How to Close a Business in Vietnam?

    

All corporations, companies, partnerships, branch offices, representative offices and other business entities are legal entities in Vietnam which can only be dissolved through formal procedures.

I. What are the major challenges with closing a business in Vietnam?

The main thing to remember throughout the process is that the dissolving company, a branch office or a representative office, one should pay close attention to the involvement of all key stakeholders, i.e. the employees, customers, creditors, business partners and relevant authorities.

The following are key information to gather for thorough analysis

Company size in terms of capital and number of employees?

Enterprise’s business sector?

Tax invoice usage declaration?

Annual profit?

Compliance with tax procedures?

Administrative violations in the field of taxation?

Any outstanding tax?

Tax document filing records?

Other tax matters?

II. What does the dissolution process involve?

Once an analysis has been through, the next procedures mostly deal with reporting and submitting the relevant documents to the various regulatories and tax authorities at each step of the process, terminating contracts, liquidating assets and settling liabilities, and general administrative work such as returning the corporate seal, registration certificates, and having the company’s name removed from the system of the license authorities.

III) How to prepare document to close a business in Vietnam?

1. Documents submitted to the licensing authority in Vietnam:

Liquidation notice of enterprise;

Minutes of the meeting of Management Board / Board of Directors decided on the dissolution of enterprises;

The company’s decision on liquidation;

Report on enterprise asset liquidation;

The list of creditors and the paid debt;

Documents evidencing that enterprise has fulfilled all of its tax;

Confirmation on social insurance for employees after the dissolution decision;

The seal and certificate of seal sample registration.

2. Documents submitted to the tax authority in Vietnam:

Liquidation notice of enterprise;

Minutes of the meeting of Management Board / Board of Directors decided on the dissolution of enterprises;

The company’s decision on dissolution;

Audit reports and tax settlements;

The financial statements for the year to date the decision on dissolution;

The company’s tax liabilities audited by tax authority;

Verification of tax obligations of the enterprise.

Closing a business in Vietnam might be a lengthy process and more complicated than setting up a company in Vietnam. Sometimes, it is important to make a decision to exit and start a new venture. As a law firm in Vietnam, we do assist clients to close the business, exit the investment and deal with pending issues with licensing authorities including department of planning and investment, department of labour, tax bureau and others.

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What is Business Registration Certificate in Vietnam?

    

Business registration certificate is considered a legal document of an organization, which is a paper or electronic document that records information related to business registration that the Business Registration Authority grants to an enterprise.

According to the provisions of the Law on Enterprises, a business registration certificate must contain the following principal contents: Enterprise name and enterprise code; Address where the head office of the enterprise is located; Full name, contact address, nationality, number of legal papers of the individual, for the legal representative of limited liability companies and joint stock companies; for general partners of a partnership company; for business owners of private enterprises. Full name, contact address, nationality, number of legal papers of the individual, for members being an individual; name, enterprise identification number and head office address of the member being an organization, for limited liability companies; Charter capital for companies, investment capital for private enterprises.

In which, the name of the enterprise must be a Vietnamese name consisting of two elements: type of business and proper name. Currently, Vietnam recognizes four types of enterprises: limited liability companies, joint stock companies, partnerships and private enterprises. The enterprise’s proper name can be written with the letters of the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols. The enterprise code element recorded on the Certificate of Business Registration is a series of numbers created by the National Information System on Business Registration, issued to an enterprise upon its establishment, and recorded on the Certificate of Business Registration. Each business has only one unique code and that code will not be reused for other businesses.

The business registration can be carried out directly at the Vietnam Business Registration Office or through the postal service or through the electronic information network. If choosing the form of enterprise registration via electronic information network, the enterprise founder shall submit an application at the National Enterprise Registration Portal. Business registration documents will be presented in electronic form and have the same legal value as paper business registration documents.

The business registration agency is responsible for reviewing the validity of the enterprise registration dossier and granting the Business registration certificate within 03 working days from the date of receipt of the application. In case the application is not sufficient or not prepared according to the regulations, the business registration agency must notify in writing the contents that need to be amended and supplemented to the enterprise founder. If the business registration authority refuses to register the enterprise, it must notify in writing the enterprise founder and clearly state the reasons. The company could prepare its own submissions or hire a Vietnam business lawyers to assist with the submissions.

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What Are Conditions for E-commerce Business in Vietnam?

     

E-commerce business in Vietnam is conditional business area

Currently, in the context of increasingly developing technology, online transactions are also taking place more often, quickly and conveniently, and the connection between buyers and sellers has become no longer a distance. But how to set up e-commerce business in Vietnam? E-commerce lawyer in Vietnam will share some ideas below on conditions to set up e-commerce business in Vietnam and other matters.

The number of enterprises doing their business in the field of e-commerce has increased significantly in recent years. Many foreign investors are also eyeing Vietnam for investment. The question is to how to set up e-commerce business in Vietnam taking advantage of the growing market and in the meantime recruiting technology talents from Vietnam for their e-commerce business which has the potential to tap on global market.

In Vietnam, e-commerce activity means conducting part or the whole of the process of commercial activity by electronic means connected to the Internet, mobile telecommunications network or other open networks.

The forms of organization of e-commerce activities includes:

Sales conducted thorough e-commerce website: It is an e-commerce website developed by traders, organizations or individuals by themselves to serve their commercial promotion, sales or service provision.

