Forms of Investment in Vietnam

Foreign investors when setting up business in Vietnam need to be advised by a law firm in Vietnam on forms of investment.

According to the Vietnam Law on Investment (2005), foreign investors can invest in Vietnam through direct investment and indirect investment.

The direct investment is when the investor invests its invested capital and participates in the management of the investment activities, includes:

– To establish economic organizations in the form of one hundred per cent (100%) capital of domestic investors or one hundred per cent (100%) capital of foreign investors.

– To establish joint venture economic organizations between domestic and foreign investors.

– To invest in the contractual forms of: BCC, BO, BTO, and BT.

– To invest in business development.

– To purchase shares or to contribute capital in order to participate in management of investment activities.

– To invest in the carrying out of a merger and acquisition of an enterprise.

– To carry out other forms of direct investment.

Foreign investor will be considered for acceptance by the competent authorities and be granted Investment Certificate.

Indirect investment means a form of investment whereby the investor contribute the capital but do not participate directly in the management of the investment activity, includes:

– Purchase of shareholding, shares, bonds and other valuable papers;

– Through securities investment funds;

– Through other intermediary financial institutions.

Types of enterprise for foreign investors to invest in Vietnam

a) Limited Liability Company

Limited Liability Company is a form of enterprise which is established by contributing of members.  A member shall be liable for the debts and other property obligations of the enterprise within the amount of capital that it has undertaken to contribute to the enterprise.

Limited liability companies are regulated by two types:

– One member Limited Liability Company is an enterprise owned by one organization or individual;

– Limited Liability Company with two or more members is an enterprise owned by organizations or individuals, in which the number of members shall not less than two members and not exceed fifty.

Organizational and management structure of Limited Liability Company normally comprise of a Member’s Council, General Director or Director.

b) Joint Stock Company

Joint Stock Company is an enterprise which has charter capital divided into equal portions called shares.   The minimum number of shareholders shall be three and there shall be no restriction on the maximum number.

Shareholders shall be liable for the debts and other property obligations of the enterprise only within the amount of capital contributed to the enterprise.

Joint Stock Companies may issue all types of securities to raise funds.  Founding shareholders must together register to subscribe at least twenty per cent (20%) of the number of ordinary shares which may be offered for sale.

The main difference between Joint Stock Company and Limited Liability Company is the Joint Stock Company can raise funds by offering shares or securities.  In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company.  Management system of Joint Stock Company is more complicated than Liability Company.

c) Partnership

A partnership is an enterprise which must be at least two members being co-owners of the company jointly conducting business under one common name.  In addition to unlimited liability partners, there may be limited liability partners.

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets.  Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

d) Representative Office of foreign trader

A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam.

Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services), but the representative Office is permitted to

• To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;
• To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;
• To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;
• To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

e) Branch of foreign trader

The Branch of a foreign business entity in Vietnam (referred as “The Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

f) The investing measures by signing Contracts

Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Build-operate-transfer contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; and, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

Build-transfer-operate contract (BTO) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

Build-transfer contract (BT) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance with an agreement in the BT contract.

Foreign investors may sign BOT, BT and BTO contracts with a competent State body to implement infrastructure construction projects in Vietnam. Typically, the contracts are for projects in the fields of transportation, electricity production, water supply, drainage and waste treatment.

The rights and obligations of the foreign investor will be regulated by the signed BOT, BT and BTO contract. The Government encourages both public- and private-sector investors to participate in BOT, BTO and BT in the following sectors:

(i) Construction, operation and management of brand-new infrastructure facilities; and

(ii) Renovation, expansion, modernization, operation and management of the existing infrastructure facilities such as:

• Roads, bridges, tunnels, and ferry landings;

• Railway bridges and railway tunnels;

• Airports, seaports and river ports;

• Clean water supply systems; sewage systems;

• Wastewater, waste collecting and handling systems;

• Power plants and power transmission lines;

• Infrastructure works of health service, education, training, career training, culture, sport and offices of State agencies; and

• Other projects as may be determined by the Prime Minister

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How to Handle Rejection of International Trademark Registration In Vietnam By The NOIP?

