Venturing Together: Establishing a Joint Venture Company in Vietnam

I. Joint venture

A joint venture (JV) is a business entity formed by two or more parties, often characterized by common ownership, common profits and risks, and common governance. Most joint ventures are incorporated, although some, such as in the oil and gas industry, are "unincorporated" joint ventures that mimic a legal entity. Key elements of the joint venture design include:
number of parties
the geographical scope, products, technologies and value chains in which the joint venture will operate
party contributions
form of structure (each country has specific options, for example in the US the main options are C corporation or LLC/partnership structure)

Valuation of the initial contribution and division of assets between the parties
economic arrangements, post-transaction (e.g., is a joint venture intended to generate joint profits rather than operating as a cost-sharing or production-sharing enterprise; whether it is a for-profit entity , do the parties share profits in proportion to the economic agreement? capital gains, or the other way around?)
administration and control
Talent/staffing model (whether the venture has its own paid employees or a second employee from the parent company)
contractual agreement with the parent company regarding input, output or services
Withdrawal and development agreements? According to Vietnamese law, a joint venture company can be established in the form of a limited liability company or a joint stock company (if there are more than 3 investors/parties). Each party is liable to the company to the extent that it contributes to the company's share capital.
As a joint venture company with a legal entity under the laws of the State of Vietnam, established and operating from the date of issuance of the Investment Registration Certificate and the Business Registration Certificate.
Every year, many investors come to Vietnam to establish joint ventures. However, most of them do not understand the legal procedures of this country, leading to problems. Therefore, Vietnam National Law wants to help you easily complete these complex legal procedures. When you contact Vietnam National Law Firm, you will be consulted by professional lawyers on all aspects related to the joint venture. After that, the company will represent you to complete all procedures according to state regulations.

II. PROCEDURES

To set up a foreign business in Ho Chi Minh City, you must have an investment certificate issued by the Department of Planning and Investment of Ho Chi Minh City and approved by the People's Committee of Ho Chi Minh City. After that, the Vietnam National Law Consultancy Association will advise and guide you to carry out the following procedures:
Step 1: Prepare the necessary documents
The Vietnam National Law Consultancy Association will send you a list of documents you need to provide (follow the list below). During the delivery process, if you have any questions, please contact us via email and phone so that we can advise you directly on these procedures.
Step 2: Complete the relevant documents.
After receiving the documents you provide, the Vietnam National Law Consultancy Company will complete the necessary documents.
Step 3: Proceed to submit the complete application for you to check and sign carefully. Step 4: On behalf of customers, submit documents and finalize until receiving investment certificate and business registration certificate.

III. REQUIRED DOCUMENTS

1. Documents proving the legal source of the investor

1.1. For business investors

→ Copy of company license (or any equivalent document) (These documents must be consular legalized)

→ Financial statements (audited) (These documents must be consular legalized)

→ Audited company accounts (These documents must be consular legalized)

→ Company Charter / Company Association Act (These documents must be consular legalized)

→ Certified copy of the representative's passport.
Note: These documents from abroad must be consular legalized at the consulate and translated into Vietnam.
1.2. If the investor is an individual:

→ Certified copy of investor's passport. → Audited company accounts (These documents must be consular legalized)

Note: These documents from abroad must be legalized at the consulate and translated into Vietnam.

2. Investor capacity profile

In addition to legal documents, the investor's capacity profile is essential to demonstrate the investor's ability to complete these transactions. However, there is no universal portfolio format and you must submit them to us for review before use.
Please send some import and export contracts between the company and customers along with related documents. In your business application, we want to let the Vietnamese government know that your company has business experience. Therefore, your project will be easily accepted.
Note: These documents from abroad must be consular legalized at the consulate and translated into Vietnam.

3. Documents proving the company headquarters and project implementation location

Legal documents on real estate, company headquarters and project location.

IV. Q&A

1. What is a joint venture company, and why consider it as a business structure in Vietnam?

• A joint venture company in Vietnam is a business entity formed by two or more parties, typically a foreign investor and a local Vietnamese partner, to collaborate in a specific business venture. Joint ventures are common in Vietnam as they allow foreign investors to leverage the local partner's knowledge, experience, and resources while complying with certain regulatory requirements.

2. What are the key steps to establish a joint venture company in Vietnam?

To establish a joint venture company in Vietnam, follow these key steps:

a. Market Research: Conduct thorough market research to identify potential local partners and opportunities in your target industry.

b. Choose a Local Partner: Identify and select a reputable local partner who aligns with your business goals and can provide the required expertise and resources.

c. Negotiate Terms: Negotiate the terms of the joint venture agreement, including capital contributions, profit-sharing, management roles, and exit strategies.

d. Register the Business: Register the joint venture company with the Vietnamese government authorities. This involves obtaining the necessary licenses and permits.

e. Capital Contribution: Contribute the agreed-upon capital to the joint venture according to the terms of the agreement.

f. Business Plan: Develop a comprehensive business plan that outlines your objectives, operations, and financial projections.

g. Compliance: Ensure compliance with Vietnamese laws and regulations, including tax and employment laws.

h. Banking and Accounts: Open a local bank account for the joint venture and establish accounting and financial reporting systems.

i. Operations: Commence business operations according to your plan.

3. What are some common challenges and considerations in setting up a joint venture in Vietnam?

Common challenges and considerations when establishing a joint venture in Vietnam include:

a. Regulatory Compliance: Navigate complex regulations and legal requirements, which may change over time.

b. Cultural Differences: Understand and manage cultural differences and communication challenges between foreign and local partners.

c. Intellectual Property: Protect intellectual property and confidential information in the joint venture.

d. Language Barrier: Address language barriers, as many local partners may not be fluent in English.

e. Risk Assessment: Conduct a thorough risk assessment to understand potential challenges and develop contingency plans.

f. Exit Strategy: Plan for the possibility of dissolving the joint venture or exiting the business gracefully if needed.

4. What are the benefits of establishing a joint venture in Vietnam?

Establishing a joint venture in Vietnam offers several benefits, including:

a. Local Expertise: Access to the local partner's knowledge, connections, and understanding of the Vietnamese market.

b. Compliance: Easier compliance with local regulations and ownership restrictions.

c. Risk Sharing: Shared financial and operational risks with the local partner.

d. Market Entry: Faster market entry and reduced market entry costs compared to wholly foreign-owned businesses.

e. Government Incentives: Access to government incentives and preferential treatment available to joint ventures in certain industries.

f. Cultural Insights: Better understanding of local customs, business practices, and consumer preferences.

g. Potential Expansion: Potential for future expansion and growth in the Vietnamese market.

It's essential to conduct due diligence, seek legal advice, and carefully negotiate the terms of the joint venture agreement to ensure a successful and mutually beneficial partnership.