What is an FDI enterprise? Process of establishing an FDI company

Article overview

What is an FDI enterprise? FDI enterprises are enterprises with direct/indirect investment capital in Vietnam. Including many diverse forms of investment such as establishing new economic organizations, contributing capital to existing businesses, or implementing investment projects under business cooperation contracts. This article will analyze in detail FDI enterprises, establishment conditions, procedures, and important notes for foreign investors.

Process of establishing FDI enterprises
Process of establishing FDI enterprises

What is an FDI enterprise?

FDI stands for “Foreign Direct Investment” and is a term commonly used in international economic activities. Therefore, it can be understood that FDI enterprises are enterprises with direct investment capital from foreign countries.

According to the provisions of Article 21 of the Law on Investment 2020, investment forms of FDI enterprises in Vietnam include:

  • Investing in establishing economic organizations in Vietnam;
  • Investing in capital contribution, buying shares, purchasing capital contributions of other enterprises;
  • Investment in the form of BCC contract (also known as business cooperation contract);
  • Implement investment projects;
  • New forms of investment and types of economic organizations according to Government regulations.
What is an FDI enterprise?
What is an FDI enterprise?

Conditions for establishing FDI enterprises in Vietnam

To establish an FDI enterprise in Vietnam, it is necessary to fully converge the following factors:

First, established or partly owned by foreign investors.

Pursuant to Clause 19, Article 3 of the Law on Investment 2020, it can be understood that a foreign investor is an individual with foreign nationality or an organization established under foreign law conducting business investment activities in Vietnam.

Because FDI enterprises need direct investment capital from abroad, of course, if you want to establish an FDI enterprise in Vietnam, it needs to be done or have capital contribution owned by foreign investors.

Second, doing business in legal industries and professions in Vietnam.

To be allowed to operate in Vietnam, FDI enterprises are not allowed to do business in prohibited industries as prescribed in Clause 1, Article 6 of the Law on Investment 2020, specifically:

  • Trading in narcotics specified in Appendix I of the Law on Investment 2020;
  • Trading in chemicals and minerals specified in Appendix II of the Law on Investment 2020;
  • Trading in specimens of wild plants and animals originating from natural sources; Specimens of endangered, precious, and rare forest plants, animals, and aquatic species of Group I originating from natural exploitation;
  • Prostitution business;
  • Buying and selling humans, tissues, corpses, body parts, human fetuses;
  • Business activities related to human cloning;
  • Trading in firecrackers;
  • Debt collection service business.

Third, carry out procedures for issuance and adjustment of Investment Registration Certificates.

According to Point c, Clause 1, Article 22 of the Law on Investment 2020, before establishing an economic organization, a foreign investor must have an investment project and carry out procedures for granting and adjusting the Investment Registration Certificate, except in cases where Establishment of 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.

Therefore, foreign investors who want to establish or contribute capital to FDI enterprises must carry out procedures for granting and adjusting Investment Registration Certificates, except for the establishment of small and medium-sized FDI enterprises that are innovative startups and have an innovative startup investment fund.

Fourth, register to establish a business

Submit the registration application to establish an FDI enterprise to the Business Registration Office under the Department of Planning and Investment where the head office is located.

Procedures for establishing FDI enterprises

Procedures for establishing direct FDI enterprises

Step 1: Prepare documents to apply for an investment certificate.

Profile includes:

Document requesting implementation of investment project of foreign investor.

Documents on legal status:

  • Investor is an individual: CCCD/Passport (copy).
  • Investors are organizations: Certificate of establishment/Other legal documents of equivalent value (copy).

Proposed investment project.

Documents proving the investor’s financial capacity:

  • Investors are individuals: Savings books, documents confirming account balance,…
  • Investors are organizations: Financial statements of the last 02 years/Financial commitment of the financial institution/Commitment to financial support of the parent company/Documents proving financial capacity/Capacity guarantee financial strength of investors.

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.

Step 2: Submit application for investment certificate.

The investor submits 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 office is expected to be located.

Step 3: The investment registration agency reviews the application and issues an investment registration certificate within 15 days from the date of receiving the investor’s valid application.

