Establishing a 100% Foreign-Owned Enterprise in Vietnam

This article provides an overview and detailed guidance on establishing a 100% foreign-owned enterprise in Vietnam. It will help you prepare thoroughly during the registration process for establishing a 100% foreign-owned enterprise.

1. What is a 100% Foreign-Owned Enterprise?

A 100% foreign-owned enterprise (FIE) is a company established in Vietnam with 100% of its charter capital contributed by foreign investors. Establishing a 100% foreign-owned enterprise allows foreign investors full control and management of the company according to their goals and strategies. 

However, the enterprise must comply with Vietnamese laws. Specifically, 100% foreign-owned enterprises must operate according to the Investment Law, Enterprise Law, WTO commitments, international treaties that Vietnam is a member of, and related legal documents.

Examples of 100% Foreign-Owned Enterprises operating in Vietnam:

• Samsung Electronics Vietnam Co., Ltd.: The largest smartphone and electronic device manufacturer in Vietnam, with 100% investment from Samsung Group, South Korea.
• Nestlé Vietnam Ltd.: The largest food and beverage manufacturer in Vietnam, with 100% investment from Nestlé Group, Switzerland.
• Coca-Cola Vietnam Ltd.: The largest beverage manufacturer in Vietnam, with 100% investment from Coca-Cola Group, USA.

2. Characteristics of a 100% Foreign-Owned Enterprise

2.1 Control and Management Rights

In a 100% foreign-owned enterprise, the foreign investor holds all the company's charter capital. Naturally, they have full control and management rights over the company without needing to cooperate with any domestic partners.

2.2 Legal Entity

A 100% foreign-owned enterprise is considered a Vietnamese legal entity after completing the business registration process and receiving the Enterprise Registration Certificate.

2.3 Forms of Enterprises

Here, investors can establish 100% foreign-owned enterprises in various forms, such as limited liability companies (LLCs) or joint-stock companies (JSCs). Depending on the business scale and objectives, the enterprise owner will choose the suitable form of business for their company.

2.4 Investment Sectors

Currently, 100% foreign-owned enterprises are allowed to invest in many different sectors in Vietnam, except for prohibited or restricted investment sectors as stipulated by law. Additionally, some sectors restrict investment for 100% foreign-owned companies, including:

• Education and training activities.
• Transportation activities.
• Real estate business activities.
• Insurance activities.
• Banking activities.
• Securities activities.

2.5 Charter Capital and Investment Capital

Firstly, charter capital is the minimum amount of capital that the enterprise commits to contribute to carry out business activities, as stipulated in Article 16 of the Enterprise Law 2020 and stated in the company's charter.
For 100% foreign-owned enterprises, the charter capital must be committed and fully contributed within the stipulated time after establishing the enterprise. The amount of charter capital will depend on the sector of activity and specific regulations of that sector.
Secondly, investment capital is the total amount of capital that foreign investors contribute to the enterprise, including charter capital and other investments. Investment capital can be made in various forms such as:

• Cash: the most common form of investment.
• Assets: including tangible assets (machinery, equipment, factories, etc.) and intangible assets (intellectual property rights, business secrets, etc.). Intellectual property rights: including patents, trademarks, industrial designs, etc.

2.6 Profits and Financial Obligations

Like other enterprises, 100% foreign-owned enterprises must comply with regulations on corporate income tax, value-added tax, and other related taxes and fees. After fulfilling financial, tax, and other obligations, the profits will be distributed to foreign investors.

2.7 Organizational and Management Structure

The organizational structure of the enterprise must match the registered form of the enterprise (LLC, JSC).
Management and operation of the enterprise usually include the board of directors, executive board, and other functional departments.

2.8 Capital Transfer

Currently, foreign investors have the right to transfer all or part of their charter capital to other investors, but they must comply with Vietnamese regulations on capital transfer.

2.9 Legal and Business Environment

100% foreign-owned enterprises enjoy the same rights and obligations as domestic enterprises, including market access, labor use, and intellectual property protection. Additionally, they must comply with regulations on environmental protection, labor safety, and other business-related regulations in Vietnam.

3. Conditions for Establishing a 100% Foreign-Owned Enterprise

To establish a 100% foreign-owned enterprise in Vietnam, the enterprise must meet the following conditions:

3.1 Investor Conditions

Investors include individuals and organizations:

• Individuals:              
  •  Must have full legal capacity according to Vietnamese law.
  • Not restricted from civil acts as prescribed by law.
  • No criminal record related to economic crimes, money laundering, corruption, or drug crimes.
• Organizations:
  • Legally established under foreign law.
  • Full legal capacity according to foreign laws.
  • Not restricted from civil acts as prescribed by Vietnamese law.
  • No criminal record related to economic crimes, money laundering, corruption, or drug crimes.

3.2 Capital Conditions

• Charter Capital:
  • Must be committed and fully contributed within the stipulated time after establishing the enterprise.
  • The minimum charter capital depends on the sector of activity and specific regulations of that sector.
• Investment Capital:
  • Must not be less than the charter capital.
  • Foreign investors have the right to decide the form of investment (cash, assets, intellectual property rights, etc.).
  • Enterprises must comply with foreign exchange management regulations when conducting transactions related to investment capital.

3.3 Business Sector Conditions

Must comply with Vietnamese law, including:

• Not being in the list of prohibited business sectors.
• Suitable for the level of competition with domestic enterprises in the same field of activity.
• Capable of creating jobs for local labor.
• Capable of contributing to the state budget.

