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. The following will be discussing about how to close a business in Vietnam.

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?

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 regulators 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.

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 to continue doing business in Vietnam.

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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How to Start a Business in Vietnam as a Foreigner?

 Why 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.

How to Start a business in Vietnam?

What to consider to start a 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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Why employee background check is important?

 Risk of wrong hiring without employee background check in Vietnam

It has been increasingly important for employer to understand about the employee through employee background check in Vietnam to reduce potential hiring risks.

The risk of wrong hiring could be accessing the wrong talent, exposure to criminal activities, legal issues, reputation matters that impact the business, workforce or customers.

It is understandable that if applicants are dishonest in how they obtained a job, they may be dishonest once they have the job. This could not be found out during the interview.

Hence, it is important to consider investment in background screening service to minimize the risks associated with workplace violence, lost customers, negligent hiring lawsuits, identity theft and fraud, embezzlement, data breaches, and high turnover.

How to undertake employee background check in Vietnam?

The pre-employment screening by verification and validation of the information and documents provided by the potential candidates could cover the following matters.

Government-issued identification document. The candidate will provide one or more identification (ID) documents i.e. a photo ID card or passport. The employee background screening firm is asked to verify that the ID document provided by the candidate is valid.

Criminal record check. This information cannot be provided by the candidate. This record check will likely be obtained directly from Provincial Department of Justice, and possibly other local or national law enforcement organizations. With the authorization of the application, such criminal record could be obtain by background check company.

Employment history. The candidate will provide the name and location for his or her previous employers for a number of years. The background screening firm is asked to verify that the candidate actually worked for the previous employers listed.

Education history. The candidate will provide a copy of the highest degree or certificate of completion issued by the educational institution i.e. university, industrial training academy. The background check service company is asked to verify that the degree, certificate was actually issued by the institution to the candidate. The candidate may be asked to provide official transcripts from the educational institution in lieu of, or in addition to, the copy of a degree, certification in order to assist in the verification process.

Professional accreditation. If a candidate claims to have a professional accreditation or certificate, the candidate should also provide a copy of this to verify.

Managerial position. This information, a search of government records cannot be provided by the candidate. This record check will be obtained directly from Business Registration Office by employee background check service.

Risk management consulting company helps employee background check in Vietnam

If a person passes a background check, it does not mean such hiring would not encounter issues in the future but it is important to have as much information about applicants being verified to warn the risks if found before making hiring decisions to reduce the potential risks to the employer and its workforce, customers.

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Potential risk of online transaction in Vietnam and its consequences

 The 4.0 Industrial Revolution has developed significantly, which results in the transformation and breakthrough of all areas of the globe. Besides, the Internet and social network has got more popular and become an indispensable part of modern life. Online business, therefore, is formed and conducted the most frequently on social networking platforms. In the process of doing online business on this platform, many potential risks arise and depending on the situation, the people taking part in the transaction might need to involve the business consultant or risk management consultant to assist proving advice or consultancy service to address the matters.

First and foremost, it is very difficult and complicated to determine the identity of the subjects partaking in the social networking platforms in general and conducting business activities on these platforms in particular. Unlike e-commerce platforms which register operation with authorities, which require the sellers to verify their information before doing business, the social network environment allows anyone to participate in without revealing their true identities exposed. User will have an account that may or may not provide their true information after only a few basic registration procedures. As a result, many people have taken advantage of this feature of social networks to commit illegal acts in business activities. There are instances in Vietnam for fraud to appropriate property on a social network which the offender using an account on a popular social network with a fake name, using other people’s photos as his avatar. Next, he bought a fake ID card and used it to set up some bank accounts to start committing fraud. Although he did not have products for sale, but he still posted ads with pictures of selling products at cheap prices on his social network account. If customers wanted to buy, he asked them to transfer money first and promised to send the products to them by post soon after. However, when receiving the money from the customer, he did not send the goods and temporarily locked his account. Beside fraudulent activities, seller’s information is not checked or confirmed, allowing unscrupulous people to readily impersonate others for profit. It is not unusual for prominent business professionals or influencers to be faked on social networking platforms. This action jeopardizes the honor and reputation of those who are exploited while also affecting a large number of legitimate business people. Thus, the fact that social networks do not require business entities to verify their identities, despite helping conduct business procedures quickly and conveniently, causes many problems mentioned before, directly affecting the right to conduct business, benefit customers and stakeholders.

Secondly, no authorities have the possibility to guarantee absolutely the quality of items traded on social networks. The goods listed for sale are extremely diverse in quantity, type and design. Each business subject can sell hundreds of products per day and there are many business subjects on one social networking platform. Therefore, governmental agencies are unable to oversee and manage the origin and quality of each product and service. Many of goods for sales are prohibited or barred from trading. At the same time, sellers can sell fake goods, counterfeit, provide poor-quality ones or sell unknown-origin ones to customers in order to maximize profits. The most serious consequence of trading in unqualified goods is affecting the health of customers.

