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Distribution Company in Vietnam

Distribution Company in Vietnam. The establishment of Company (NewCo) requires an Investment Certificate from the licensing authority.
Depending on the location of the company, the licensing authority may be the provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).

In case Foreign Investor shall invest capital to setup the NewCo under the form of Limited Liability Company with two members upwards.

Upon establishment, the NewCo shall conduct whole sale distribution and installment of Equipments in Vietnam. The legal procedure will be follows:
Executive Summary
Under Vietnam Law on Investment, in order to obtain an Investment Certificate for establishment of a foreign invested company, Foreign Investor is required to propose an Investment Project.
Investment Project is understood as a collection of  proposals  for  the  expenditure  of  medium  and long-term capital in order to carry out an investment activity in a specific geographical area and for a specified duration”.  Then, relevant competent authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine whether to grant Investment Certificate or not.
Assessment of the legitimacy of an Investment Project shall be based on legal framework of Vietnam, including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the NewCo shall register its head-office.
Meanwhile, a conclusion regarding to the feasibility of an Investment Project shall be based on assessment on the financial ability of the Foreign Investor, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.
Thus, procedure for establishment of a foreign invested company in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2005 is only 20 -45 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to valuate the investment project.
Specific comments
Under Vietnam’s WTO Commitments regarding to importation, exportation right and trading right (hereinafter referred to as “Distribution right”), from the year of 2009, restriction of foreign ownership in a foreign invested company conducting the distribution right in Vietnam shall be totally removed. Thus, it is possible for Foreign Investor to set up the NewCo in Vietnam for trading Equipment under the form of Wholly Foreign Invested Company.
Procedures for setting up a foreign invested company in Vietnam to provide wholesale distribution services in Vietnam
In general, distribution sector is considered as a conditional investment sector in Vietnam, the application for establishment of the NewCo must undergo the investment evaluation process. Thus, before the Licensing Competent Authorities must consult Ministry of Planning and Investment, Ministry of Finance and MOIT to determine whether to grant the investment certificate to Foreign Investor to setup the NewCo or not.
In this process, Foreign Investor must propose a sufficient explanation regarding to its financial ability, methods to conduct its distribution rights, its satisfaction of requirements for guaranteed technical equipment which meet the standards prescribed in the regulations of the MOIT; warehouse for goods which meets the requirements for reservation of distributed goods quality, environment protection and fire and explosion prevention; and distribution channel.

For ease of reference, hereinafter is an overview roadmap of this procedure as follows:
Step 1 Step 2 Step 3 Step 4 Step 5
Preparation of application dossier Submission of application dossier to Provincial  Department of Planning and Investment Comments from relevant Ministries Provincial People’s Committee grant the  Investment Certificate Publication on News Paper

Time frame
Step 1 5-7 working days from receipt of necessary information and documents from you
Step 2 02-03 working days from receipt of signed and sealed documents from you
Step 3 1-2 months from submission of dossier to Provincial Licensing Authority
Step 4 5-10 working days from receipt of comments from relevant competent authorities
Step 5 05 working days from receipt of the Investment Certificate
We believe that SBLaw is well-positioned to assist Foreign Investor in obtaining the Investment Certificate for the establishment of the NewCo in Vietnam for following basis:
  • Highly skilled and experienced consultants and lawyers with high ability to assist client regarding to approach business goals in Vietnam.
  • Experience of SBLaw in assisting client for obtaining license for distribution right in Vietnam.
  • SBLaw has successfully assisted a large number of Foreign Investor to obtain License for Distribution Services in Vietnam from the year of 2009.
Client Reference of SBLaw:
  • Acting for a Japanese Investor (Individual Investor) to obtain license for trading and leasing construction equipment in Vietnam. This includes preparing application dossier, co-ordinating with competent authority to follow the case, responding to actions of competent authority;
  • Acting for Malaysian and Singaporean Investors to obtain license for trading wood floor and pharmaceutical and lab equipments. This includes preparing application dossier, liaising with competent authority to follow the case, updating status of application dossier for client;
  • Acting for an Italian Investors to obtain license for importation, exportation and distribution of alcohol in Vietnam. This includes preparing application dossier, liaising with competent authority to follow the case, updating status of application dossier for client.
Scope of works
Our services in this regard will include:
Description of Scope of Work Note
  1. Preparation of the application documents :
  • Notifying Foreign Investor of the required documents;
  • Drafting application documents required for submission purposes including application, technical explanatory statement, financial capacity confirmation, board resolutions, power of attorney;
  • Liaising with Foreign Investor to discuss the draft application documents;
  • Amending the application documents based on Foreign Investor’s comments;
  • Finalizing and translating the final versions of the application documents into Vietnamese for execution.
Assuming that information and feedback from Foreign Investor are provided to us in a timely manner, the first draft documents will be available within two to three weeks upon receipt of Foreign Investor’s instruction.
  1. Assistance in arranging the translation and certification
We can assist Foreign Investor in arranging translation and certification after the documents have been duly legalized in English.
  1.  NewCo Charter
  •     Drafting a template NewCo Charter in accordance with Vietnamese laws;
  •    Finalizing the draft NewCo Charter following Foreign Investor’s Comments;
  •    Translating the final version of the NewCo Charter into Vietnamese for execution purposes; and
    • Submitting the application dossier to the licensing authorities.
The first draft NewCo Charter will be available within two weeks upon receipt of Foreign Investor’s instructions.
  1. Licensing procedures:
  • Monitoring and following up with the relevant authorities on the approval process;
  • Update on the developments and additional requirements, if any;
  • Prepare additional documents and submit to the licensing authority (if required); and
  • Obtaining the investment certificate.
The timeframe will depend on the scale and scope of business of the NewCo
Upon issuance of the investment certificate, the NewCo is required to carry out immediate administrative procedures.  Our services include:
  • Application for the seal of the NewCo;
  • Obtaining a tax code; and
  • Public announcement arrangement.
These procedures for the post licensing procedures usually take about two weeks to complete.

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