E-commerce service provision website: It is an e-commerce website developed by traders or organizations to provide an environment for other traders, organizations or individuals to conduct their commercial activities. The e-commerce service provision website includes: E-commerce trading floor; Online auction website; Online promotion website and other types of website as regulated by the Vietnam Ministry of Industry and Trade.

How to set up e-commerce business in Vietnam?

The Law on Investment in Vietnam stipulates that e-commerce business is one of the conditional business lines. Therefore, if an enterprise wishes to set up e-commerce company in Vietnam, register and conduct business activities in this field, it must meet the following conditions:

Traders, organizations and individuals wishing to set up sales e-commerce websites must be traders, organizations or individuals who have been granted personal tax identification numbers; Having websites with valid domain names and complying with regulations on management of information on the Internet and having notified the Ministry of Industry and Trade of the set-up of sales e-commerce websites.

In order to conduct business activities based on websites providing e-commerce services, traders and organizations need to be registered for business at a competent agency in accordance with law and have websites with valid domain names and complying with regulations on management of information on the Internet.

In addition, traders and organizations also need to have a service provision project which clearly states the following contents: (i) Model of organization of operations, including service provision, promotion and marketing both online and offline; (ii) Structure, utilities and main information sections on the service website; (iii) Rights and responsibilities of the trader or organization providing e-commerce services and service users.

Enterprises that wishes to do e-commerce business need to register to set up a website to provide e-commerce services and be certified by the Ministry of Industry and Trade to register in accordance with the law.

Further, the enterprises also have to apply for investment registration certificate and business registration certificate in Vietnam at the Department of Planning and Investment.

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How Bank Guarantee Letter Could Help Secure a Transaction and Risks Involved?

  

In the process of performing civil transactions, there is a need to bind the performance of obligations of the parties hence secured transaction is needed and guarantee is one of the commonly used methods to secure the performance of obligations in business and commercial activities. The party that provides guarantee is normally a commercial bank and bank guarantee is normally a loan service. In reality, there are potentially many risks involved in the guarantee transaction through issuing of bank guarantee letter which needs the attention of dispute lawyers in banking and finance to provide legal advice throughout the process.

Bank guarantee or guarantee commitment is a document issued by the guarantor or counter-guarantee or the guarantee-confirming party in the form of a Letter of Guarantee or a Guarantee Contract. Thus, a letter of bank guarantee is understood as a written commitment of the bank to the guarantee recipient that the bank will perform financial obligations on behalf of the guaranteed party when the guaranteed party fails to perform or not fulfilling the obligations committed to the guarantee recipient. In case the parties choose the form of counter-guarantee or guarantee confirmation, the letter of guarantee shall include the written commitment of the counter-guarantee issuing party to the guarantee, or of the guarantee-confirmation issuing party to the obligee.

When a guarantee obligation arises, the obligee must send a written request for the performance of the guarantee obligation, enclosed with the documents agreed upon in the guarantee commitment, to the guarantee-executing bank. The request for performance of guarantee obligations is considered valid when the bank receives it within the working time of the bank and within the valid guarantee commitment period. In case the request for performance of the guarantee obligation is sent in the form of a registered letter via the public postal network, the date the guarantor receives the request is the date of signing and receiving the registered letter.

Within 5 working days from the date the guarantor bank receives a valid written request for performance of the guarantee obligation, the guarantor shall be responsible for properly and fully performing the promised guarantee obligation for the with the guarantor. In case the guarantor bank refuses to perform the guarantee obligation, within 5 working days after receiving the request to perform the guarantee obligation, the bank must reply in writing clearly stating the reason for the refusal. In case of payment in foreign currency, credit institutions, foreign bank branches shall debit that foreign-currency sum to the mandatory lending account.

Credit institutions, or foreign bank branches, shall agree on the guarantee-issuing fee amount paid to customers. In case of a counter guarantee or guarantee confirmation, the guarantee-issuing fee amount shall be agreed upon by parties on the basis of the guarantee-issuing fee amount approved by the obligor. If the guarantee currency is foreign one, parties shall agree on collecting the guarantee-issuing fee by accepting that foreign currency or converting that foreign currency into Vietnam at the sell rate defined on the fee collection or fee collection notification date.

Disputes could arise from many situations, for example, there is a case of issuing a false letter of guarantee because an individual in the bank violates the law, or the bank officer signs a letter of guarantee without proper authorization from the legal representative of the bank, or letter of guarantee is in violation of form according to the regulation of state bank. In addition, if a conditional letter of bank guarantee is applicable, a dispute may arise from an understanding of whether or not the conditions for the guarantee have been met. In many cases, there might need to be a lawsuit to determine the conditions fulfilment of the guarantee and such might be lengthy and costly. Therefore, the parties involved in the guarantee transaction might need to consult a lawyer with expertise in banking disputes to check the legitimacy and validity of the letter of bank guarantee and the possibility to be guaranteed when the conditions are met.

ANT Lawyers – As a law firm in Vietnam will always follow up with authorities for legal update on matters relevant to banking and finance to update clients on regular basis.

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How to Resolve Disputes in Labour in Vietnam?

   

Both employees and employers can consult labour dispute lawyers in Vietnam to understand the labour law and protect their rights.

A labour dispute is one of the most common disputes in society, in particular it means a dispute over rights, obligations and interests among the parties during the establishment, execution or termination of labor relation; a dispute between the representative organizations of employees; a dispute over a relationship that is directly relevant to the labor relation.

