Setting up a foreign owned capital social enterprise in Vietnam

Setting up a foreign owned capital social enterprise in Vietnam

Social enterprise in Vietnam is a type of business that can attract foreign investment according to the provisions of the Law on investment of Vietnam. Currently, some kinds of organizations such as social funds or charity funds only apply to founders who are Vietnamese individuals and organizations only, so the organization as social enterprise is the best alternative for foreign investment in Vietnam.

The procedure for setting up a foreign owned capital social enterprise is similar to the procedure for setting up a normal foreign own capital enterprise in Vietnam, including the following steps:

1. To apply for an investment registration certificate for a new investment project in accordance with the Law on Investment. In case there is already an investment project that has been granted an investment certificate, the investor can carry out the procedures for transferring the capital contribution or investment project in accordance with the provisions of the investment law.
2. Register a foreign own capital social enterprise in accordance with the Law on Enterprises.

1. Application files for investment registration certificate to set up a foreign owned capital social enterprise:

a) An application form for execution of the investment project in standard form;
b) A document concerning the legal status of the investor;
c) Document(s) proving the financial capacity of the investor including at least one of the following documents: the investor’s financial statements for the last two years; commitment of a parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for the investor’s financial capacity; other document proving the investor’s financial capacity;
d) Proposal for the investment project including the following main contents: investor or method of investor selection, investment objectives, investment scale, investment capital and plan for raising capital, location, duration and schedule of the investment project, information about the current use of land in the location of the project and proposed demand for land use (if any), demand for labor, proposal for investment incentives, impact and socio – economic efficiency of the project and preliminary assessment of environmental impact (if any) in accordance with the law on environment protection.
If the law on construction requires formulation of a pre-feasibility study report, the investor is entitled to submit the pre-feasibility study report instead of a proposal for the investment project;
dd) If the project does not require the State to allocate or lease out land or to permit land repurposing, a copy of the document regarding the land use rights or other document identifying the right to use the location for execution of the investment project is required to be submitted;
e) Contents of the explanation for the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology in accordance with the Law on Technology Transfer;
g) The business cooperation contract if the investment project is executed under a business cooperation contract;
h) Other documents relating to the investment project, and requirements on the eligibility and capacity of the investor in accordance with law (if any).

2 Application files  for registration of a foreign owned capital social enterprise in Vietnam.

Social enterprise, it looks like ordinary business, include the following types:
1) Single member limited liability company.
2) Limited liability company with two or more members.
3) Joint Stock Company

Depending on the type of business, the application files for registration of a social enterprise will have documents required corresponding to each type of business. In addition, registration to a social enterprise will requires a commitment to social environment goals, in which:
a. Describe the social and environmental issues that the enterprise wishes to solve through its business activities,
b. Describe the way, the business method that the business intends to conduct, such as: what is the product or service, where does the revenue come from? Can economic, social and environmental indicators (qualitative/quantitative) be expected to be achieved? Name the group of beneficiaries. Explain why your business activities contribute to solving social and environmental problems as described in item a above.
c. Time limit for carrying out activities aimed at solving social and environmental issues: Having a specific time limit or no time limit
d. The level of annual profit retained by the enterprise for reinvestment for the registered social and environmental objectives (the enterprise must determine the annual retained profit level from 51% to 100% of the total annual profit of the enterprise). enterprises under Clause 1, Article 10 of the Law on Enterprises).

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