The joint venture between Vietnam and foreign companies is one of the investment forms in Vietnam that many foreign investors choose. Currently, in Vietnam, there are three forms of joint ventures prescribed by law, including:
- Joint venture in the form of business cooperation contract (BCC)
- Joint venture in the form of jointly contributing capital to establish an economic organization in Vietnam
- Joint venture in the form of foreign investors contributing capital, buying shares of Vietnamese companies.
This form of investment has many advantages. The participation of many investors will help investors limit their weaknesses and promote their strengths to develop their businesses sustainably. Besides, it promotes the investment process, improves the efficiency of capital. When the foreign investors have the experience limitation about the domestic market, they can cooperate with domestic enterprises and investors who understand the consumption habits of consumers, domestic market factors.
In addition to earning profits from the main business activities of the enterprise, foreign investors can also benefit from joint ventures with other enterprises. When the enterprise is profitable, the joint venture members will be entitled to a share of the profits. However, they will also be liable to the extent of their contributed capital when the business is operating inefficiently.
However, investors need to keep a few points when choosing to invest in this form. Below, AZLAW summarizes important notes that investors need to check before deciding to invest in this form:
Firstly, in terms of the percentage of ownership of charter capital. Some industries specified in the Law on Investment and international treaties to which Vietnam is a member have regulations on limiting the percentage of charter capital ownership of foreign investors.
For example: Regarding the cargo transportation services, the foreign investor’s share of charter capital must not exceed 51%.
Secondly, in terms of investment forms, in certain industries, investors are only allowed to invest in certain forms.
For example: Regarding the video game business services, foreign investors are only allowed to invest in the form of a business cooperation contract or a joint venture with a Vietnamese partner who has been authorized to provide this service.
The investors need to strictly comply with the regulations on investment forms following the Vietnamese law and international treaties to which Vietnam is a member.
Thirdly, when choosing a partner to join the joint venture, investors should learn about the partner carefully and consider the required legal conditions related to the Vietnamese partner.
For example, the services such as advertising, film production, and video game business require a Vietnamese partner licensed to operate in these fields.
In addition, foreign investors should also pay attention to the scope of activities of the joint venture. Because many business lines require conditions for foreign investors, it may cause difficulties in investment legal procedures.
Regarding the documents to be prepared to carry out investment procedures in the form of a joint venture, the investor needs to prepare the following documents:
- A copy of the passport ( the investor is an individual)
- A copy of the Certificate of Establishment (the investor is an organization)
- Documents proving the investor’s financial capacity: Financial statements of the last two years, Confirmation of bank account balance, capital funding decision of the headquarter, documents to ensure loan provision of bank
- BCC contract (if the investment is in the form of signing a BCC contract)
In addition, there are other legal documents according to the prescribed form.
Depending on whether the project is located outside or inside the industrial park, the implementation of procedures is realized at the Department of Planning and Investment or the Management Board of Industrial Parks,
The article refers to the notices when investing in the form of a joint venture. If you have any questions or need legal support related to investment activities in Vietnam, please don’t hesitate to contact us at Hotline 0987.748.111 or email info@azlaw.com.vn for advice.
