Procedures for Establishing 100% Foreign-Owned Company in Vietnam

Vietnam is becoming an increasingly attractive destination for an international investor to establish a 100% foreign-owned company, thanks to its open policies and favorable business environment. However, setting up a wholly foreign-owned company here requires compliance with specific legal procedures. In this article, we will guide you through each step of the company formation process, from preparing the necessary documents to completing all required procedures. Understanding the requirements and regulations will help you save time, minimize risks, and ensure the success of your investment project.

What is a 100% foreign-owned enterprise?

A 100% foreign-owned company is a business owned entirely by foreign investors who contribute capital, establish, manage, and take full responsibility for its business operations in Vietnam.

This type of company operates under the provisions of the Investment Law, the Enterprise Law, WTO commitments, international treaties, and relevant legal documents. It can be established as a limited liability company or a joint-stock company with legal status under Vietnamese law. The company is officially recognized from the date it receives its investment registration certificate.

Conditions for establishing a 100% foreign-owned company

Nationality requirements for founders/investors

Vietnamese law permits only foreign individuals, organizations, or companies from WTO member countries to register a commercial presence in Vietnam under the following forms:

• Business cooperation contracts with a Vietnamese entity

• Establishing a 100% foreign-owned company in Vietnam

• Forming a joint venture in Vietnam

• Setting up a representative office or branch in Vietnam

Capital requirements

Although Vietnamese law does not specify a minimum investment capital for industries without capital conditions, some provinces and cities consider the foreign investor’s capital when reviewing investment registration applications. Companies that seek long-term project implementation must register the highest possible charter capital and investment capital.

Location requirements for project implementation and company headquarters

Foreign investors cannot register a company for manufacturing or processing activities if the project site is located in office buildings or residential areas with limited space. Additionally, export-processing companies cannot lease project sites outside industrial zones.

For businesses engaged in trade and services, the project site and company headquarters may be at the same location. However, company headquarters cannot be in residential apartments or collective housing. In mixed-use buildings, they can be located in the commercial section. Choosing a suitable project location is a critical factor that differentiates the establishment process between Vietnamese and foreign investors.

Legal representative requirements

The legal representative of a business must be an individual with full civil capacity. A company may have multiple legal representatives, but at least one must reside in Vietnam. If there is only one legal representative residing in Vietnam, they must authorize another individual residing in Vietnam to perform their duties when leaving the country.

Business entity requirements

Vietnamese law does not impose restrictions on business entity types. However, in certain industries and for specific investors, the law limits the type of business that can be established. For example, foreign accounting service providers can only establish specific types of economic organizations in Vietnam.

Documents and procedures for establishing a 100% foreign-owned company under the latest regulations

Step 1: Obtain investment policy approval (if required)

If the investment falls under cases requiring policy approval (Articles 30, 31, 32 of the Investment Law 2020), the investor must submit an application to the competent authority. The required documents and procedures are specified in Articles 33, 34, 35, and 36 of the Investment Law 2020.

If investment policy approval is not required, this step can be skipped.

Step 2: Obtain the investment registration certificate

According to Article 37 of the Investment Law 2020, foreign investors must apply for an investment registration certificate in the following cases:

• Investment projects by foreign investors

• Investment projects by economic organizations specified in Clause 1, Article 23 of the Investment Law 2020, including:

  1. Organizations in which foreign investors hold more than 50% of charter capital or where a majority of general partners are foreigners (for partnerships).

  2. Organizations where the entity in (1) holds more than 50% of charter capital.

  3. Organizations where both foreign investors and entities in (1) hold more than 50% of charter capital.

Required documents (Clause 1, Article 33 of the Investment Law 2020):

• Application form for investment project implementation, including a commitment to bear all costs and risks if the project is not approved.

• Legal documents of the investor.

• Proof of the investor’s financial capacity, which can be one of the following:

  • Financial statements of the last two years

  • Parent company’s financial support commitment

  • Financial support commitment from a financial institution

  • Guarantee of financial capacity from the investor

  • Other documents proving the investor’s financial capacity

• Investment project proposal, including:

  • Investor details or selection method

  • Investment objectives, scale, and capital

  • Project location, duration, and implementation schedule

  • Land use status and land use request (if applicable)

  • Labor demand

  • Proposed investment incentives

  • Socio-economic impact and preliminary environmental impact assessment (if applicable)

If a feasibility study report is required by construction laws, it can replace the investment project proposal.

• For projects not requiring land allocation or lease from the state, a copy of the land-use rights certificate or equivalent document confirming the project site.

• Explanation of technology used in the project if it falls under technology appraisal requirements.

• Business cooperation contract (if applicable).

• Other relevant documents as required by law.

Application submission: Investment registration authority.

Step 3: Business registration and obtaining an enterprise registration certificate

Once the investment registration certificate is issued, the investor must prepare documents to register the business entity.

Step 4: Additional post-registration procedures

• Public announcement of enterprise registration (Article 32 of the Enterprise Law 2020).

• Company seal engraving and public notification of seal specimen (Article 43 of the Enterprise Law 2020).

• Initial tax registration and declaration with tax authorities.

Contact us

With an experienced team of lawyers, solid legal expertise, and excellent bilingual consulting skills, BKC LAW is a trusted legal partner for establishing 100% foreign-owned companies in Vietnam.

For a free legal consultation, contact our lawyers at:

Phone: 0901 3333 41
Email: info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, Ho Chi Minh City
Binh Tan Office: 41 Tên Lửa, Binh Tan, Ho Chi Minh City

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