WHAT IS DIRECT INVESTMENT TO ESTABLISH A FOREIGN ENTERPRISE?
QUESTION
Dear TLK Law Firm, I currently have questions and hope to hear from you as follows: Shortly, I want to contribute investment capital with a Thai friend to establish a business in Vietnam However, I do not clearly understand the regulations for establishing a business and what is direct investment in establishing a foreign enterprise. Looking forward to your company's answer. Thank you!
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Thank you for your trust and sending questions to TLK Law Firm. Based on legal regulations and practical solutions, we would like to send you the following consulting content:
LEGAL BASIS
1. Enterprise Law No. 59/2020/QH14 passed by the National Assembly on June 17, 2020;
2. Investment Law No. 61/2020/QH14 passed by the National Assembly on June 17, 2020;
3. Decree No. 31/2021/ND-CP issued by the Government on March 26, 2021 detailing and guiding the implementation of a number of articles of the Investment Law;
4. Other legal documents providing relevant guidance.
CONSULTATION CONTENT
In the trend of global integration, Vietnam is one of the markets with strong development potential attracting many foreign investors to invest in the form of establishing foreign-invested enterprises. Choosing the appropriate form of investment is also one of the difficulties for investors, and direct investment to establish foreign businesses is a priority choice for many investors. However, many investors still do not clearly understand what direct investment is to establish a foreign enterprise. This is a question that many customers sent to TLK Law Firm.
Therefore, through this article, we will answer your questions about "What is direct investment to establish a foreign enterprise?".
Photo 1. What is direct investment to establish a foreign enterprise._Hotline: 0972118764
I. SOME IMPORTANT LEGAL ISSUES RELATED TO DIRECT INVESTMENT IN ESTABLISHING FOREIGN ENTERPRISES
1. How to invest directly in establishing a foreign enterprise?
Pursuant to the Investment Law 2020, foreign investors are individuals with foreign nationality or organizations established under foreign laws conducting business investment activities in Vietnam. Direct investment in establishing a foreign enterprise (FDI) is a form of long-term investment of an individual or company in another country by establishing production and business facilities. That foreign individual or company will take over the management of this production and business facility.
2. Conditions for establishing a foreign-invested enterprise
Pursuant to the Investment Law 2020, to establish a foreign-invested economic organization in Vietnam, investors must meet the following conditions:
(1) Investors must establish economic organizations according to the provisions of law corresponding to each type of economic organization;
(2) Foreign investors must meet the market access conditions specified in the List of industries and occupations restricted from market access for foreign investors (including industries and occupations that have not yet been accessed) market access and industries and occupations with conditional market access) as follows:
- Conditions on charter capital ownership ratio of foreign investors in economic organizations;
- Conditions on investment form;
- Conditions on the scope of investment activities;
- Conditions on investor capacity;
- Conditions for partners participating in investment;
- Other conditions according to other relevant regulations.
(3) Investors must have an investment project and carry out procedures for granting and adjusting the Investment Registration Certificate before establishing a foreign-invested economic organization, except for the case of investors establishing innovative small and medium-sized start-up enterprises and creative start-up investment funds according to the provisions of law on supporting small and medium-sized enterprises.
In addition, investors must also meet the conditions specified in other relevant legal documents such as conditions on security and defense issues; environmental protection issues; issues related to land and labor.
3. How are investment activities of foreign-invested economic organizations regulated?
Pursuant to the Investment Law 2020, for each type of investment, foreign investors must meet the conditions and carry out investment procedures according to the provisions of law when investing in establishing other economic organizations. Investing in capital contribution, buying shares, purchasing capital contributions of other economic organizations and investing in the form of BCC contracts if that economic organization falls into one of the following cases:
(1) Having foreign investors holding more than 50% of the charter capital or the majority of partners are foreign individuals for economic organizations that are partnerships;
(2) Having an economic organization specified in the Investment Law 2020 that holds more than 50% of charter capital;
(3) Having foreign investors and economic organizations specified in the Investment Law 2020 holding more than 50% of charter capital.
Thus, economic organizations with foreign investment capital established in Vietnam need to meet the above conditions according to the provisions of law.
