How is a foreign invested joint stock company established 2024?

Foreign invested joint stock company is a popular form of investment in Vietnam, allowing foreign businesses to participate in the domestic market. The process of establishing a joint stock company with foreign capital requires compliance with legal regulations on investment and business. Long Phan, with investment consulting experience, will guide customers step by step in this process.

Overview of a foreign invested joint stock company

What is a joint stock company?

Article 111 of the Law on Enterprises 2020 regulates joint stock companies as follows:

Firstly, a joint stock company is an enterprise in which:

• Charter capital is divided into equal parts called shares;
• Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number;
• Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;
• Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.

Second, a joint stock company has legal status from the date of issuance of the Business Registration Certificate.

Third, a joint stock company has the right to issue shares, bonds and other securities of the company.

Characteristics of a foreign invested joint stock company

The outstanding feature of a foreign invested joint stock company is the combination of domestic and foreign capital. This capital structure creates conditions for businesses to access diverse capital sources and management experience from international investors. In principle, foreign investors can contribute capital to establish a company in the following forms:

• Investment in the form of capital contribution, share purchase, capital contribution purchase (Article 24 of Law on Investment 2020)

With this form, foreign investors can contribute capital, buy shares, or purchase capital contributions in established Vietnamese enterprises. This is a quick way for investors to enter the market without needing to set up a new legal entity. With this form, investors gain profits from the economic organization’s business activities without directly participating in decision-making and management of the economic organization.

• Investment in the form of establishing economic organizations (Clause 1, Article 22 of the Law on Investment 2020)

This is a traditional and popular form of investment for an FDI enterprise. For this form, foreign investors will establish an economic organization in Vietnam in the form of any type of enterprise.

The characteristics of this form of investment are suitable for small-scale investment projects, often applied by transnational companies. At the same time, economic organizations, although owned by foreign investors, are still under the control of the host state.

Benefits of establishing a foreign invested joint stock company

Establishing a company with foreign capital brings many benefits to investors and the Vietnamese economy. This model creates conditions to attract foreign investment capital, contributing to promoting economic growth. The participation of foreign investors also provides opportunities to access advanced technology and management experience.

As for domestic enterprises, cooperation with foreign partners opens up opportunities to access large capital sources and corporate management experience. The participation of foreign investors can improve the competitiveness and performance of businesses. This is also an opportunity for Vietnamese businesses to integrate more deeply into the global value chain.

In terms of macroeconomics, foreign investment contributes to increasing state budget revenue through taxes and fees. The presence of FDI enterprises also creates positive spillover effects, promoting the development of supporting industries. This is an important driving force for the process of industrialization and modernization of the country.

Process of establishing a joint stock company with foreign capital

Procedures for applying for Investment Registration Certificate

The investor prepares 01 set of documents to apply for an investment certificate according to the provisions of Clause 1, Article 33 of the Law on Investment 2020, including:

• Document requesting implementation of investment project of foreign investor.
• Documents on legal status:

Investors are individuals: ID card/CCCD/Passport (copy).

Investors are organizations: Certificate of establishment/Other legal documents of equivalent value (copy).

• Investment project proposal includes: Investor information, objectives, investment capital, scale and capital mobilization plan, duration, location and investment progress, assessment of socio-economic efficiency Project association and proposal for investment incentives.
• Document proving the investor’s financial capacity
• If the project does not request the State to allocate land, lease land or allow change of land use purpose, submit documents on land use rights/documents determining the right to use the project location (copy). .
• Explain the technology used in the project for projects subject to appraisal and solicitation of technological opinions according to regulations on technology transfer.
• BCC business cooperation contract for investment projects in the form of a BCC contract.

According to Clause 1, Article 36 of Decree 31/2021/ND-CP, investors submit the above documents to the investment registration agency. In case the project is implemented in 02 or more provincial administrative units, submit the application to the Department of Planning and Investment of a province/centrally-run city where the project is implemented or where the Agency is expected to be located. Investment registration reviews documents and issues investment registration certificates within 15 days from the date of receiving valid documents from investors (as prescribed in Clause 3, Article 36 of Decree 31/2021/ ND-CP).

Procedures for registering the establishment of a joint stock company with foreign capital

After obtaining the Investment Registration Certificate, the investor proceeds with the procedure Register to establish a company. Business registration documents are submitted to the Business Registration Office under the Department of Planning and Investment where the company is expected to have its headquarters.

Document components include:

1. Application for business registration.
2. Company charter.
3. List of members for limited liability companies with two or more members; List of founding shareholders and list of shareholders who are foreign investors for joint stock companies.
4. Copies of the following documents:

• Legal documents of the individual for the legal representative of the enterprise;
• Personal legal documents for company members, founding shareholders, and shareholders who are foreign investors who are individuals; Legal documents of the organization for members, founding shareholders, shareholders who are foreign investors being organizations; Legal documents of individuals for authorized representatives of members, founding shareholders, shareholders who are foreign investors who are organizations and documents appointing authorized representatives.
• For members and shareholders who are foreign organizations, copies of the organization’s legal documents must be consularly legalized;
• Investment registration certificate in case the enterprise is established or participates in the establishment by foreign investors or economic organizations with foreign investment capital according to the provisions of the Investment Law and guiding documents. implementation guide.

Content specified in Article 23 of Decree 01/2021/ND-CP on business registration.

The processing time for business establishment registration documents is 03 working days from the date of receipt of complete and valid documents. After completing the procedures, the company will be issued a Business Registration Certificate. This is an important legal basis that confirms the legal status of the enterprise, allowing the company to officially begin operations.

Consulting services for establishing a foreign invested joint stock company

Establishing a joint stock company with foreign capital is a complex process, requiring extensive knowledge of Vietnamese law. Professional consulting services help investors save time and ensure compliance with legal regulations. At Long Phan, consulting services for establishing a foreign invested joint stock company support investors in the following activities:

• Investment strategy consulting;
• Support in preparing documents to apply for Investment Registration Certificate;
• Drafting company charter and legal documents;
• Representing investors in working with competent state agencies;
• In addition, consulting companies also provide post-registration support services such as initial tax declaration and labor registration.

Choosing a reputable consulting unit is an important factor to ensure the company establishment process goes smoothly. Investors should learn carefully about the experience and expertise of the consulting unit in the field of foreign investment. Long Phan’s team of lawyers with many years of experience in the field of international investment is ready to support investors throughout the process of establishing and operating businesses in Vietnam.

A foreign invested joint stock company offer investment benefits and access to international markets. To ensure a smooth process, you should consult a legal professional. Long Phan and our team of lawyers are ready to advise and support you in establishing a joint stock company with foreign capital effectively and legally. Contact Hotline immediately 0906.735.386 for detailed advice.