Thirdly, although Vietnamlaw imposes taxs on business subjects, it is difficult to collect taxes from organizations and individuals conducting business on social networks. That reduces state revenue and creates an unfavorable competitive climate for other sorts of enterprises. The reason is that business on social networks is based on technology, and it is easy to modify and delete information online, so it creates difficulties in identifying and verifying the number of business people and capturing transactions. This situation can be characterized as unfair competition, which is upsetting and unstable for the economy.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Background Check Service in Vietnam

 Why need the background check service in Vietnam?

Vietnam is a developing countries where opportunities are coupled with risks. Risks in Vietnam could appear in different forms i.e. risks in doing business with untrustworthy partners or incapable partners, risks in employing the wrong people or people with criminal record, risks in buying goods from scammers…Hence for the significant transactions, many companies hire professional to assist with background check service in Vietnam

Vietnam has been strongly attracting direct investment capital from foreign investors or indirect investment through merger and acquisition or cross-border transactions i.e. buying and selling of goods. Although Vietnam is working on improving on the level of transparency, it is advisable that foreign investors and traders take effort to learn about their partners before cooperating with them. In other words, it is important to understand an individual or enterprise before joining venture with them in Vietnam so that the investors may reduce the minimum risks that may occur as well as evaluating the possibility of cooperation in the future.

With the development of internet, the world is much more connected. Obviously, business could be done much easier with just of click. But, there are many incidents which scammers happen to be in Vietnam to use internet and lure foreigners to buy goods or make investment. More cases have been reported during and after Covid pandemic because the practice of using social media grow while the need for face to face meeting reduce. People could be more relaxing to do business without visiting site, meeting partners than before. This is where the scammers take advantage.

If the investors or traders ignore this step of due diligence of partners, they may take heavy consequences. It may be a loss of money, time, and reputation.

Many investors investing in Vietnam for the first time or traders new to Vietnam use survey results from third parties, that is, the professional companies specializing in the investigation of market information, partners assessment, employ background check.

What matters in background check service in Vietnam?

To learn about the new market, it requires understanding of cultures, business practices, languages. Each country is different. Vietnam is different. Not many people from different background could pick up strange behaviours, and red-flags. If the investors or traders conduct the investigations themselves, the results may be inaccurate and not objective.

Further the investors or traders can save time as well as money to focus on other professional activities.

With a team of experienced professionals, they are business minded people, people with skills in desktop research and human research, the professional companies specializing in background check service in Vietnam could conduct market research, information research through having access to market intelligence, people intelligence to meet requests from the investors or traders.

Do not let the lessons to be learnt the hard way!

Therefore, if you are going to invest in Vietnam, we recommend you to conduct a thorough background check service in Vietnam.

Research for records of enterprises or record of individuals in Vietnam;

Research for the reputation of the company or individual who shall be your business partners in Vietnam;

Research for the history of public information about the company or individual.

Employee Background Check in Vietnam

It might be obvious to professional but it could be not so obvious to the investors and traders whom are eager to see some too good to be true opportunities. Trust in business is important but it could and should be backed up by facts. If details do not match, be alerted and use the background check service in Vietnam to safely invest and do business in Vietnam.

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Lawyers in Ho Chi Minh City

 With the increasingly strong socio-economic development, the role of law in society is increasingly emphasized, especially in Ho Chi Minh City – the economic locomotive of Vietnam, a dynamic city.

Therefore, the demand for reputable and quality legal services from individuals, organizations and businesses is always high.

General requirements of our lawyers in Ho Chi Minh City

Our lawyers in Ho Chi Minh City, like in many other places, typically hold certain qualifications and credentials that enable them to provide legal services to clients.

In Vietnam, lawyers are regulated by the Vietnam Ministry of Justice, and they must meet specific requirements to practice law. Here are the qualifications of lawyers in Ho Chi Minh City:

Legal Education: Lawyers in Ho Chi Minh City are required to have completed a bachelor’s degree in law from a recognized university or institution. This education equips them with a foundational understanding of legal principles, theories, and practices.

Training and Internship: After obtaining their law degree, aspiring lawyers must undergo a period of practical training, often as an intern at a law firm or a legal department of a company. This practical experience helps them develop the skills needed for the legal profession.

Bar Exam: As part of the qualification process, lawyers in Vietnam, including those lawyers in Ho Chi Minh City, must pass the bar examination administered by the Ministry of Justice. The bar exam evaluates their knowledge of various legal subjects and their ability to apply legal principles to real-world scenarios.

Bar Association Membership: Once they pass the bar exam, lawyers become members of the Vietnam Bar Federation or the bar association of their respective city. Membership in the bar association is mandatory for practicing law in Vietnam. Once became a lawyer in Vietnam, the lawyer could practise anywhere in Vietnam.

Continuing Education: Like in many jurisdictions, lawyers in Ho Chi Minh City are encouraged to engage in continuing legal education to stay updated on changes in laws and regulations. This helps them provide accurate and effective legal advice to clients.

Benefits that ANT Lawyers in Ho Chi Minh City offers to clients

Local Expertise and Knowledge: Having a presence in Ho Chi Minh City, which is a major business hub in Vietnam, ANT Lawyers possesses an in-depth understanding of local laws, regulations, and business practices. This local knowledge is invaluable for clients entering the Vietnamese market.