The procedure to register a trademark in Vietnam is carried out at the National Office of Intellectual Property of Vietnam (NOIP). The duration calculated from the full receipt of the dossier to the announcement is at least 12 months, or it can be expended from 16 months to 18 months.

However, in many cases, NOIP could send a notice on its intended refusal of the trademark application because of the following reasons:

• There are grounds to affirm that the subject matter stated in the application does not fully satisfy the conditions for protection;
• If there are more than one registration applied in the same time with full conditions to issue the protection title, but your application is not the first.

After receiving the refusal intention notice, applicants and all organizations and individuals have rights to reject the notice within 02 months, this duration can be extended one time, the extended time is 02 months.

If reasons in the notice are not correct and the applicant does not agree with the notice, within the given duration, the applicant could send written comment to NOIP, in which display the applicant’s comment, submit supplemental documents and proof to support.

After receiving the written comment, NOIP shall re-examine before issue the final decision.

The time limit for re-examination of applications is equal to two thirds of the time limit for examination; for complicated cases involving many circumstances which need to be verified or requiring expert opinions, that time limit may be prolonged but must not exceed the time limit for examination. Re – examination is only carried out one time.

However, in many cases, the applicant cannot display convincing arguments or reliable proofs, hat makes NOIP does not agree and keep their own intention to refuse issuing the protection titlet. Therefore, when receiving intention notice to refuse issuing protection titles, applicants should find legal advice from consultants who have experience in intellectual property.

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Sales and Purchase of Ocean Ships in Vietnam

Ship sales and purchase should involve shipping lawyers in Vietnam whom understand the laws and the shipping industry.

For long, maritime activities and carriage of goods by sea are important parts of the international economic life, supporting the import and export of goods, connecting Vietnam to the world commodities market and therefore playing as driving factors behind the development of maritime transportation field.

As the demands for transportation exists, although some times up and down depending on the cycle of the economy, ships purchase and sales are important part of maritime related transaction businesses. With its own special characteristics, the purchase or sale of ships usually involve enormous economic interests, and risks at the same time. Ships are special objects in transactions therefore require the help of local and international ship lawyers with knowledge and experience to handle.

Stages in a Ship Transaction

The sale and purchase of a ship include contract, inspections, and the closing.

At the first step, both buyer and seller appoint ship brokers to carry out the negotiating and defining the clauses needed in the contract. Once details of the contract are agreed, the parties shall initiate the process of drafting the contract under Memorandum of Agreement (MOA) which normally is under a standard form. The governing law applies to such contract is usually the law of the country where the ship is registered its nationality. To enable the international transaction of ship, parties will sign an addendum to the MOA, stating necessary documents to be provided which may include: Approval from Director or Shareholders of resolving the sale of the vessel; Export or Import Permission of the Maritime Administration (requirement depending on national legislation), Power of Attorney, as well as other related documents involving the grade, commitments of the seller, etc.  Once lawyers of buyers and sellers agree on the documents and have initial checking of such, the buyer may pay a deposit as a percentage of the value of the contract.

After the forming of contract, shipping lawyers of buyer start to inspect the documents provided by the seller.  The inspection of the ship could be conducted in parallel. For the documents inspection, the buyer will check the ship’s class records and certificate records. The inspection of records will reveal the history of the ship’s maintenance in compliance with the requirement of class. Furthermore, the buyer need to check the mortgages and the maritime lien records to make sure that the vessel is free from encumbrances, debts, taxes, mortgages and maritime liens.  This will help prevent any damages or loss subject to the legal issue of the ship which may occur before the delivery of the ship. The buyer should also acknowledge of whether the shipowner is in debts for fuels or salaries, etc. However, in some case, it may be difficult to verify such information without the collaboration of the ship owner.