3.4 Establishment Document Conditions

• Enterprise registration application form.
• Company charter.
• List of members/founding shareholders and shareholders who are foreign investors.
• Copies of the following documents:  
  •  Citizen identification card, identity card, passport, or other legal personal identification of individual members.
  • Documents proving the legal capacity of the organization as a member.
  • Documents proving the source of investment capital.
  • Documents proving the head office of the company.
  • Other documents as prescribed by law.

4. Procedures for Establishing a 100% Foreign-Owned Enterprise in 2024

To establish a 100% foreign-owned enterprise in Vietnam in 2024, the enterprise must follow these steps:

4.1. Prepare Documents

• Enterprise registration application forms as prescribed.
• Charter of the 100% foreign-owned enterprise.
• Economic and technical explanation (if any).
• Documents confirming the legal status and financial condition of the foreign investor.
• Copies of the following documents:
  • Citizen identification card, identity card, passport, or other legal personal identification of individual members.
  • Documents proving the legal capacity of the organization as a member.
  • Documents proving the source of investment capital.
  • Documents proving the head office of the company.
  • Other documents as prescribed by law.

Note:
Documents issued overseas must be legally notarized and translated into Vietnamese

4.2. Submit Documents

• The enterprise submits the documents to the competent investment licensing agency as prescribed.
• List of investment licensing agencies:
• Ministry of Planning and Investment.
• Provincial/Municipal People's Committee.
• Document submission time: Within 15 working days from the date of receiving complete documents as prescribed.

4.3. Appraisal and Issuance of Investment License

• The investment licensing agency appraises the documents within 15-30 working days from the date of receiving complete documents as prescribed.
• If necessary, the investment licensing agency may extend the appraisal period by no more than 15 working days but must notify the foreign investor in writing.
• After appraisal, the investment licensing agency will issue the investment license to the enterprise if the documents are valid.

4.4. Enterprise Registration

• The enterprise submits the enterprise registration documents to the competent business registration authority as prescribed.
• Enterprise registration time: Within 03 working days from the date of receiving the investment license.

4.5. Announce Enterprise Information

• The enterprise announces its information on the national enterprise information portal as prescribed.
• Time to announce enterprise information: Within 05 working days from the date of receiving the business registration certificate.

5. Benefits and Challenges of Establishing a 100% Foreign-Owned Enterprise

Learn more about the benefits and challenges of establishing a 100% foreign-owned enterprise:

Benefits of Establishing a 100% Foreign-Owned Enterprise in Vietnam

• Full Control and Decision-Making: Foreign investors have full control and decision-making power over business strategy, management, and development of the company without needing to share power with domestic partners.
• Reliability and Reputation: 100% foreign-owned enterprises are often highly regarded for their reliability and reputation due to bringing international standards in management and operation.
• Access to International Markets: The enterprise can easily access international markets through the network of relationships of foreign investors.

Challenges of Establishing a 100% Foreign-Owned Enterprise in Vietnam

• Complex Establishment Procedures: Establishing a 100% foreign-owned enterprise is more complex than domestic enterprises, requiring more documents and time.
• Language Barrier: The enterprise may face difficulties in communicating with regulatory authorities and domestic partners due to language barriers.
• Cultural Risks: The enterprise may face difficulties in adapting to Vietnam's business culture and customs.
• Intense Competition: The enterprise must face intense competition from other domestic and foreign enterprises.

6. Notes on Establishing a 100% Foreign-Owned Enterprise in Vietnam

To ensure the smooth and effective establishment of a 100% foreign-owned enterprise, investors should consider the following important points:

6.1 Thoroughly Research Vietnamese Investment Laws

• Understand the regulations on investment conditions, permitted business sectors, establishment procedures, investment incentives, etc., for 100% foreign-owned enterprises.
• Refer to relevant legal documents such as the Enterprise Law 2020, Decree No. 30/2020/ND-CP on investment, etc., to ensure compliance with the regulations.

6.2 Choose an Appropriate Business Sector

• Carefully consider the development potential, competitive ability, market demand, etc., of the intended business sector.
• Ensure the business sector complies with Vietnamese law and is included in the list of encouraged investment sectors.

6.3 Prepare Complete and Accurate Documentation

• The documentation for establishing a 100% foreign-owned enterprise includes various types of documents, which must be prepared completely, accurately, and in accordance with regulations.
• Pay attention to important documents such as the enterprise registration application form, company charter, documents proving the source of investment capital, etc.

6.4 Understand the Establishment Procedures

• The process of establishing a 100% foreign-owned enterprise usually involves several steps, including document submission, document appraisal, issuance of the investment license, and enterprise registration.
• Understand the steps and timelines for each procedure to proactively follow and complete the documentation.

6.5 Choose a Reliable Enterprise Establishment Service

• Establishing a 100% foreign-owned enterprise requires substantial expertise and complex procedures.
• Using support services from reputable law firms and investment consulting services will help investors save time and effort and ensure the accuracy and legality of the establishment process.

Additionally, investors should consider other issues such as:

• Cultural Risks in Business: Understanding and adapting to Vietnamese business culture and customs.
• Language Issues: Communication and administrative procedures.
• Intense Competition: Facing competition from other domestic and foreign enterprises.

Currently, there are many companies providing reliable services for establishing 100% foreign-owned enterprises in the market. Investors can refer to and choose services that suit their needs and budget.
Overall, establishing a 100% foreign-owned enterprise in Vietnam offers many benefits to investors but also comes with certain challenges. Thorough research, complete documentation preparation, and choosing reliable support services will help investors optimize the establishment process and ensure the success of their enterprise.
We are proud to be one of the leading providers of support services for establishing 100% foreign-owned companies in the market. Contact us immediately for the earliest support.