Establishing a Subsidiary in Vietnam: A Comprehensive Guide with Legal Basis

Establishing a subsidiary is a strategic decision for businesses seeking to expand operations, enter new markets, and optimize profits. In Vietnam, the legal framework governing the establishment and operation of subsidiaries is outlined in the Enterprise Law 2020 and its implementing decrees. This guide, provided by NT International Law Firm, dives into the legal aspects of establishing a subsidiary in Vietnam, offering valuable insights and guidance for entrepreneurs.

Establishing a Subsidiary in Vietnam: A Comprehensive Guide with Legal Basis

What is a Subsidiary?

The Enterprise Law 2020 does not provide a specific definition of a subsidiary. However, it can be understood as a legal entity under the control and ownership of a parent company. Subsidiaries operate independently, yet the parent company retains significant control and decision-making power.

Legal Basis for Establishing a Subsidiary:

Article 195 of the Enterprise Law 2020 defines a parent company as one that meets any of the following criteria:

• Owns more than 50% of the charter capital or total common shares of the subsidiary.
• Holds the right to appoint a majority or all members of the subsidiary’s Board of Directors, Director, or General Director.
• Possesses the authority to amend and supplement the subsidiary’s Charter.

It is important to note that subsidiaries are not allowed to invest in their parent company or participate in cross-ownership with other subsidiaries of the same parent.

Benefits of Establishing a Subsidiary:

• Expansion: Subsidiaries enable businesses to expand their reach and enter new markets, tap into untapped resources, and broaden their customer base.
• Risk Management: Establishing a subsidiary can help manage business risks by separating assets and liabilities.
• Tax Optimization: Subsidiaries can offer tax benefits depending on their location and structure.
• Focus: Businesses can focus on core activities while the subsidiary handles specific operations or projects.

Documents and Procedures:

The documents required for establishing a subsidiary depend on the chosen business type. However, some essential documents include:

• Application for Business Registration: This form initiates the legal process.
• Company Rules: This document outlines the internal governance structure and operational procedures of the subsidiary.
• Copies of relevant documents: These vary depending on the business type and may include licenses, permits, and certifications.

The procedures for establishing a subsidiary are outlined in Decree 01/2021/ND-CP. They involve:

1. Preparing necessary documents.
2. Submitting the application for business registration to the Business Registration Office.
3. Paying registration fees and charges.
4. Waiting for approval from the Business Registration Office.
5. Obtaining the Business Registration Certificate.

Legal Considerations:

• Compliance with Relevant Laws: Businesses must adhere to various legal regulations, including tax, finance, labor, and environmental laws.
• Company Type Selection: Choosing the appropriate company type (e.g., limited liability company, joint stock company) is crucial for compliance and tax purposes.
• Legal Documentation: All necessary legal documents, including contracts, agreements, and financial reports, must be prepared and maintained.
• Organizational Structure: Establishing a well-defined organizational structure ensures efficient operations and clear decision-making.
• Adapting to Changing Regulations: Businesses must remain updated on changing legal regulations and adjust their operations accordingly.

Seeking Legal Support:

Navigating the legal complexities of establishing a subsidiary can be challenging. NT International Law Firm offers comprehensive legal services to support your subsidiary establishment journey, including:

• Legal Consultation: Expert advice on legal requirements, compliance procedures, and potential challenges.
• Document Preparation: Assisting in preparing all necessary documents for registration and licensing.
• Procedure Management: Handling the entire registration process efficiently, minimizing delays.
• Tax Compliance: Advising on tax obligations and ensuring adherence to regulations.
• Dispute Resolution: Providing legal representation and assistance in case of disputes or legal issues.
• Tailored Solutions: Designing legal solutions specific to your business needs and industry.

By partnering with NT International Law Firm, you can navigate the legal landscape of establishing a subsidiary in Vietnam with confidence and ensure your business is positioned for success. Remember, establishing a subsidiary is a significant investment, and thorough legal planning and execution are crucial for long-term success.

NT International Law Firm is Here to Help

NT International Law Firm has addressed the question of how to establish your subsidiary for your company. If you have any further questions or concerns regarding corporate law, please contact our law firm immediately for expert legal advice.

If you require any legal assistance, please feel free to reach out to us via phone at 090 252 4567 or through email: info@ntpartnerlawfirm.com. At NT INTERNATIONAL LAW FIRM, our team is committed to offering you prompt and personalized advice.

You also might be interested in:

• The 2015 Civil Code in English
• The 2020 Law On Enterprises in English