There are three steps for setting up a subsidiary company in Vietnam. In production and business activities, many companies need to expand their markets to find and attract customers. Therefore, they can choose to establish an associate company, which can bring certain benefits to the business.
Conditions for setting up a subsidiary company
According to the provisions of Article 189 of the Enterprise Law 2020:
“A company is considered the parent company of another company if that company holds more than 50% of the share capital or total ordinary shares of this company; or has the right, directly or indirectly, to decide to appoint a majority of all members of the Board of Directors, Director or Executive Director of this company; or have the right to decide on the amendment and supplementation of the company’s charter.”
A subsidiary company is a company established from the capital contribution of the parent company as well as from capital sources from members not belonging to the parent company. A company is considered a subsidiary if it meets the following 3 conditions:
- Owning 51% or more of the parent company’s capital.
- Securities in subsidiaries can be designated and modified by the parent company
- The parent company has the right to amend the charter of the subsidiary.
Procedures for setting up a subsidiary company in Vietnam
The law also stipulates several capital restrictions between the parent company and its subsidiary:
Subsidiaries are not allowed to contribute capital or buy shares of the parent company. Subsidiaries of the same parent company may not jointly contribute capital or purchase shares for cross-ownership.
Subsidiaries having the same parent company which is a company held by the State with 65% or more capital is not allowed to jointly contribute capital to establish a company by the provisions of the Enterprise Law 2020.
Thus, the parent company and its subsidiary are two independent legal entities with separate assets (with independent legal status). Therefore, the procedure for establishing a subsidiary is similar to the procedure for establishing a normal business.
There are three steps for setting up a subsidiary company in Vietnam
Step 1: Prepare information before setting up a business
About the head office: Companies must ensure to have a head office as prescribed in Article 43 of the Law on Enterprises 2020.
About the type of subsidiary: Depending on the purpose and needs when establishing a subsidiary, the Customer can choose the following types of businesses: single-member limited liability company, limited liability company two or more members, joint-stock company, a private company, and partnership.
About the name of the subsidiary: The name of the subsidiary company must be consistent with the provisions of Enterprise Law 2020.
Regarding share capital when establishing a subsidiary: the Law on Enterprises 2020 and Decree No. 78/2015 / NDCP on business registration stipulate that share capital is mandatory information but does not stipulate the minimum or maximum share capital for each company. with different types of companies.
Depending on the sector of operation, the establishment of a subsidiary may be subject to certain minimum capital requirements. According to the Enterprise Law 2020, registered capital is self-declared and self-responsibility.
Regarding the field of operation of the subsidiary: The 2013 Constitution stipulates that individuals and organizations are allowed to operate in fields not prohibited by law. Therefore, based on their operational goals, companies declare their industries in the registration documents. For some industries, the company must meet the conditions prescribed by law.
Step 2: Prepare and draft documents to establish a subsidiary
– Application for registration of business establishment
– Charter of the company: The charter of a subsidiary must ensure the contents as prescribed by the Law on Enterprises 2020.
For subsidiaries that are limited liability companies with 2 or more members or joint-stock companies, it is necessary to prepare a list of members and shareholders.
Power of attorney to carry out procedures for setting up a subsidiary in case the person performing the procedure is not the legal representative of the company.
In addition, the preparation of documents for the establishment of a subsidiary depends on the type of parent company
In addition, when carrying out the procedures for establishing a subsidiary, it is necessary to prepare the documents to be submitted with the application as follows: A notarized copy of the identity card/citizen identity card/passport of the members in the company. company; A notarized copy of the business registration certificate of the parent company; A notarized copy of the identity card/citizen identity card/passport of the person appointed by the parent company to contribute capital and manage the subsidiary,
Step 3: Submit the application for the establishment of a subsidiary at the competent authority
Dossier-receiving agency: Business seal and notify the use of sample seals, hang business signs, carry out tax-related procedures, accounting, and permit supplementation of operating licenses. , continuity of procedures to work, insurance, etc.