Legal and Cultural Insight: ANT Lawyers can bridge the gap between foreign clients and the local business environment by providing insights into cultural norms, business etiquette, and legal intricacies. This helps clients avoid misunderstandings and navigate cultural challenges.

Market Entry Assistance: The firm can guide clients through the process of market entry, assisting with legal entity selection, business registration, permits, and licenses. This support ensures that clients establish a solid legal foundation for their business operations in Vietnam.

Contract Drafting and Negotiation: ANT Lawyers can assist clients in drafting contracts and agreements that comply with Vietnamese laws while protecting the interests of foreign businesses. The firm’s expertise in contract negotiation can help clients secure favorable terms with local partners.

Compliance and Regulatory Guidance: Vietnam’s regulatory landscape can be complex, especially for foreign businesses. ANT Lawyers can advise clients on compliance with industry-specific regulations, licensing requirements, and other legal obligations.

Intellectual Property Protection: Protecting intellectual property is crucial for businesses. ANT Lawyers can help clients register trademarks, copyrights, and patents in Vietnam, ensuring their intellectual property rights are safeguarded. ANT Lawyers holds IP licensing certificate to practise IP laws. Not all law firms can practise IP laws.

Dispute Resolution and Litigation: In case of disputes, ANT Lawyers’ legal team can represent clients in negotiation, arbitration, or litigation proceedings. Their knowledge of local laws and dispute resolution methods is instrumental in achieving favorable outcomes.

Government Relations: ANT Lawyers can facilitate communication with relevant government agencies, helping clients navigate administrative procedures, obtain necessary approvals, and address regulatory issues.

Network and Connections: ANT Lawyers’ local network and connections can help clients establish valuable contacts in the Vietnamese business community, facilitating partnerships, collaborations, and business growth.

In conclusion, lawyers in Ho Chi Minh City office of ANT Lawyers bring a wealth of legal expertise and local knowledge to assist foreign clients entering Vietnam for business. By leveraging their understanding of local laws, culture, and business practices, these lawyers contribute to clients’ success in the dynamic Vietnamese market.

About us: ANT Lawyers in Ho Chi Minh City

We are a Vietnam law firm with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services.

We help clients to overcome cultural barriers and achieve their strategic and financial results, and in the meantime ensure best interest protection, risk minimization, and regulatory compliance doing business in Vietnam.

Our people are members of Vietnam Bar Federation, Hanoi Bar Association, Vietnam law firm member of Prae Legal, a global law firm network spanning 5 continents and 150 countries, World Mediation Organization, an international organization headquartered in Berlin that promote and foster mediation as an alternative dispute resolution.

We advise clients in the following areas:

Commercial

Employment

Foreign Investment

Infrastructure Energy & Projects

Intellectual Property

International Trade and Taxes

Mergers and Acquisitions

Real Estate and Construction

Mergers and Acquisitions

Securities and Capital Markets

Shipping and Maritime

Telecommunications, Media & Technology

Civil Matters

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Set up company in Vietnam and comply

 Complying with the law after the investors set up company in Vietnam is of utmost importance for several key reasons.

Firstly, legal compliance ensures that your company operates within the boundaries of the law, avoiding any potential legal repercussions or penalties. Vietnam has specific regulations and requirements that businesses must adhere to, such as tax obligations, labour laws, environmental regulations, licensing requirements, and corporate governance standards. By following these regulations, you demonstrate your commitment to ethical business practices, maintain a positive reputation, and reduce the risk of legal disputes or regulatory actions.

Secondly, legal compliance fosters a stable and sustainable business environment. Adhering to the law helps create a level playing field for all market participants, promoting fair competition and ensuring that businesses operate on a fair and equitable basis. Compliance also enhances transparency and accountability, which can attract potential investors, partners, and customers who value companies with strong ethical practices. By establishing a reputation for legal compliance, your company is more likely to build long-term trust and maintain fruitful relationships with stakeholders.

Furthermore, compliance with the law safeguards the rights and interests of your employees. Labour laws in Vietnam provide essential protections for workers, such as fair wages, working hours, occupational safety, and social insurance. By complying with these regulations, you create a safe and equitable working environment, fostering employee satisfaction, loyalty, and productivity. Prioritizing legal compliance in Vietnam also minimizes the risk of labour disputes, ensuring harmonious and productive relationships with your workforce.

Lastly, legal compliance contributes to the overall economic development and stability of Vietnam. When businesses operate in accordance with the law, they contribute to a robust and sustainable economy. Compliance supports government initiatives, such as tax revenue generation, social welfare programs, and infrastructure development, which benefit the country as a whole. By fulfilling your legal obligations, you actively participate in the growth and progress of Vietnam’s business ecosystem.

What are steps to follow to set up company in Vietnam and comply with the laws?

With the promulgation of the enterprise law, the business setting up process has been adjusted with many favorable regulations for investors. However, in order for a business to start up and comply in operation, the following basic steps should be noted:

The first step is to set up company in Vietnam. To take this step, the investor first needs to determine the type of business to choose to establish and provide the business name and expected information. Accordingly, the composition of the enterprise establishment dossier will be prepared according to regulations and submitted at the Business Registration Office, the Department of Planning and Investment of the place where it is expected to be headquartered. After submitting a valid application, the enterprise will be granted an enterprise registration certificate and announced the registration contents on the National Business Registration Portal.

