Under the laws of Vietnam, trading activities are divided into the following types:

(i) Import means the trader imports goods from other countries into Vietnam to distribute the buyer without having warehouse.

(ii) Export means that the trader collects the goods domestically and export them to the foreign countries.

(iii) Retail means that the trader can import the goods overseas or purchase domestically for sell to the end users (with or without setting up a retail outlet).

(iv) Wholesale means that the trader can import the goods overseas or purchase domestically for sell to the distributors or dealers (with or without having a warehouse)

Under Vietnam’s commitments on accession into the WTO and the local laws, the foreign investors are allowed to set up a 100% foreign invested company to conduct the trading activities. However, there are some certain restrictions applied to the foreign investor to conduct such business in Vietnam. Accordingly, in order for the trading company to conduct the trading activities, it is required to obtain the Business License. To obtain this Business License, it is required to obtain the approval from the Ministry of Industry and Trade of Vietnam (MOIT). Moreover, the products to be imported, exported or distributed in Vietnam must not fall into the list of products which is prohibited or limited to import/export. Moreover, the local licensing authority may request the foreign investor to prove its experience in doing trading business in their home country or Vietnam.

Given the fact that there is no regulation on the minimum investment capital for setting up the trading foreign invested company, but as our practical experience, in order to be approved, the minimum investment capital for the foreign investor will be around USD 100,000 subject to the number of HS codes to be registered.

In the light of the above, we often advise the foreign investor to consider 02 options to set up their trading company in Vietnam:

(i) Option 1: Directly setting up a trading foreign invested company. It takes around 4-5 months to completed, providing that the foreign investor meets all requirements from the licensing authority.

(ii) Option 2: Facilitating and fund a Vietnamese trustee to set up a local company and thereafter the foreign investor will acquire the local company from the trustee to convert it into a foreign invested company. Under this Option, it may save time and cost.

Option: 2 (Details)

some following options to secure your money with the trustee:

1. Entering into the Nominee Agreement between the Foreigner and the Nominee with some following material terms:

– The Foreigner appoints/authorizes the Nominee to represent the Foreigner to set up the Local Company under the corporate information approved by the Foreigner and appoint the Foreigner as the legal representative and Director of the Local Company to control the daily operation of the Local Company;

– The Foreigner will fund a Nominee a loan, equivalent to the charter capital of the Local Company so that the Nominee uses this loan to subscribe the charter capital of the Local Company;

– The Nominee unconditionally and irrevocably grants the Foreigner the exclusive right to acquire partially or wholly the capital of the Local Company after its establishment at any time under the request of the Foreigner (the “Option Right”);

– The mechanism for the Investor to execute the Option Right over the capital of the Local Company to convert into the foreign invested company (the “FIC”); and

– Representations and warranties of the Foreigner and Nominee.

2. the Foreigner will act as the legal representative and Director of the Local Company to control the daily operation of the Local Company;

3. Entering into the shares mortgage agreement between the Foreigner and Nominee, under which to guarantee the loan, the Nominee will mortgage all of his/her shares of the Local Company to the Foreigner. To secure this transaction, the mortgaged shares will be registered with the National Registration Agency for Secured Transactions (NARST).

4. If the Nominee gets married, she/he needs to make a commitment to declare that his/her shares of the Local Company is her/his private asset separating from the common assets with his/her spouse. Under the laws of Vietnam, this commitment is required to be notarized at the notary office.

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