How can foreign investors establish their commercial presence in Viet Nam? Foreign investors can do so with the help of business corporation contracts, and by setting up foreign-invested enterprises, branches or representative offices.
1. Business corporation contracts
For foreign enterprises in particular, establishing commercial presence through business corporation contracts will not result in establishing any new business organisation. According to the 2014 Law on Investment, business corporation contracts (BCCs) are an agreement between foreign investors and domestic enterprises or among foreign investors in which the parties will carry out business activities, contribute capital, distribute profits and bear risks together without setting up a new legal entity. The commercial presence under this form will save a lot of time and effort for investors.
Under this form of commercial presence, despite operating with an independent legal status to solve any problems in a flexible manner, the parties can also support each other in the process of production and trading. Nevertheless, since there will be no new legal entity established, PLF hereby makes a note for enterprises that signatories of the BCC that they should have clear agreements on project management, selecting the company's stamp, rights of representation for signing contracts, etc. to steer clear of any dispute arising in the process of incorporation.
2. Foreign-invested enterprise
Depending on the fields of business, the Government permits foreign investors to establish enterprises with 100 per cent foreign capital or joint ventures with domestic enterprises following a certain percentage of foreign capital. In the case of joint ventures, investors are entitled to contribute capital, buy shares or a capital contribution from a Viet Nam trader following a statutory proportion and in accordance with international treaties that Viet Nam has signed.
3. Branches and representative offices
The foreign investors can also institute their branches or representative offices in Vietnam as the last form of commercial presence. According to provisions under a Government Decree, foreign investors will be acknowledged as lawful enterprises based on their countries of business registration and shall be granted licences for establishment of representative offices if they have been operating in the country for no less than a year or have been granted licenses for establishment of branches if operating for no less than five years.
(Source:PLF LAW FIRM)