The second step is to publish the contents of business registration. After being granted an enterprise registration certificate, an enterprise must make a public announcement on the National Business Registration Portal.

In the third step, the enterprise conducts stamp engraving. Enterprises can request to make a seal from the seal making agent. Accordingly, the enterprise actively decides on the type, quantity, form and content of the seal and is solely responsible for the use of its legal entity seal.

Fourth step is that to open a bank account in Vietnam. Currently, businesses can choose a bank to open an account for their business, to open an account, the bank requires an application form issued by the bank, a seal sample, the company’s charter, and a certificate. Business registration and related documents are required by different bank.

The fifth step is to register the tax declaration form in Vietnam. Accordingly, enterprises register for the use of e-invoices and notify the use of e-invoices to their tax authorities. Enterprises need to contact the invoice supplier to order the printing of value-added invoice books and must register self-printed invoices with tax authorities.

In the sixth step, the enterprise needs to conduct labor registration in Vietnam. Enterprises register with the Department of Labor, War Invalids and Social Affairs to declare the use of labor. Within 30 days from the date of commencement of operation, the employer must register the employer to the Labor Department (according to the prescribed form). In addition, enterprises should note that the relationship between the employer and the employee is regulated by the Labor Code and specified in the labor contract.

Seventh step is to register for social insurance in Vietnam. Enterprises register with the Social Insurance Agency to pay health insurance and social insurance for employees. Employers must fill in all information according to the form provided by social insurance, including: full name, date of birth, salary (recorded in labor contract), number of social insurance book (for employees who have been issued with a book), a certified copy of the company’s business registration certificate and a copy of each labor contract.

How a consulting firm in Vietnam could help set up company in Vietnam and stay complied?

It can be seen that in order for the investors to set up company in Vietnam, it requires investors to carry out a number of procedures and comply with many different regulations of tax, banking, labour, insurance… Therefore, besides learning about legal regulations and businesses can seek the support of professional consulting firm to set up company in Vietnam with expertise and experience in the field of business establishment to implement the process quickly and effectively.

Compliance with the law after the investors set up company in Vietnam is essential for maintaining a strong legal standing, fostering a fair and transparent business environment, protecting the rights of employees, and contributing to the sustainable development of the country’s economy. By upholding legal compliance, your company can thrive and build a solid foundation for long-term success in Vietnam while doing business in Vietnam.

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Set up Representative Office in Vietnam

 ANT Consulting offers service to set up representative office in Vietnam for foreign traders whom wish to learn about Vietnam markets and make investment

A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam.

Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services), but the representative Office is permitted to

To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;

To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;

To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;

To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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M&A Due Diligence and Execution in Vietnam

 Merger and Acquisition (M&A) activities in Vietnam have been rapidly increasing over the the years in value and number of transactions when Vietnam’s opening policies to attract foreign investments loosen up. The M&A due diligence and execution are therefore important steps to ensure a successful transaction.

For foreign investors wishing to take advantage with a certain level of risks in Vietnam where the cost of labour are cheap, mid-income populations are growing, and the need of capital are high, it is important to find the right target companies to invest. Challenges might arise when approaching the right local companies, locating the right decision makers within the local companies, encountering differences in languages and cultures.

It is important that the local consultants with the understanding of the business and legal environment in Vietnam where the local companies are incorporated could be involved at an initial stage to monitor and minimize the risks, improve the effectiveness of the M&A process in Vietnam.

The Vietnam consulting company could also provide corporate intelligence and insights of the Vietnam targeted companies to have an overall evaluation of the compliance of the Vietnam companies, possible risks involved and growth potential. Financial forensic services might also be needed before other further steps. Then, the following will need to be considered when undertaking the M&A in Vietnam.

Due diligence

M&A due diligence in Vietnam is a vital step because it determines whether the M&A will succeed or not. There are some aspects that must be carefully considered:

Financial reports

Review all the financial reports of the Vietnam targeted companies within 3 to 5 years to assess the current and future financial situation. These data needs to be audited by a reputable independent auditing company. Evaluating financial situation targets on many aspects such as the reasonable connection between the financial statements, operating and sales margin of the business in relation to the average in that industry. These data allow valuation real value of the target business.

The cash flow

Checking the dates on invoices showing that whether targeted businesses have paid promptly or not. Term of payment may vary from industry to industry, but generally 30 to 60 days. If the money order is paid after the billing date period of 90 days or more, it means that the business owner may be struggling with cash flow. Finding out that if the clients’ inability to pay bills or not is very important.

The staff

Determining the importance of staff for the success of the business considering work habits of employees, working time of key employees; ability to remain working after a change of the owner occurs; the incentives necessary to keep key employees; ability to easily replace key employees; the relationship of key employees with the company’s customers.

The customers

This is the most important assets of the Vietnam targeted company. Make sure that clients are as the other tangible assets of the business. Evaluating customers on some primary aspects: the relationship with the current owner of the business, customer history with business relations and the contribution of each customer to the profits of the company; assessing that customer will leave or stay when the business having new owners; customer services and dispute of the company, the relationship of the former owner of the business with the community or the industry.

