors are not required to deposit capital to ensure project implementation:
- Investors achieving land-use rights auctions where the State allocates land with land-use fees, or leases land with one-time rental payment;
- Investors achieving auctions for investment projects using land;
- Investors receiving land allocation or land lease based on transferring an investment project that has made a deposit or has completed capital contribution and capital mobilization according to the duration specified in the investment policy approval document and the Investment Registration Certificate;
- Investors receiving land allocation or lease to implement investment projects based on transferring land-use rights or assets attached to land of other users.
Thus, investors may need to deposit capital as required for establishing the Chinese-invested company.
2. Competent authorities handling dossiers for establishing Chinese-invested companies in Vietnam
Chinese investors must apply for an Investment Registration Certificate when investing in Vietnam. In certain cases, investors must register the investment policy under the authority of the National Assembly, the Prime Minister, or the Provincial People’s Committee before applying for the Investment Registration Certificate.
IV. Legal consultancy services related to establishing Chinese-invested companies in Vietnam
The above provides detailed guidance from NPLaw to support clients on establishing Chinese-invested companies in Vietnam. Should you have any further questions regarding this matter or other legal issues, please contact NPLaw for direct consultation and assistance.