In fact, labour disputes happen often, but there are many situations where employees often have little understanding of their rights, leading to disadvantages if the employer does not know or does not follow the law.

Therefore, identifying employment disputes is very important. For employees, learning about labor law is to know their rights. Employers need to understand labor laws to ensure compliance.

Labour disputes incurred during pandemic, questions needing answers?

For example, during the recent pandemic, many businesses faced difficulties in doing business in Vietnam and hence many common labour disputes arisen. For workers, a dispute could arise from not being paid on time. Other concerns are whether there is any violations that lead to the termination of the labor contract? Has the employer carried out restructuring procedures and notified state agencies according to the correct procedure before terminating the labor contract with the employee? Does the employer have an agreement with the employee before suspending the labor contract during the pandemic? When the business is not efficient, is the employer required to pay the 13th month salary to the employee?

What types of labour dispute you might be encountering?

At present, labour disputes are classified into different types based on the object who participated in the dispute: Labour disputes between the employee and the employer; labour between the employee and the organization that sends the employee to work overseas under a contract; labour dispute between the outsourced worker and the enterprise. Right-based or interest-based collective labour disputes between one or several representative organizations of employees and the employer or one or several representative organizations of employees.

How to settle labour dispute at court?

The labor dispute settlement process must follow the following principles:

Respect the parties’ autonomy through negotiation throughout the process of labor dispute settlement;

Prioritize labour dispute settlement through mediation and arbitration on the basis of respect for the rights and interests of the two disputing parties, and respect for the public interest of the society and conformity with the law;

The labour dispute shall be settled publicly, transparently, objectively, promptly, and lawfully;

Ensure the participation of the representatives of each party in the labour dispute settlement process;

Labour dispute settlement shall be initiated by a competent authority or person after it is requested by a disputing party or by another competent authority or person and is agreed by the disputing parties.

When a labour dispute arises, one party or parties may request a Labor Mediator; The Labor Arbitration Council or the People’s Court to settle the disputes.

Matter on time limit is an important matter that the parties should pay attention. The time limit to request a labor mediator to settle an individual labor dispute is 06 months from the date on which a party discovers the act of infringement of their lawful rights and interests.

For the form of dispute settlement through the Labor Arbitration Council, the time limit is 09 months from the date on which a party discovers the act of infringement of their lawful rights and interests. In case of requesting the Court to settle the labour dispute, the time limit is 01 year from the day on which a party discovers the act of infringement of their lawful rights and interests.

What labour dispute lawyers in Vietnam could help?

Many of the labour disputes could be resolved effectively at court hence engaging a labour dispute lawyers in Vietnam to file a lawsuit will help parties involved.

Please note, upon the expiration of the above-mentioned time limitation, the disputing parties will not have the right to request the competent authorities to resolve the dispute. In case the requester is able to prove that the aforementioned time limits cannot be complied with due to a force majeure event or unfortunate event, the duration of such event shall not be included in the time limit for requesting settlement of individual labour dispute.

ANT Lawyers, a law firm in Vietnam, always follow up the labour matters to update clients on regular basis.

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How to Start a Business in Vietnam?

     

In recent years, Vietnam has become an attractive destination for foreign investment thanks to its advantages of security, political stability, and favorable geographical position to trade with the world. This is both the connection center of the region and the gateway to penetrate the economies in the western region of the Indochina Peninsula. In addition, the Vietnam government has increasingly been offering more preferential policies to create favorable conditions for foreign investors to start doing business in Vietnam.

To start a business in Vietnam, investors first need to choose for themselves an appropriate type of business based on the number of capital contributors, the amount of capital contributed, and the business’s purse. According to the provisions of Vietnam law, foreign individuals and organizations can establish a limited liability company or a joint stock company or a partnership or a private enterprise.

The next issue that needs to be considered is the business line. In order for the company to be able to operate, the company must register the appropriate business lines, related to business activities. If the selected line of business does not require conditions, the enterprise can go into operation after the establishment of the company. This is considered non-conditional business area which most of company would do. However, if the investor chooses a conditional business line to do business, the enterprise must meet the necessary requirements, apply for a business license as prescribed, and then go into operation. This is considered conditional investment area where there are some restrictions being required license, minimum charter capital, foreign ownership ratio…

Investors also need to choose a location for their business, which is legally allowed to conduct business activities. The company address must be located in the territory of Vietnam, and comply with requirement corresponding to purpose of business i.e. company address can not be in an apartment building or a dormitory for living purposes only; factory location has to be at proper zone for industrial purpose…

In order to serve the management of the State and facilitate business activities, newly established businesses need to have their own name and this proper name must be unique, not be the same or similar to previously registered businesses. Enterprises are not allowed to use the names of functional agencies, state management agencies to name the company. The name of the business must include the type of company and proper name. To avoid duplication with other companies, businesses can use abbreviations or English names, but must ensure that the company name will not cause confusion, without adding prefixes, suffixes or cultural symbols in the name of the business.

The investors need to apply for an Investment Registration Certificate at a competent authority in Vietnam. This is a mandatory procedure for all projects that want to establish a new legal entity in Vietnam. The processing time for an investment certificate application is around 30 days depending on the specific project. After being granted an Investment Registration Certificate, foreign individuals and organizations need to prepare an application for an Enterprise Registration Certificate at the Department of Planning and Investment which would take around 7 days. Completing this procedure, the enterprise has the legal status according to the provisions of the Law on Enterprises of Vietnam.