Business location

This is especially important if the targeted company is a retail company. Does the importance of business location play a crucial role for the success of the company? How is the location of the company you plan to acquire? Is there sufficient parking lot for customers? How does the company depend on sales in the region? How is the prospects of the business in this area? Does this place have been in the process of rapid change from new residential district office building or not? Has business location become more or less desirable because of contemplated changes in surrounding area or not?

Competitors

Considering this aspect in order to define the capacity of the targeted business in the industry, the following questions would help: who are its competitor and what are their strategies? Does the price war happen frequently? How has the competitive environment changed?

Business registration, permits and zoning

It’s necessary to make sure that business registration certificate and other legal documents can be easily given to the buyer. It would be better to acknowledge the procedures to transfer these documents and its fee with the help of local management consulting company in Vietnam. If the targeted company is a joint-stocks company, what is the procedure for the business registration? Can foreigners own the company 100% according to Vietnam laws? Conditional investments in Vietnam need to be considered carefully by lawyers in Vietnam to avoid mishaps.

The company image

Company image can be a significant asset and that cannot be assessed in the financial report. There are many intangible factors to consider when evaluating a company: how to serve customers, how employees answer the phone and the level of support the community or the industry.

Negotiate the price

It is important to understand the purpose and motivation of both parties. The sellers’ motivation are formed and affected by value drivers. There are two main value drivers which are approach value and avoidance value. Approach value is our purpose such as prosperity and avoidance value is the negative effect that we need to eliminate. Normally, the buyers try to find out what are the reasons why the owner wish to sell the companies. This will help the buyers plan a reasonable strategy beforehand.

A research analyzes the general aspects that the buyers seeking for via conducting surveys companies’ owner who have sold or transformed their enterprises. The research results are focus on profit maximization (79%), minimization of tax payable (73%), protection of viability of the company (71%)…(Source: Acquisition Marketplace Review, 2007).

The motivation of the buyer in most cases is similar to the motivation of the seller, which is to maximize profits, expand markets, increase revenue, operating areas, areas of activity, minimize taxes…

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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Granting Investment Registration Certificate in Vietnam

 As Vietnam integrates further into the global supply chain, foreigners are more and more encouraged to invest in Vietnam in many areas for pursuing profit. The foreign direct investment of the foreigners is required to be registered at Vietnam state authority to protect the rights of the investor. The investors could then establish company in Vietnam and apply investment certificate in Vietnam

According to the Law on Investment, investment projects of foreign investors; projects of setting up a economic organization in which foreign investors holding 51% of charter capital or more or the majority of the general partners are foreigners in a partnership; projects of BCC contract between domestic investors and foreign investors or between domestic investors and economic organization which foreign investors holding 51% of charter capital or more or the majority of the general partners are foreigners shall need to conduct the procedure of applying investment registration certificate as regulations of law.

Preparation of dossier to apply investment certificate in Vietnam

-A written request for permission for execution of the investment project;

-A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization).

-An investment proposal that specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, requests for investment incentives, assessment of socio-economic effects of the project;

-Copies of any of the following documents: financial statements of the last two years of the investor; commitment of the parent company to provide financial support; commitment of a financial institutions to provide financial support; guarantee for investor’s financial capacity; description of investor’s financial capacity;

-Demand for land use; if the project does not use land allocated, leased out by the State, or is not permitted by the State to change land purposes, then a copy of the lease agreement or other documents certifying that the investor has the right to use the premises to execute the project shall be submitted;

-Explanation for application of technologies to the project which specifies: names of technologies, origins, technology process diagram, primary specifications, conditions of machinery, equipment and primary technological line;

-The business cooperation contract (BCC) (if the project is executed under a BCC).

Order and procedure to apply investment certificate in Vietnam

-Investors submit the dossier at Department of Planning and Investment (or management of economic zones, high-tech zones);

-Within 15 working days from the date of receipt of a complete and valid dossier, the competent authority shall grant the investment registration certificate in Vietnam for investors. In practice, the time duration would be lengthened due to the time for preparation of documents from investor, getting them notarized, legalized, authenticated and translated into Vietnamese before being accepted in Vietnam.

The actual time for processing paper at the State authority would also last longer in practice when the State authority evaluate the project plan of the investor to ensure that its investment purpose is achievable economically and in accordance to the regulations of Vietnam. It is advised that the client engage professional law firms in Vietnam to assist with advisory and to apply investment certificate in Vietnam for doing business in Vietnam.

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When Will Foreigner Need Criminal Background Check in Vietnam?

 Many countries including Vietnam have regulations in place to ensure the safety and security of its citizens and visitors. One such measure is the requirement for individuals to provide a criminal background check in Vietnam certain situations. In this article, we will explore when and why foreigners may need a criminal background check in Vietnam, the application process, and the significance of this essential document.

Criminal Background Checks in Vietnam for Visa and Immigration Purposes

For many foreigners, the first step to embarking on their journey to Vietnam involves securing a visa or residency permit. Depending on the type of visa they are applying for, certain categories may necessitate a criminal background check. Vietnam authorities, particularly those handling immigration matters, often require this document to assess the applicant’s suitability for entry and stay in the country.

