Business Lines Of Foreign-Invested Enterprises

ARTICLES

Business Lines Of Foreign-Invested Enterprises

According to Enterprises Law 2015, enterprises are free to do business in business lines that are not prohibited by law. In addition, enterprises need to pay attention to fully meeting business investment conditions when doing business in conditional business lines under the provisions of Appendix 4 of the Investment Law 2014 and ensuring that business investment conditions are maintained during the process of business operations. And within 10 days after the change of business lines, the legal representative of the enterprise is responsible for registering the change of the contents of the Enterprise Registration Certificate.

Before establishing enterprises, Foreign Investors must carry out the procedures for issuance of Investment Registration Certificates, the registration content includes the Project Objectives which record the operational goals, CPC code (international business line code) and VSIP code (business line code of Vietnam). At this time, the competent authority will consider whether or not the Foreign Investors have met business investment conditions of a certain business line as registered, including:

  • The ratio of charter capital ownership of the Foreign Investors in enterprises;
  • Vietnamese partners participating in investment activities;
  • Other conditions as prescribed in laws, ordinances, decrees and treaties on investment.

Pursuant to the Protocol of Accession to the Agreement on Establishing the World Trade Organization (WTO) of Vietnam, signed on November 7th, 2006; bilateral agreements on investment encouragement and protection; Free trade agreements and other regional economic integration agreements; Other international treaties providing for the rights and obligations of the State or the Government of Vietnam relating to investment activities in which Foreign Investors are specified conditions when investing in a certain business line.

For example, the business line of “Urban planning services and urban landscape architecture” is committed by Vietnam to open the market to allow the establishments of Foreign-invested Enterprises under the Protocol of Accession to the WTO are as follows:

  • Capital ownership ratio: After 2 years from the date of accession, a 100% foreign-invested enterprise may be established; Within 2 years from the date of accession to WTO, 100% foreign-invested enterprises are only allowed to provide services to foreign-invested enterprises in Vietnam;
  • Vietnamese partners participating in investment activities: Not required;
  • Other conditions: Foreign-invested enterprises must be legal entities of a Member; foreign architects responsible for foreign-invested enterprises must have a practicing certificate issued by the Vietnamese Government or recognized by the Vietnamese Government; For national security and social stability reasons, in some areas, according to Vietnamese government regulations, foreign service providers may not be permitted to provide this service.

Besides, a number of principles to apply investment conditions to Foreign Investors are as follows:

  • A Foreign Investor that makes investment in various business lines must fulfill all conditions applied to these business lines;
  • A Foreign Investor that is regulated by international treaties on investment that provide for different investment conditions may apply the investment conditions provided for in one of such international treaties and must fulfill the foreign investor’s rights and obligations under the selected international treaty;
  • With regard to sectors and sub-sectors excluded from commitments or not specified in Vietnam’s WTO Schedule of commitments and other international treaties on investment, if investment conditions applied to foreign investors are already provided for in Vietnam’s law, such Vietnam’s law shall apply;
  • Where a Foreign Investor in a territory that is not a WTO member makes investment in Vietnam, such investor shall apply the same investment conditions as Foreign Investors in WTO members, unless otherwise prescribed by law and international agreements between Vietnam and such countries or territories;
  • With regard to sectors and sub-sectors excluded from commitments or not specified in Vietnam’s WTO Schedule of commitments and other international treaties on investment, if investment conditions applied to Foreign Investors are also not provided for in Vietnam’s law, the investment registration authority shall consult with the Ministry of Planning and Investment and relevant Ministries;
  • Where a Foreign Investor permitted to make investment in the service sectors and sub-sectors specified in the fifth Point of this Clause and they have been posted on National Foreign Investment Web Portal specified in Article 13 of Decree No. 118/2015/ND-CP, the investment registration authority shall consider deciding Foreign Investors’ investment in the same business lines without consulting with Ministries.

If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.

This article is for general information only and is not a substitute for legal advice.