From day one since commencing its operation, the company could by itself or hire professional to assist with monthly compliance service i.e., submit foreign labour reports, submit investment report, submit tax report, submit health and insurance reports to authorities to avoid encountering penalties.

ANT Lawyers – a law firm in Vietnam will always follow up with authorities for legal update on matters relevant to investment registration or doing business in Vietnam.

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When Labour Dispute over Bonus Issue Arise and How to Resolve?

    

Employment bonus promise could help drive the performance for the business but sometimes disputes arise because there is discrepancy in translating how performance is met in the eye of employer and employee.

According to the provisions the Labor Code, the bonus, also known as the “other supplement”, is one of the main contents of the Labor Contract. Specifically, bonus is understood as a sum of money paid by an employer to the employees on the basis of annual business results and the level of work performance of employees. When the dispute arises, the employer or the employee could consult with labour dispute lawyers in Vietnam to advise and handle the matter effectively.

Bonus regulations of each company must be decided and publicly announced by the employer at the workplace after consultation with the representative organization of the grassroots-level employees’ collective. However, there are companies that do not specify bonus regulations or companies with unclear bonus regulations referring to such generally as “based on capability”, or “based on work results” without referring to specific key performance indicator (KPI). Such regulations will easily cause labor disputes that each party would need to seek consultancy from labour dispute lawyers in Vietnam. In most of the case, the employee would face disadvantage because the employer will be the one whom make the final decision on whether or not the capability or work results are satisfied.

A labor dispute means a dispute over rights, obligations and interests among the parties during the establishment, execution or termination of labor relation; a dispute between the representative organizations of employees; a dispute over a relationship that is directly relevant to the labor relation. Labor disputes over bonuses can be individual labor disputes or collective labor disputes. The competence authority to settle labor disputes belongs to the Labor Mediator, the Labor Arbitration Council, and the People’s Court. Normally, individual labor disputes or collective labor disputes must go through the mediation procedure of the labor mediator before referring to the court to settle, unless otherwise provided for by law.

For individual disputes, in case the conciliation is unsuccessful or either party fails to implement the agreements in the minutes of successful conciliation or the settlement time limit expires but if the labour conciliator fails to conduct conciliation, each disputing party has the right to request a court or arbitration council for settlement.

For collective disputes over bonuses, in case the conciliation is unsuccessful or one of the two parties fails to implement the agreements in the minutes of successful conciliation, the parties have the right to request the President of the district-level People’s Committee to resolve the dispute. If the parties disagree with the decision of the President of the People’s Committee of the district or beyond the time limit but the President of the People’s Committee of the district does not settle, the parties have the right to request the Court to settle. In such situation, a litigation lawyer would be engaged to assist for productive result.

How labour dispute lawyers in Vietnam could help?

Labour dispute lawyers in Vietnam could help from the early stage to draft and review labour contract, labour regulations to be submitted and registered with authority. Once there are labour dispute potentially arisen, the labor dispute lawyers could assist with advice, negotiation for settlement. The last resort would be needing the labor dispute lawyers to assist in filing litigation petition at court for resolution.

ANT Lawyers, a law firm in Vietnam, always follow up the labour matters to update clients on regular basis.

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When Foreign Currency Usage not Forbidden in Vietnam?

       

Foreign currency is a form of foreign exchange, the currency of another country or the common currency currently used in international and regional payments are collectively referred to as foreign currency. Cash foreign currency includes banknotes and coins. Banking and finance lawyers are always asked if an organization could use foreign currency on contract or for conducting certain business transactions, in Vietnam or abroad.

In order to ensure convenience in conducting transactions in Vietnam, ensure the rights of the State Bank and limit smuggling crimes, Foreign Exchange Ordinance provided: “within the territory of Vietnam, usage of foreign currency is not allowed in most cases for example foreign currency are not allowed in agreements, in making payments. Further, foreign currency even is not allowed in listings, advertisements, quotation, pricing. These apply for both residents and non- residents except for cases permitted in accordance with regulation of the State bank of Vietnam.”

However, there are some special cases where the Government allows individuals and organizations to use foreign currency when conducting transactions in the Vietnamese territory. Vietnam State Bank issued instructions that stipulate that residents are allowed to contribute capital in foreign currency by transfer in order to perform foreign investment projects in Vietnam. Residents being entities with legal person status are allowed to conduct internal transfer of capital in foreign currency between their accounts with accounts of their dependent units that have no legal person status and vice versa.

Non-residents are allowed to transfer in foreign currency for other non-residents; are allowed to denote prices in contracts in foreign currency and payment of export goods and services in foreign currency by transfer for residents. For foreign investors in Vietnam, foreign investors may deposit or escrow deposit in foreign currency by transfer when participating in auctions in the following cases:

(i) Purchase of shares in equitized state-owned enterprises approved by the Prime Minister;

(ii) Purchase of shares or contributed capital by the State in state-owned enterprises or divestment state-owned enterprises approved by the Prime Minister;

(iii) Purchase of shares or contributed capital of a State-owned enterprise to invest in another enterprise for divestment approved by the Prime Minister.

In case of winning the auction, the foreign investor shall transfer investment capital in accordance with the provisions of law on foreign exchange management to pay for the value of buying shares or contributed capital. In case of unsuccessful auction, foreign investors are allowed to transfer overseas the deposit or deposit in foreign currency after deducting related expenses, if any.