Work permits, business visas, and long-term residence permits are common examples of instances where a criminal background check is typically requested. By reviewing the applicant’s criminal history, Vietnamese officials aim to identify any potential security risks, ensuring the safety and well-being of the Vietnamese population.

Employment Opportunities and Criminal Background Checks in Vietnam

The flourishing Vietnamese economy attracts a many foreign professionals seeking employment opportunities. However, certain industries, such as education, healthcare, finance, and security, impose strict requirements to maintain the integrity of their workforce. As such, employers in these sectors may request a criminal background check in Vietnam from applicants.

Providing a criminal background check in Vietnam demonstrates transparency and trustworthiness, making it easier for employers to make informed hiring decisions.

Adoption and Criminal Background Checks

Adoption is a heartwarming journey that brings joy to families around the world. For foreigners hoping to adopt a child from Vietnam, a criminal background check is typically required. Adoption authorities in Vietnam use this document to assess the prospective adoptive parents’ eligibility and suitability to provide a nurturing and secure environment for the child.

This measure is vital to safeguard the well-being of the adopted child and to prevent potential risks that could arise from a history of criminal activity. A clean criminal record assures the authorities that the adoptive parents are prepared to provide a loving and supportive home.

Licensing and Certification in Regulated Sectors

Certain professions and activities in Vietnam are subject to stringent regulations to ensure public safety and security. In such cases, foreigners may be required to provide a criminal background check as part of the licensing or certification process.

Professions in healthcare, education, law enforcement, security services, and other regulated sectors must adhere to strict standards, and a clean criminal record is often considered a prerequisite for eligibility.

Significance of a Criminal Background Check in Vietnam

The importance of a criminal background check cannot be overstated. It plays a crucial role in safeguarding the well-being and security of the Vietnamese population and visitors alike. By requiring individuals to provide this document, organizations and authorities ensure that individuals with a history of criminal activities are not granted entry or allowed to participate in activities that could put others at risk.

For foreign individuals, having a clean criminal record can open doors to exciting opportunities in Vietnam, whether for employment, education, volunteer work, or personal endeavors like marriage or adoption. A criminal background check demonstrates an individual’s commitment to following the law and adhering to the highest standards of conduct.

Navigating the requirements for a criminal background check as a foreigner in Vietnam is an essential aspect of ensuring a smooth and successful stay in the country. Whether for visa and immigration purposes, employment, adoption, or other activities, understanding when and why this document is needed can help individuals prepare and comply with the regulations.

How a law firm in Vietnam could help with criminal background check in Vietnam

Our lawyers in Vietnam constantly follow up with changes of law to provide the client with update for better decision making process.

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 doing business in Vietnam.

ANT lawyers has attorneys in Hanoi, Ho Chi Minh and Danang.

Nguồn: https://lawyersindanangvietnam.blogspot.com/2023/08/when-will-foreigner-need-criminal.html

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Six benefits for investors to set up company in Hanoi

 Along with the trend of integration in the world, Vietnam is considered a country with rapid and strong growth, in which, industrialization and modernization are focused on developing a uniform set and achieve high performance. Hanoi and Ho Chi Minh City are considered the two cities and dynamic development in Vietnam. The investors would choose to invest and set up company in Hanoi because of the benefits the city could offer.

First, the skilled labor force for hiring

Hanoi is considered a capital with a longstanding historical developed tradition. The population is heavily crowded, reaching about 7 million after 4 times of adjusting the administrative boundaries in 2014.

Ha Noi has become one of the 17 largest cities in the world. In addition, with favorable conditions, Hanoi is considered an attractive city for labor, especially qualified and highly skilled workforce. A large workforce will provide adequate resources for industries requiring a large amount of labor force.

Second, the pace of economic development

Over the years, the economy of Hanoi has continued to grow and controlled inflation. In addition, GDP in the province is estimated at 8.8% and revenue is estimated at 130.000 billion, with 103% of the mathematics.

Besides, administrative reform, improvement on the investment environment, business environment, policies to remove difficulties for enterprises often deploy, which made PAR index of cities rise 2 levels compared with 2012 and No. 5 of the 63 provinces and cities nationwide. Thus, with the stable and strong economic development, Hanoi is a city that brings stability for businesses to invest and develop.

Third, infrastructure to encourage investors to set up company in Hanoi

With the aim of developing Hanoi based on criteria of synchronous and modern infrastructure, leadership of Hanoi has attempted to offer policies to promote infrastructure construction of the city in order that Hanoi will become more modern, in which, the traffic system in Hanoi must be built and upgraded. This is considered particularly advantage, because the synchronous development of infrastructure will bring to the development of economy of the city.

Fourth, administrative and tax policies

With attractive policies for investment, Hanoi has implemented policies solving administrative procedures with one door policy. This policy is seen as a new step forward the people of Hanoi in general and businesses having demand to invest in Hanoi in particular.

With this open policy, the procedures for establishing businesses, dissolution, business transformation become quickly and easily than ever before, creat favorable conditions for the development of business and resolve administrative procedures. In addition, in order to facilitate business development for businesses, Hanoi has many policies to reduce taxes in order to create favorable conditions for development of new business with low capital.

