How to set up a joint venture in VN

VGP – Foreign enterprises have to obey regulations on legal capital and other spheres of business if they want to establish a joint venture with Vietnamese partners.

April 19, 2010 8:41 AM GMT+7

Illustration photo

Question: (A Germany-headquartered transportation company): We want to set up a joint venture with a Vietnamese partner, operating in trade and export. What does Việt Nam require for legal capital, rate of equity, criteria of asset valuation?

Answer: (Lawyer NHQuang’s Office, B23 Trung Hòa–Nhân Chính Villa Complex, Thanh Xuân District, Hà Nội)

1. Legal capital for joint-venture enterprises

Under Item 7, Article 4 of the Law on Enterprises, “legal capital means the minimum level of capital as stipulated by law to form an enterprise.”

The law of Việt Nam only requires the legal capital in some fields, namely banking and credit, real estates, insurance and gold trading.

If doing business in trade and export, it is not necessary for your joint-venture to meet the condition of legal capital.

2. Highest capital contribution of foreign partner in joint-ventures

The rate of foreign capital contribution in a joint-venture depends on the field of business. Accordingly, if your joint-venture operates in the area of trade and export, it is supposed to engage in distribution services and thus the foreign partner is free from equity limitations in the joint-venture since January 1, 2009 on.

However, joint-ventures are not permitted to distribute the following products: tobacco, publications, video products, precious metals and stones, rice, sugar, cement, clinker, paper, steel, liquor and fertilizers./.