Except for the cases prescribed by the State Bank, acts of using foreign currency while performing transactions in the territory of Vietnam will be sanctioned depending on the seriousness of the violation. Therefore, individuals and organizations should pay attention to avoid unfortunate risks that may occur.

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How Long Are Immigration Restrictions Applied?

         

Suspension of exit means a decision of competent authority in Vietnam to suspend a Vietnamese or a foreigner residing in Vietnam from leaving Vietnam for a certain period of time. In most cases, the person whom is subject to suspension of exit should be informed in advanced by the competent authority. Immigration lawyers in Vietnam could also assist the person subject to suspension of exit to work with authorities for clarification and understanding for better preparation or resolving the situation on immigration restriction based on specific case below explained.

For foreigner, according to Law on Entry, Exit, Transit and Residence of foreigners in Vietnam, a foreigner may be suspended from exit if he/she is currently the suspect, the accused, or the person with relevant obligations in a criminal case; a defendant or a person with relevant obligations in a civil case pertaining to business, employment, administration, marriage and familial affairs or has to implement a judgment or decision of the Court or a Competition Settlement Council. Foreigners may also be temporarily suspended from exit if his/her tax obligation is not fulfilled or he/she is obliged to implement a decision on penalties for administrative violations; or be temporarily suspended from exit for reasons of national defense and security.

The persons belonging to above cases may still be allowed to exit if the person serving a prison sentence is escorted abroad to provide evidence in accordance with the Law on Judicial assistance. The time limit for temporary suspension of exit for a foreigner residing in Vietnam is not more than 03 years and can be extended.

For Vietnamese citizens, cases of suspension of exit include:

Suspects and defendants; persons who are accused or filed for charge, later proved that they may have committed crimes thus must be prevented from escaping or destroying evidence as specified in Code of Criminal Procedure.

Persons subject to delayed imprisonment, persons suspended from imprisonment, persons on parole during probation period, persons subject to suspended sentence during probation period, persons executing community services during sentence enforcement period according to Law on Execution of Criminal Judgment.

Persons having obligations according to regulations and law on civil procedure if their obligations to government, agencies, organizations and individuals are proved to be involved in proceeding and their exit are proved to influence the proceeding, interests of government, legal rights and interests of agencies, organizations and individuals; persons subject to judgment execution.

Civil judgement debtors and legal representatives of agencies and organizations obliged to execute judgment and decisions according to regulations and law on enforvement of civil judgment in Vietnam if their exit is proved to influence interests of government, legal rights and interests of agencies, organizations and individuals; persons subject to judgment execution.

Tax payers, legal representatives of enterprises subject to enforcement of implementation of administrative decision on tax administration, Vietnamese making exit to reside overseas and Vietnamese residing overseas that have not satisfied tax liabilities according to regulations and law on tax administration before making exit.

Persons subject to enforcement and representatives of organizations subject to enforcement of implementation of decision on administrative sanctions and to be prevented from escaping.

Persons subject to inspection and verification, proved to have committed particularly serious violations and to be prevented from escaping.

Persons contracted from dangerous and infectious diseases and to be prevented from spreading the diseases throughout community unless allowed by foreign parties for entry.

Persons whose exit is identified by competent authorities to infringe national defense and security.

How immigration lawyers in Vietnam could help?

The duration of suspension of exit for Vietnamese citizens depends on each specific case, according to the provisions of the Criminal Procedure Code, the decision of the Minister of National Defense and the Ministry of Public Security. When the suspension period expires and is not extended further, Vietnamese citizens and foreigners can continue to leave the country when they wish. Or when the matters get complicated, the subject person could seek help from lawyers in Vietnam for advisory or represetation at Immigration Department Authority in Vietnam.

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How to Invest Through Acquisition – Advice from M&A Lawyers in Vietnam

    

With the international integration, more and more policies to attract foreign investment have been introduced by Vietnam government including the facilitation of M&A transaction. It has been proven efficient if the transaction get help from M&A lawyers in Vietnam but it is important the investors understand the ideas and process.

M&A or Direct Investment in Vietnam?

Besides the fact that the investor could invest through setting up a company in Vietnam, the investor could also enter Vietnam through making investment by buying shares in a company or acquire contributed capital in company operating in Vietnam which is also considered as merger and acquisition transaction.

Specifically, according to the provisions of the Law on Investment, foreign investor can invest in the form of capital contribution, share purchase, or acquisition of capital contributions from an economic organization. However, the investor must: satisfy market access conditions applied to foreign investors; ensure following national defense and security in accordance with the law; comply with regulations of the law on land and conditions for the receipt of land use rights and conditions for use of land on islands or border or coastal communes.

Unlike the case of investment in the establishment of an economic organization, the investment in the form of capital contribution, share purchase or purchase of contributed capital of an economic organization does not need to carry out investment registration procedures in Vietnam.

A foreign investor only shall follow procedures for registration of capital contribution or purchase of shares or stakes of a business organization prior to change of members or shareholders in one of the following cases:

(i) The purchase of capital contribution or shares increases the ownership ratio of the foreign investors in a company operating in the restricted investment business lines;

(ii) The capital contribution or purchase of shares or stakes results in a foreign investor or business organization specified in some points of the that cover the investors with investment over 50% of the charter capital of the business organization in the following cases: The holding of charter capital by the foreign investor is increased from less than or equal to 50% to over 50%; the holding of charter capital by the foreign investor is increased while such foreign investor is holding over 50% of the charter capital of the business organization.