Fifth, geographic location

Hanoi offers convenient location, with synchronous traffic system, a northern – southern railway, highway 1A, along with the expanded domestic and international routes, it is considered a city with the most convenient trade location in Southeast Asia and the gateway to the East Sea of Laos and other countries.

Sixth, broad market

With the population of 7 million, belonging to one of the 17 cities with the largest population in the world, Hanoi is considered a city which has the largest consumer goods market in the country. Abundant work force, along with the large number of people from suburbs, strong demand for consumer products, services lead to favorable conditions for businesses in production and consumption of consumer products and services.

It can be said that Hanoi is considered to be an attractive destination for investment. It is important that the client also consider other matters including regulatory, political environment before making decision.

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What Criminal Violations in Stock Exchange in Vietnam?

 Along with the increasingly diversified securities activities, the criminal violations in the stock market are also becoming more and more sophisticated and complex. The securities lawyer in Vietnam is sharing some opinions on the practice of criminal violations in stock exchange in Vietnam to avoid.

Although in Vietnam, violations and crimes committed in the securities sector still account for a small percentage compared to other fields, but these white collar crimes have directly negatively affected trading activities in the market, in particular eroding investors’ confidence, and causing the stock market distortion.

The criminal violations in the stock market could hinder the efficient functioning of the stock market which is a component of a free-market economy, where enterprises raise funds and investors invest and trade. Vietnam is a developing economy and it is getting more serious on prosecuting this crime due to the large scale negative impacts to the financial market.

There are four violations in the securities sector that are defined as crimes, which are: Provision of false information or concealment of information in securities activities; Use of internal information for trading securities; Manipulation of securities market and Forging documents in offering or listing profile as follows:

Provide false information

The law in Vietnam charges person who deliberately provides false information or conceals information in the activities of offering, listing, trading securities, market organization, registration, depositing, clearing or paying for securities. The fine for such activities will be from VND 100,000,000 to VND 2,000,000,000 or up to 02 years’ community sentence or 03 months – 5 years’ imprisonment. Punishments incurred by a corporate legal entity that commits the offenses shall be fined from VND 500,000,000 to VND 5,000,000,000; be banned from operating in certain fields or raising capital for 01 – 03 years.

How insider trading in Vietnam is treated?

Insider trading is also considered a crime in Vietnam but its seriousness has not been emphasized strongly enough as compared with other countries with developed financial market.

Over the 20 years since the stock market in Vietnam has been established, insider traders have not been found or charged yet although the law states that any person who has information about a public company or public fund which has not been published and could remarkably affect securities price of that public company or public fund but and uses such information to deal in securities or discloses it or provides it for another person for trading securities shall be liable to a fine from VND 500,000,000 to VND 2,000,000,000 or face a penalty of 07 months – 03 years’ imprisonment. Punishments incurred by a corporate legal entity that commits the offenses shall be fined from VND 1,000,000,000 to VND 10,000,000,000.

For some reasons, in Vietnam, it has been disputed that there are challenges to prove the crime in the stock market that make the practice of investigating and charging insider trading crime difficult.

Manipulation of stock market in Vietnam

Manipulation of stock market could be in the forms of fraudsters using one or more security accounts linked to each others, to set buy or sell orders in significant volume that create unusual and fake supply and demand, to lure other small investors in great quantity to make buy and sell decisions and the fraudster later benefit by exiting their shares at high price.

Or the fraudster could use pump and dump scheme to manipulate the stock market by spreading misleading information that create a buying frenzy of the stocks to “pump” prices and later “dump” their shares at inflated price.

The the fine for the individual committing the crime is ranging from VND 500,000,000 to VND 4,000,000,000 or a penalty of 06 months – 07 years’ imprisonment; the penalty for the legal entity committing the crime is a fine ranging from VND 2,000,000,000 to VND 10,000,000,000; can be permanently shut down or be banned from operating in certain fields or raising capital for 01 – 03 years depending on the severity of the violation. Recently these criminal activities have been most popular in Vietnam and a number or cases have been prosecuted.

Forging documents

Forging documents in offering or listing profile criminal is a stock market crime in Vietnam. The law states that any person who forges documents of the offering or listing profile shall be liable to a fine of from VND 500,000,000 to VND 2,000,000,000 or face a penalty of 06 months – 07 years’ imprisonment. In addition, the offender might also be liable to a fine of from VND 50,000,000 to VND 250,000,000, be prohibited from holding certain positions because of such criminal record in Vietnam or doing certain works in related fields for 01 – 05 years.

Securities lawyer in Vietnam to distinguish signs of criminal behaviour or administrative violations

There are also disputes among law makers, legal experts and lawyers in Vietnam on whether there are criminal violations or not; or wherether there are administrative violations, or economic or civil violations for acts that could have signs of criminal behaviours. These kinds of arguments are important to help the society to find balance and defend justice in the development of economy and stabilization of the financial market in Vietnam.

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How To Conduct Legal Due Diligence for M&A in Vietnam?