Photo 2. What is direct investment to establish a foreign enterprise._Hotline: 0972118764
II. SUMMARY OF THE ANSWER SECTION: WHAT IS DIRECT INVESTMENT IN ESTABLISHING A FOREIGN ENTERPRISE?
Dear Customers, from the above synthesis and analysis, TLK Law Firm would like to give the following answer:
Direct investment in establishing foreign enterprises according to the provisions of the Investment Law 2020 is a form of long-term investment by individuals or companies of one country in another country by establishing production and business facilities. That foreign individual or company will take over the management of this production and business facility.
III. HOW SHOULD YOU BEST CHOOSE AN ORGANIZATION THAT PROVIDES LEGAL SERVICES?
An organization providing quality and reputable legal services should have the following criteria:
First: Must be an official legal organization with a legal operating license;
Second: It is better if the Board of Directors must be lawyers, experienced and have high degrees;
Third: Have a team of lawyers and a systematic, professional, and thoroughly trained human resources system;
Fourth: Friendly, dedicated and make every effort for the benefit of customers. Consider customer satisfaction and work quality as your own honor;
Fifth: Professional, thoughtful, flexible and logical service provision process to optimize work performance and save customers' time;
Sixth: Reasonable and competitive service prices;
Seventh: Rich services in both fields of supply and service packages in the same field for customers to choose the appropriate service package, as well as comprehensive support for customers throughout the operation process. movement;
Eighth: Have the ability to Connect - Promote commercial relationships for customers if customers have needs,...
Finding a comprehensive, professional and reputable legal consulting organization is what every customer wants. Because no one wants to risk losing both money and time when the results are not as expected. However, finding such an organization is not easy because the number of service providers in the Vietnamese market today is very large with varying quality.
A suggestion for you: Although our TLK Law Firm does not dare to claim to be the best legal service provider on the market, we satisfy all of the above criteria and more will definitely be a good choice for you.
IV. SOME QUESTIONS RELATED TO DIRECT INVESTMENT IN ESTABLISHING FOREIGN ENTERPRISES
Question 1: In what forms can investors contribute capital to economic organizations?
Reply:
Pursuant to the Investment Law 2020, investors are allowed to contribute capital to economic organizations in the following forms:
(1) Buy shares issued for the first time or additional shares issued by a joint stock company;
(2) Contribute capital to limited liability companies and partnerships;
(3) Contributing capital to other economic organizations that do not fall into the above cases.
Thus, when investing, investors can choose forms of investment in economic organizations according to the provisions of Vietnamese law.
Question 2: Does the charter capital of an economic organization established by a foreign investor need to be equal to the investment capital of the investment project?
Reply:
The answer is No.
Pursuant to Decree No. 31/2021/ND-CP, the charter capital of an economic organization established by a foreign investor to implement an investment project is not necessarily equal to the investment capital of the investment project. Thus, it can be understood that the charter capital of an economic organization established by a foreign investor does not need to be equal to the investment capital of the investment project and can contribute capital and mobilize capital sources. other to implement investment projects according to the schedule specified in the Investment Registration Certificate.
Question 3: Can I change the type of asset when contributing capital?
Reply:
The answer is yes.
Pursuant to the Enterprise Law 2020, members must contribute capital to the company with sufficient and correct types of assets as committed when registering to establish a business within 90 days from the date of issuance of the Business Registration Certificate, no Include the time it takes to transport and import capital contribution assets and carry out administrative procedures to transfer asset ownership. During this period, members have rights and obligations corresponding to the committed capital contribution ratio. Company members can only contribute capital to the company with assets other than the committed assets if approved by more than 50% of the remaining members. Thus, it is allowed to change the type of assets contributed as capital but must be within 90 days from the date of issuance of the Business Registration Certificate.
=> See more: Can foreign individuals establish a company in Vietnam? What are conditions?
Above is some general advice that we would like to offer to our customers. As a service provider, we always understand and are ready to accompany and solve the needs and difficulties that customers are facing. If you still have questions or need more in-depth advice, please contact the hotline: 0972118764 to receive direct advice from a lawyer (completely free consultation).
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