For the physical inspection, instead of just checking the logbook for the status of the ship, it is preferable to hire a professional examiner to control the process of physical inspection relating the safety, certificates, equipment and engine issues. Sending a person on the ship to participate in some of the ship’s voyages may be advisable in circumstances.

At closing, the parties shall transfer the ship and all related documents as required. During the stage of delivery, the buyer physically accepts the delivery of the vessel after re-checking the status of the vessel, the remaining amount of fuel and engines status at the designed port. The place for delivery may be at a different location from where the contract was made. It depends on the agreement between the parties and usually for the convenience of the voyage.

An important document that needs to be transfer at this stage is the Bill of Sale. The Bill of Sale should be in proper form and duly notarized. In some country, it is crucial to get the Bill of Sale registered at the authority agencies in order for it to take effect.

Other procedures that the parties also need to complete at the state’s authority agencies include legalization of the ship transaction process, transference of vessel ownership and modification of the shipping registration. The state where parties are to complete such procedure shall be the country where the vessel is registered (the country which the vessel is permitted for flying flag).

Why Shipping Lawyers are Important in Ship Transaction?

Seagoing vessel is a special type of asset in a commercial transaction. When engaging in a contract to purchase a vessel, it is important to consider not only the nationality of the owner but also the nationality of the vessel itself. As the process of the transaction involves many procedures and requirements which usually need to be complete at the state’s authority agencies, the law of the country where the vessel is registered shall have a strong influence on the interpretation and execution of the contract.

The model contract usually comes with specific requirements on the content and form of the commercial invoice and the Bill of Sale pursuant to the national legislation (the nation where the vessel is registered). The parties may agree to change some of the clause in the model contract to meet their demand in the transaction. However, if a model contract is chosen to be used, the parties should at all time acknowledge of all the clauses existing in the contract and try to comply with the form and requirement of such documents.

Most of the transferred documents in a vessel transaction need to be notarized or legalized in order for the contract to take effect. However, the process of notarized and legalized in some country only certify that the documents have been duly signed and stamped, it doesn’t confirm or verify the certainty of the content and information provided in the documents. Therefore, both parties should require the other to provide the certificate or proof of the competent authority agencies confirming the certainty of the information or content that they have committed in the contract. For example, in a ship transaction, the buyer usually required seller to commit that the ship is free from any encumbrances, debts, taxes, mortgages and maritime liens. To confirm the certainty of such information, the buyer may require the seller to provide documents or certification from National Registration Agency for Secured Transactions to ensure the documents are provided in good faith. To reduce the risks, the buyer may also ask for a specific clause in a contract stating the liability of the seller in the event of future dispute relating the vessel.

In case one parties of the contract is an organization or company, the required documents should include the Minute of the Joint Meeting and Decision/ Approval of Directors or Shareholders resolving the sale of the vessel in accordance with the term and conditions of the MOA.  Those documents should be duly established and signed in accordance with the requirement of the national legislation (law of the country where the company is set up).  The Approval of Shareholder should also require the signature of all the shareholders of the company in order to avoid future disputes that may arise. Other documents which parties should also consider including Association’s Regulation, authorized papers, passports and personal documents of the representatives of each party.  This will help better understand the legal position of parties in the contract, ensure their legal status to engage and perform in the contract.

ANT Lawyers have experience in laws and shipping matters to advice clients whom are interested to buy ships from Vietnam ship owners.   We assist our clients in the process of reviewing contract, examining the documents and giving useful consultation for the sale and purchase procedure.

Source: http://www.antlawyers.vn/legal-service/sales-and-purchase-of-ocean-ships-in-vietnam.html

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Criminal Record Granting for Foreigner

In order to be granted the work permit for foreigner, completing the immigration or reside procedures in a country, foreigners who are or have been residing in Vietnam must apply for a criminal record for the time that they residing in Vietnam.

Foreigners who are or have been temporarily residing in Vietnam have the right to request the Department of Justice of the province or city where they are residing or the National Centre for Criminal Record to issue the criminal record, in order to confirm that people have or do not have criminal records while residing in Vietnam. The person requesting for criminal record card can authorize another person on their behalf to complete procedures to obtain the criminal record.