(iii) The foreign investor that contributes capital, purchases shares or stakes of a business organization has a certificate of rights to use land on an island or in a border or coastal commune; in a coastal commune; in another area that affects national defense and security.

In addition to the above cases, the investor will carry out the procedures for changing shareholders or members in accordance with relevant laws when contributing capital, buying shares or buying contributed capital of economic organizations.

How risks could be minimized with the help of M&A Lawyers in Vietnam

Investing in a company in the form of capital contribution, share purchase, or capital contribution from economic organizations will help investors gain a number of benefits such as quick access to market, gaining customers’ trust, taking advantage of physical facilities, human resources, existing operating procedures, reducing the time to create a brand as well as reduce licensing procedures. However, investing in a company according to these methods also encounter some risks which the investors need to carry out strict legal due diligence by experience M&A lawyers in Vietnam, to check on the company’s compliance and validity of their licenses to mitigate risks. Further, the investor also needs to undertake financial due diligence and operational due diligence to safe guard the potential economic benefits.

Readmore:https://antlawyers.vn/library/how-to-invest-in-vietnam-through-ma.html

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Preferential import and export tariff according to EVFTA for the period 2020-2022

    

On September 18, 2020, the Government issued Decree No. 111/2020/ND-CP on Vietnam’s Preferential Export Tariffs and Special Preferential Import Tariffs to implement the Free Trade Agreement between The Socialist Republic of Vietnam and the European Union (EVFTA Agreement) for the period 2020-2022.

Accordingly, the Decree stipulates the Preferential Export Tariff, the Special Preferential Import Tariff of Vietnam to implement the EVFTA Agreement and the conditions for enjoying preferential export tax rates and special preferential import tax rates according to this Agreement.

The preferential export tariff specified in Appendix I to this Decree includes product code, description of goods, and preferential export tax rates for different stages when exporting to a territory under the EVFTA Agreement, including: European Union member territories; United Kingdom of Great Britain and Northern Ireland for each code.

Goods exported from Vietnam to which the preferential export tax rates are applied must satisfy the following conditions: to be imported into any territory specified in the EVFTA Agreement, including member territories of the European Union, United Kingdom of Great Britain and Northern Ireland; have transport documents (copy) showing the destination is the above territories; have the import customs declaration of the export consignment of Vietnamese origin imported into the aforesaid territories (the copy and translation in English or Vietnamese in case the language used on the declaration is not English).

Vietnam’s special preferential import tariff for the implementation of the EVFTA Agreement is specified in Appendix II to this Decree, including product code, description, and special preferential import tax rates according to stages are imported from the European Union member territory; United Kingdom of Great Britain and Northern Ireland; The Principality of Ando; The Republic of San Morocco and the Socialist Republic of Vietnam (Goods imported from non-tariff zones to the domestic market) for each product code.

Imported goods eligible for special preferential import tax rates under the EVFTA Agreement must satisfy the following conditions: in the Special Preferential Import Tariff specified in Appendix II to this Decree; be imported into Vietnam from the member territory of the European Union; United Kingdom of Great Britain and Northern Ireland; The Principality of Ando; Republic of San Mary; and the Socialist Republic of Vietnam (Goods imported from non-tariff zones to the domestic market); meeting the rules of origin of goods and having proof of origin in accordance with the provisions of the EVFTA Agreement.

The provisions of this Decree only apply to goods exported from Vietnam to the the United Kingdom of Great Britain and Northern Ireland and goods imported into Vietnam from the United Kingdom and Northern Ireland for the period from August 1, 2020, to the end of December 31, 2020.

This Decree takes effect from the date of signing.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have law firm in Hanoi, law firm in Ho Chi Minh City and law firm in Da Nang.

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How to Distinguish between Deposit and Advance Payment?

    

In commercial transactions, it is very common for one party to give the other party an amount of money before the contract being performed.

Should this amount be considered as deposit or advance payment?

Deposit is one of security measures for the performance of contract obligations. According to regulation of Civil Code 2015, deposit is an act whereby one party (hereinafter referred to as the depositor) gives to other party (hereinafter referred to as the depositary) a sum of money or precious metals, gemstones or other valuable things (hereinafter referred to as the deposited property) for a period of time as security for the entering into or performance of a contract.

Upon a contract being entered into or performed, any deposited property shall be returned to the depositor, or deducted from the amount of payment obligation. If the depositor refuses to enter into or perform the contract, the deposited property shall belong to the depositary. In case the depositary refuses to enter into or perform the contract, the depositary must return the deposited property and pay an amount equivalent to the value of the deposited property to the depositor, unless otherwise agreed.

It can be seen that the purpose of deposit is to ensure the entering into or performance of a contract. Due to the fact that its nature is a security measure for the performance of contract obligations, sanction is set in regulation of deposit in case one party refuses to perform the agreement.

In practice, the advance payment can be understood that the obligor pays the obligee a sum of money in advance and this amount is regarded as in-advance performance of a payment obligation. As the nature of the advance is not a security measure for the performance of contract obligations, there is no fine rising from the advance if one party refuses to perform the agreement. Further, when a contracting party gives to the other party a sum of money, which is not clearly identified by the parties as a deposit or an advance, such amount shall be considered an advance payment.

It is important to distinguish the difference between deposit and advance payment to avoid potential disputes in performance the contract or consult with dispute resolution lawyers at early stage of the dispute for proper actions.