 Mergers and Acquisitions (M&A) has become popular in Vietnam as the country develops and more investors are eager to invest and gain control of the business enough to engage in, decide important business matters through partial or full ownership of an enterprise. As experience of M&A law firms in Vietnam, a successful M&A mean the parties achieve their financial and commercial goals (increasing capital, raising management capacity, branding, etc) and ensuring safety and restraint the risk at the lowest level. The legal due diligence undertaken by law firms in Vietnam to help address the concerns.

The Importance of Legal Due Diligence of Enterprise in M&A activities

Legal due diligence of enterprises focuses on full and detailed assessment of legal issues relating to the legal entity, capital contribution status, shareholder status, legal rights and obligations. From the investigation information, the parties can anticipate legal risks, assess opportunities to come up with alternatives. In addition, legal assessments help parties evaluate the reliability of their counterparts as well as understand their advantages and constraints for the negotiation process.

What Legal Due Diligence in M&A Activities Entail?

Evaluate the factors related to the legal status and capacity of the target enterprise: Review the legitimacy of the establishment, operation, possession of enterprise; ensure that the enterprise is not subject to procedures for dissolution or bankruptcy and compliance with the law of the enterprise in the course of operation. The information to be checked includes: dossiers, certificate of enterprise establishment, operation licenses, practice certificates, professional liability insurance, company charter, agreement between the company owner on rights of shareholders, capital contributors, minutes of meetings, member/shareholder register, certificate of capital contribution.

Evaluate the factors related to the business and financial activities of the target enterprise: Review the system of customers and partners of the enterprise; the documents on economic contracts (with customers, suppliers, etc); dossier of investment, construction, land, project; information on guarantee, mortgage (if any), debt and credit agreement, M&A, financial leasing contract, exclusive contract, franchise, etc, in terms of value, legality, validity, progress to evaluate legal risks in the future. Review the financial statements on the accuracy of the financial status of the business.

Verify the factors related to labor: Review labor contracts, labor agreements, internal labor regulations to determine the enterprise’s financial obligations to employees, compliance Labor law and reception of labor after the purchase or sale.

Verify the factors related to intellectual property: Review intellectual property rights of enterprises including: trademarks, trade names, industrial designs, layout designs, business secrets, etc; the property has granted the patent/license. Review matters of infringement of intellectual property rights of other organizations, individuals or legal persons in order to anticipate the risks of being sued or claiming damages.

In addition, in an M&A deal, the acquirer should ensure that participation in capital contribution or acquisition of the target enterprise is permitted, the form of M&A implementation is in accordance with the law and the M&A deal was approved by the competent authority of each party. After that, the factors related to M&A transaction procedures and constraints and restrictions of law (if any) must be evaluated.

How M&A Law Firms in Vietnam Could Help?

M&A law firms in Vietnam play a crucial role in helping investors undertake due diligence in the country. Due diligence is a comprehensive process that potential investors go through to assess the risks and opportunities associated with an investment or acquisition. M&A law firms in Vietnam, with their understanding of law, business environment, and cultures, can provide valuable assistance in the following ways:

Legal Expertise: M&A law firm in Vietnam have a deep understanding of Vietnam laws and regulations governing mergers, acquisitions, and foreign investments. They can ensure that the investor complies with all relevant legal requirements, identify potential legal risks, and suggest strategies to mitigate them.

Identifying Risks: Vietnam’s business environment can be complex and dynamic, and there may be various hidden risks associated with an investment or acquisition. M&A law firms in Vietnam can thoroughly investigate the target company’s legal and financial records to identify potential legal liabilities, contractual obligations, and pending litigations that might impact the investor’s decision.

Cultural Understanding: Understanding the local culture is crucial for successful business transactions in Vietnam. M&A law firms in Vietnam are familiar with the Vietnamese culture can help bridge the gap between the investor and the target company, facilitating effective communication and negotiations.

Transaction Structure: M&A law firms in Vietnam can assist in determining the most suitable transaction structure based on the investor’s objectives and the target company’s characteristics. They can recommend options such as asset acquisitions, stock purchases, joint ventures, or other investment structures that align with the investor’s goals.

Deal Negotiation and Drafting: Lawyers with M&A experience can help negotiate the terms of the deal and draft the necessary legal documents, including the letter of intent, memorandum of understanding, and the final purchase agreement. They ensure that the investor’s interests are protected and that all relevant details are properly documented.

Regulatory Approvals: Vietnam has specific rules and regulations concerning foreign investments, and certain acquisitions may require approval from government authorities. M&A law firms in Vietnam can guide investors through the regulatory approval process, ensuring that all necessary permits and licenses are obtained.

Tax Implications: M&A transactions can have significant tax implications. M&A law firms in Vietnam can advise investors on the tax implications of the deal and help structure the transaction in a tax-efficient manner.

Post-Deal Integration: After the acquisition, M&A law firms in Vietnam can assist with post-merger integration, helping the investor navigate any legal issues that may arise during the integration process.

In summary, M&A law firms in Vietnam are essential for investors undertaking due diligence as they provide a comprehensive understanding of the legal landscape, navigate cultural differences, identify risks, and ensure compliance with local regulations, contributing to the overall success of the investment or acquisition.

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 while doing business in Vietnam. ANT lawyers, a law firm in Vietnam has attorneys in Hanoi, Ho Chi Minh and Danang.

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