ANT Lawyers can assist clients to apply for: Criminal record card no 1 and Criminal record card no 2

Individual when requesting for criminal record issuance have to provide the following documents:

·        For Vietnamese:

– A written declaration requesting for the issuance of criminal record;

– Certified copy of identity card, passport, family record book, temporary residence book, temporary residence card, permanent resident card in Vietnam (should present the original for comparison);

– Confirmation of permanent residence in Vietnam before leaving the country (applies to Vietnamese who are living in foreign countries).

·        For Foreigner:

– A written declaration requesting for the issuance of criminal record;

– Copy of the passport and visa that are still valid;

– Confirmation of temporary residence in Vietnam.

Implementation time: 3-7 working days.

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How to Apply for Birth Certificate for Newborn in Vietnam?

How to overcome challenges to apply for birth certificate in Vietnam?

For children of foreigner and Vietnamese born in Vietnam, the procedure to apply for birth certificate in Vietnam is carried out at the Vietnam’s provincial Department of Justice.

In today’s globalized world, it has become more common that people from different cultural backgrounds travel, and meet their spouse.  Their children were born with happiness however they would face difficulties when applying for birth certificate for the newborn in Vietnam.  For the parents, the difficulties of registering birth certificate in Vietnam could range from the choice of name, nationality, or whether or not the child is born out of wedlock.

When a child between a foreigner and a Vietnamese is born in Vietnam, according to the regulation on the registration and management of civil status, the Department of Justice will be the Vietnam government agency issuing the birth certificate.

In cases where parents choose foreign nationality for the child, they must obtain the agreement of the parents about the choice of nationality. The valid agreement of the parents about the choice of nationality shall be certified by the local authority.

After receiving an application dossier for birth certificate for newborn in Vietnam, civil status officials of the Department of Justice records in the birth registration and original birth certificate. The director of the Department of Justice shall sign and issue an original birth certificate for the newborn.  Copies of birth certificates are issued at the request of the applicant.

For children born out of wedlock, if the father is not identified, the information about the father in the birth registration book and birth certificate are left blank. When the father officially agrees to recognize father for a child, he has to carry out the procedure at the Vietnam’s provincial Department of Justice.  The birth certificate could also be revised to reflect the father’s details into the new birth certificate.  This birth certificate will be very important when the father applies foreign citizenship for the child.

The child can be named according to parental choice to be recorded on the birth certificate.

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List of Investment Sectors With Conditions Applied to Foreign Investors

In general, investment is encouraged in Vietnam. However, when setting up a company in Vietnam, foreign investors need to be aware of investment sectors with conditions applied to foreign investors in Vietnam.

The following sectors with investment conditions are issued with Decree 108/2006/ND-CP dated September 22nd 2006 of the Government on guiding the implementation of some Articles in the Law on Investment:

1. Radio and television.

2. Production, publication and distribution of cultural products.

3. Mining and mineral processing.

4. Set up telecommunication network infrastructures, broadcasting, provide telecommunications and internet services.

5. Construction of the public postal network, provide postal services, delivery services.

6. Construction and operation of river ports, sea ports, airports.

7. Transportation of goods and passengers by railway, airway, road, sea, inland waterway.

8. Fishing.

9. Tobacco production.

10. Real estate business.

11. Businesses in the field of export, import and distribution.

12. Education and training.

13. Hospital and clinic.

14. Other areas of investment in the international treaties to which Vietnam is a member that restricting the market access for foreign investors.

The investment conditions applicable to foreign investors with investment projects in the fields of investment provided with this list shall be in accordance with the provisions of the international treaties to which Vietnam is a member.

At ANT Lawyers, a law firm in Vietnam with offices in law office Hanoi and Ho Chi Minh City, we are available to assist clients in licensing and post-licensing matters to help clients with all questions and services in setting up and maintaining the company or other form of business entities in Vietnam.

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