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Receipt of Application for Anti-dumping Measures on Welding Materials From China, Thailand and Malaysia

    

On January 21th, 2021, Trade Remedies Authority of Vietnam (Investigating Authority) received Dossier from a company which is the representative of the domestic manufacturing (Requesting Party) requesting for the application of the anti-dumping measures on some types of welding materials originating from People’s Republic of China, Kingdom of Thailand and Malaysia.

On February 01st, 2021, Investigating Authority confirmed that Dossier was complete, valid according to regulations of law on trade remedies.

Within 45 days of the receipt of a complete, valid Dossier, the Investigating Authority shall examine the Dossier to submit to the Minister of Industry and Trade for consideration for conducting an investigation.

Contents of Dossier examination include: (i) Determine qualification of the legal representative of the domestic manufacturing of organization, individual that submitted the Dossier according to regulation of Law on Foreign Trade Management; (ii) Determine evidence on the dumping of imported goods that caused or threatened to cause significant injury to a domestic manufacturing or significantly prevent the formation of a domestic manufacturing.

Our international trade and competition lawyers at ANT Lawyers – a law firm in Vietnam will always follow the development from authorities to provide update to our clients.

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What Are Conditions for E-commerce Business in Vietnam?

     

E-commerce business in Vietnam is conditional business area

Currently, in the context of increasingly developing technology, online transactions are also taking place more often, quickly and conveniently, and the connection between buyers and sellers has become no longer a distance. But how to set up e-commerce business in Vietnam? E-commerce lawyer in Vietnam will share some ideas below on conditions to set up e-commerce business in Vietnam and other matters.

The number of enterprises doing their business in the field of e-commerce has increased significantly in recent years. Many foreign investors are also eyeing Vietnam for investment. The question is to how to set up e-commerce business in Vietnam taking advantage of the growing market and in the meantime recruiting technology talents from Vietnam for their e-commerce business which has the potential to tap on global market.

In Vietnam, e-commerce activity means conducting part or the whole of the process of commercial activity by electronic means connected to the Internet, mobile telecommunications network or other open networks.

The forms of organization of e-commerce activities includes:

Sales conducted thorough e-commerce website: It is an e-commerce website developed by traders, organizations or individuals by themselves to serve their commercial promotion, sales or service provision.

E-commerce service provision website: It is an e-commerce website developed by traders or organizations to provide an environment for other traders, organizations or individuals to conduct their commercial activities. The e-commerce service provision website includes: E-commerce trading floor; Online auction website; Online promotion website and other types of website as regulated by the Vietnam Ministry of Industry and Trade.

How to set up e-commerce business in Vietnam?

The Law on Investment in Vietnam stipulates that e-commerce business is one of the conditional business lines. Therefore, if an enterprise wishes to set up e-commerce company in Vietnam, register and conduct business activities in this field, it must meet the following conditions:

Traders, organizations and individuals wishing to set up sales e-commerce websites must be traders, organizations or individuals who have been granted personal tax identification numbers; Having websites with valid domain names and complying with regulations on management of information on the Internet and having notified the Ministry of Industry and Trade of the set-up of sales e-commerce websites.

In order to conduct business activities based on websites providing e-commerce services, traders and organizations need to be registered for business at a competent agency in accordance with law and have websites with valid domain names and complying with regulations on management of information on the Internet.

In addition, traders and organizations also need to have a service provision project which clearly states the following contents: (i) Model of organization of operations, including service provision, promotion and marketing both online and offline; (ii) Structure, utilities and main information sections on the service website; (iii) Rights and responsibilities of the trader or organization providing e-commerce services and service users.

Enterprises that wishes to do e-commerce business need to register to set up a website to provide e-commerce services and be certified by the Ministry of Industry and Trade to register in accordance with the law.

Further, the enterprises also have to apply for investment registration certificate and business registration certificate in Vietnam at the Department of Planning and Investment.

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How to Establish Company in Vietnam?

   

Foreign investors may invest in the form of 100% capital to establish company in Vietnam, being limited liability company, joint stock company, partnership company.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates. Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for establishing company in Vietnam shall comprise:

Registration/Request for issuance of Investment Certificate;

A report on financial capability of the investor;

Draft of the company’s charter;

List of members of company;

Copy of the people’s identity card, passport or other lawful personal certification, for individual members;

Copy of the establishment decision, business registration certificate or other equivalent document, for member organizations;

Copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives.

Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;

Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;

The joint-venture contract or Business Cooperation Contract (BCC);

Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days. The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project. Minimum capital, special licenses or other conditions might be required in certain investment projects.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.

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Whom is Exempted from Work Permit Since 2021?

    

On December 30, 2020, the Government issued Decree No. 152/2020/ND-CP regulating foreign workers working in Vietnam and recruiting and managing Vietnamese employees to work for the foreign employers in Vietnam.

