ESTABLISHING A JOINT VENTURE COMPANY: WHAT DOES CURRENT LAW REGULATE?

In the current period of strong economic integration, it is not difficult for us to encounter a joint venture between a foreign company and a Vietnamese company. So what is a joint venture company? What are the steps to establish a joint venture company according to current law? Find out with OTIS LAWYERS in the article below!

Legal basic

Law on investment 2020

Law on enterprises 2020

What is a joint venture company? 

A joint venture company is not a type of company recognized in the Enterprise Law 2020. In the Enterprise Law 2020 as well as other related guiding documents, there are no specific regulations on the concept of joint venture companies. However, based on current practice, it can be understood:

A joint venture company is a company established in Vietnam by two or more cooperative parties on the basis of a joint venture contract or on the basis of an agreement signed between the Government of the Socialist Republic of Vietnam and the company has investment capital in cooperation with Vietnamese companies, or with foreign investors on the basis of joint venture contracts.

A joint venture company can be established in the form of a limited liability company (LLC) or a joint stock company. The parties are responsible within the scope of capital committed to contribute to the legal capital of the enterprise.

Conditions for establishing a joint venture company

Subject conditions

To be considered a joint venture company, members/contributing shareholders must include at least two parties, including Vietnamese investors and foreign investors; can be individuals and/or legal entities; not in the case of not being allowed to establish and manage an enterprise according to Article 17 of the law on enterprises 2020

– Individual: must have full civil capacity; not while serving a prison sentence or other administrative penalties as prescribed

– Legal entity: must be legally established; still in operation at the time of making the investment

Financial conditions

The investor must have financial capacity corresponding to the amount of capital committed to investing in the project, meaning the investor must be able to pay for the amount of capital they commit.

The bank that will hold the investment money in the company must be a legal bank, licensed to operate in Vietnam.

The legal capital of the joint venture company must meet Vietnamese law on joint venture companies.

Conditions for business registration

Enterprises conducting business in industries and professions permitted by Vietnamese law. Do not do business in fields that are prohibited or restricted from business for foreign investors according to the provisions of Vietnamese law.

Note: When registering to establish a joint venture company, the enterprise must comply with the provisions of Vietnamese law, international treaties that Vietnam has signed or recognized and other relevant regulations.

Procedures for establishing a joint venture company

Case 1: Establishing a new economic organization with capital contribution from foreign investors and Vietnamese investors in the form of a LLC or Joint Stock Company

Step 1: Apply for Investment Registration Certificate

The enterprise applies for an Investment Registration Certificate at the Investment Office of the Department of Planning and Investment where the joint venture company is expected to be headquartered.

Enterprises must carry out procedures to apply for investment licenses in these cases

– Joint venture enterprises expected to be established have foreign investors holding more than 50% of the charter capital or have the majority of partners being individuals of foreign nationality;

– Enterprises expected to be established have an economic organization that is a joint venture enterprise (an enterprise with foreign investors holding more than 50% of charter capital or with a majority of partners being individuals of foreign nationality) holds over 50% of charter capital.

Step 2: Apply for a business registration certificate

After being granted an Investment Registration Certificate, the enterprise applies for a Business Registration Certificate at the Business Registration Office under the Department of Planning and Investment where the joint venture company is expected to be headquartered.

Depending on the type of activity, businesses carry out the following procedures:

– Procedures for setting up a joint stock company

– Procedures for establishing a partnership company

– Procedures for establishing a limited liability company

Step 3: Apply for a Child License

For some conditional business lines, enterprises must meet a number of conditions as prescribed by law; Register with the competent state agency to receive sublicenses to be allowed to do business.

Case 2: Foreign investors contribute capital and purchase capital shares of an existing Vietnamese enterprise

Step 1: Register to contribute capital and buy shares

Investors register to contribute capital, purchase capital shares, and buy shares in Vietnamese enterprises at the Investment Office of the Department of Planning and Investment where the joint venture company is expected to be headquartered.

Step 2: Apply for Investment Registration Certificate

Enterprises must apply for an investment license in the following cases:

– Contributing capital, purchasing shares, purchasing capital contributions of foreign investors into Vietnamese enterprises increases the ownership ratio of foreign investors in enterprises that are doing business in market access industries and occupations. conditional for foreign investors;

– Contributing capital, purchasing shares, purchasing capital contributions of foreign investors into Vietnamese enterprises leads to foreign investors holding more than 50% of the charter capital of Vietnamese enterprises.

– Foreign investors contribute capital, buy shares, buy capital contributions of Vietnamese enterprises that have land use rights certificates on islands and border communes, wards and towns; coastal communes, wards and towns; Other areas that affect national defense and security.

Step 3: Carry out procedures for changing shareholders/members

After receiving written approval for foreign investors to contribute capital, buy shares, or contribute capital, the enterprise continues to carry out procedures for changing shareholders/members according to the provisions of the enterprises law 2020 at the registration office. business under the Department of Planning and Investment where the joint venture company is expected to be headquartered.

Step 4: Apply for a Business License

For some conditional business lines, enterprises must meet a number of conditions as prescribed by law; Register with the competent state agency to receive sublicenses to be allowed to do business.

Consulting services for establishing joint venture companies of OTIS LAWYERS

OTIS LAWYERS is always proud to be a professional unit in the field of consulting on establishing joint venture companies. With a team of highly qualified lawyers, extensive experience and dedication to our customers, we believe we will provide our customers with the best, most professional service at a reasonable cost and time. Complete the procedure as quickly as possible. We commit that all customer information is absolutely confidential and customer interests are always put first.

For any questions or comments, please contact:

OTIS AND PARTNERS LAW FIRM

Office address: K28 - Group K, Lane 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi

Email: [email protected]

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