Step 4: Prepare documents and submit business registration documents.

Profile includes:

  • Investor’s application for business registration.
  • Charter of the company.
  • The list of members/shareholders depends on the type of enterprise.
  • If an individual: CCCD/Passport or legal personal identification document (copy).
  • If it is an organization: Business registration certificate/Establishment decision/equivalent documents of the organization and authorization document; Legal personal identification documents of the representative (copy).
  • Business registration certificate/equivalent document that has been consular legalized of a member who is a foreign organization (copy).
  • Investment registration certificate has been issued by the competent authority.

The application is submitted to the Department of Planning and Investment of the province where the foreign-invested company is headquartered.

Step 5: Issue business registration certificate.

Issue business registration certificate within 03 working days from the date of receiving valid documents.

Step 6: Proceed to disclose corporate information.

Step 7: Engraved seal.

Step 8: Open a direct investment capital account from abroad.

Step 9: Carry out other procedures after establishing the company.

After completing the above steps, investors contribute investment capital as committed and register digital signatures, request to issue electronic invoices, declare and pay taxes,…

Procedures for establishing indirect FDI enterprises through capital contribution and share purchase

For convenience and speed, investors can choose to invest in the form of contributing capital or buying shares in Vietnamese companies. Accordingly, the procedure is carried out as follows:

Step 1: Prepare documents to register to buy capital contributions, shares, and capital contributions from foreign investors:

  • Document to register capital contribution, share purchase, purchase of capital contribution;
  • Charter capital ownership ratio of foreign investors before and after capital contribution, share purchase, and capital contribution purchase;
  • Expected transaction value of capital contribution, share purchase, and capital contribution contracts;
  • Information about investment projects of economic organizations (if any);
  • Copies of legal documents: of individuals, organizations contributing capital, purchasing shares, purchasing capital contributions. And of economic organizations with foreign investors contributing capital, buying shares, purchasing capital contributions;
  • Principle agreement document: on capital contribution, share purchase, purchase of capital contribution between foreign investors and economic organizations with foreign investors contributing capital, purchasing shares, purchasing capital contributions. Or between a foreign investor and a shareholder or member of that economic organization;
  • Copy of Land Use Rights Certificate of the economic organization with foreign investors contributing capital, purchasing shares, purchasing capital contributions.

Step 2: Register with the Department of Planning and Investment:

  • Submit the registration application to the Department of Planning and Investment where the economic organization is headquartered;
  • The Department of Planning and Investment will consider meeting investment conditions for foreign investors and notify investors so that they can carry out procedures to change shareholders and members according to the provisions of law;
  • In case the conditions are not met, the Department of Planning and Investment shall notify the investor in writing and clearly state the reason.

Step 3: Carry out procedures for changing members and shareholders at the business registration agency.

Note: Economic organizations are not required to carry out procedures for granting or adjusting Investment Registration Certificates or Investment Policy Decisions for investment projects implemented before the time foreign investors contributed capital, purchased shares or contributed capital.

>>> Reference: Procedures for establishing FDI enterprises in export processing zones.

Procedures for establishing FDI enterprises
Procedures for establishing FDI enterprises

Consulting services for establishing FDI enterprises in Long Phan

At Long Phan, we provide comprehensive consulting services in establishing foreign invested (FDI) enterprises with quality and professionalism. Our services include:

  • Consulting on effective forms of investment in Vietnam;
  • Consulting on preferential policies when investing in Vietnam;
  • Consulting on conditions for establishing foreign-invested enterprises in Vietnam;
  • Consulting and guidance on preparing documents and procedures for establishing direct FDI enterprises;
  • Consulting and guidance on preparing documents and procedures for establishing indirect FDI enterprises;
  • Consulting on tasks that need to be done after registering to establish an FDI enterprise;
  • Consulting and answering problems during the operation of FDI enterprises;

Carrying out correct procedures for establishing FDI enterprises and complying with legal regulations is extremely important, helping investors ensure transparency and legal operations. We provide professional solutions, helping the business establishment process go smoothly and effectively. Please contact the hotline 0906735386 for detailed advice and best support from the Long Phan team of experts.