In which, foreign workers in Vietnam are not required to be granted work permits include:

The employee is the owner or capital contributor of a limited liability company with a capital contribution of at least 3 billion VND; Chairman of the Board of Directors or a member of the Board of Directors of a joint stock company with a capital contribution of at least 3 billion VND;

Intra-corporate transferees within 11 service sectors in Vietnam’s service commitment schedule with the World Trade Organization, including: business services, communication services, construction services, distribution services, educational services, environmental services, financial services, health services, tourism services, recreational and cultural services, and transport services;

The person responsible for establishing a commercial presence;

The employee enters Vietnam to work as manager, executive, expert or technical worker for a working time of less than 30 days and not more than 3 times a year;

The employee who enters Vietnam for a period of less than 03 months to offer services;

The employee enters Vietnam for a period of less than 03 months to handle complicated incidents, technical or technological situations that affect or risk affecting production and business that Vietnamese experts and the foreign experts currently in Vietnam cannot handle it;

Foreign lawyer who has been granted a law practice license in Vietnam in accordance with the Law on Lawyers; The employee is licensed by the Ministry of Foreign Affairs to operate information and press in Vietnam in accordance with the law; The person certified by the Ministry of Education and Training to enter Vietnam for teaching and researching;

The employee enters Vietnam to provide professional and engineering consulting services or perform other tasks intended for research, formulation, appraisal, supervision, evaluation, management and execution of programs and projects using official development assistance (ODA) in accordance with regulations or agreement in international treaties on ODA signed between the competent authorities of Vietnam and foreign countries;

The employee is sent to Vietnam by competent foreign agency or organization to teach and research at international schools under the management of foreign diplomatic missions or the United Nations; establishment and organization established under the agreement which Vietnam has signed and acceded to;

The employee enters Vietnam to implement an international agreement to which a central or provincial authority is a signatory as per the law;

Person obtains an official passport to work for a regulatory agency, political organization, or socio-political organization;

Relatives of members of foreign representative missions in Vietnam;

In cases where the provisions of an international treaty to which the Socialist Republic of Vietnam is a signatory;

Head of representative office, project or is responsible for the activities of international organizations, foreign non-governmental organizations in Vietnam;

The employee is a volunteer;

The student studies at a foreign school or training institution which has a probation agreement with an agency, organization or enterprise in Vietnam; or a probationer or apprentice on a Vietnam sea-going ship;

The employee is a foreigner who marries a Vietnamese and lives in the territory of Vietnam.

This Decree takes effect from February 15, 2021.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.

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What Conditions to File Divorce Petition?

     

Divorce means termination of the husband and wife relation under a court’s legally effective judgment or decision. Divorce lawyers in Vietnam will help advise if there are legal grounds to file for divorce in Vietnam or not.

What is the condition of divorce?

Firstly, we need to know about subjects being entitled to request divorce settlement.

That is husband or wife or both having the right to request divorce settlement from a Court; a parent or other relatives has the right to request divorce settlement from a Court when the spouse is unable to perceive and control his/her acts due to a mental disease or another disease and is concurrently a victim of domestic violence caused by his/her spouse which seriously harms his/her life, health or spirit. In addition, a husband has no right to request a divorce when his wife is pregnant, gives birth or is nursing an under-12-month child.

The divorce is divided into two cases, those are divorce by mutual consent and divorce at one party’s request.

Conditions of divorce by mutual consent:

If both wife and husband request a divorce and both parties are really willing to divorce and have agreed upon the property division, looking after, raising, care for and education of their children on the basis of ensuring the legitimate interests of the wife and children, the court shall settle the divorce a court shall recognize the divorce by mutual consent; if the spouses fail to reach agreement or have reached an agreement which fails to ensure the legitimate interests of the wife and children, the court shall settle the divorce.

Divorce at one party’ s request:

If a spouse requests a divorce and the conciliation at a court fails, the court shall permit the divorce if there are grounds to believe that a spouse commits domestic violence or seriously infringes of the rights and obligations of the husband or wife seriously deteriorates the marriage and makes their common life no longer impossible and the marriage purposes unachievable.

When the spouse of a person who is declared missing by a court requests a divorce, the court shall permit the divorce. For a parent or other relatives’ request for a divorce mentioned above, a court shall permit the divorce if there are grounds to believe that the domestic violence committed by one spouse seriously harms the life, health or spirit of the other.

Domestic violence acts is one of the important factors mentioned in unilateral divorce. Domestic violence acts and “serious condition, common life no longer impossible and the marriage purposes unachievable” are defined in Vietnam laws.

For divorce involving foreigner or oversea Vietnamese, an important condition is permanent residence.

First of all, marriage and family relation involving foreign elements means the marriage and family relation in which at least one partner is a foreigner or an overseas Vietnamese or in which partners are Vietnamese citizens but the bases for establishing, changing or terminating that relation are governed by a foreign law, or that relation arises abroad or the property related to that relation is located abroad.

Two foreigners shall be settled a divorce in Vietnamese court if both of them reside permanently in Vietnam. However this is very rare.

In case a partner being a Vietnamese citizen does not permanently reside in Vietnam at the time of request for divorce, the divorce shall be settled in accordance with the law of the country where the husband and wife permanently co-reside; if they do not have a place of permanent co-residence, the Vietnamese law could be applied. It is suggested to consult with divorce lawyers in Vietnam in the court proceeding to best protect the rights and interest especially involving property division and child custody.

How divorce lawyers in Vietnam could help?

In conclusion, divorce lawyers in Vietnam could help advise on the conditions to meet when filing for divorce in Vietnam. There are situations under Vietnam laws that it is not possible to file for divorce in Vietnam. For instance, two foreigners living in Vietnam might not be able to file for divorce in Vietnam because they do not permanently reside in Vietnam. There are situations that the wife is is pregnant, gives birth or is nursing an under-12-month child. Sometimes, it is not possible to locate the husband or wife because they go missing or disconnect or hide, hence it could be troublesome for the court to serve the divorce petition request. In such cases, the divorce lawyers in Vietnam could help advise and suggest solutions.

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