Noticeable Issues of Corporation Compliance when Doing Business in Vietnam
(1) Licensing procedure: Any investment of any foreign investor into Vietnam must be approved by the Vietnam authorities through certificate or written confirmation. Usually, the licensing procedure has 02 stages including approval for making investment into Vietnam and approval for establishing the company, branch or office. In case the investment lines of the foreign investor are conditional lines, the foreign investor has to obtain additional sub-licenses from the specialized authorities before doing business in such investment lines.
(2) Transferring money into or out of Vietnam: It is strictly controlled by the State Bank of Vietnam, which requires to verify the source of the money and the purpose of transfer before transferring. This is to comply with anti-money laundering and control of foreign exchange regulations. All the investment capital in form of money must be placed into a bank account (investment bank account) separate from the daily operating account of the company.
(3) Foreign loans: All the foreign loans must be endorsed by the lawfully contractual documents and complied with the regulations of each relevant commercial bank in Vietnam. The long-term loan (over 12 months) must be lawfully registered with the State Bank of Vietnam; otherwise, such loan cannot be transferred back aboard in the future.
(4) Periodic reporting obligations: There are reporting obligations related to labor, foreign investment, business operation, foreign loans and tax which must be done monthly, quarterly, every 06 months and yearly during the investment term. The reports are easy to make but if missing any report, the company may be subject to a fine, temporary suspension of business and even withdrawal of the investment/operation license (depending on the seriousness of the violation/failure/non-compliance).
(5) Employment: The Vietnam law focuses on protecting the employees so there should be internal labor regulations and labor contractual documents clearly addressing the conflict of interest, non-compete, internal transactions, cases of dismissal/termination of labor contract, labor disciplines, compensation, illegal strikes, etc. to protect the lawful rights and interests of the company.
(6) Legal representative: In case the foreign investor establishes a company in Vietnam, the investor needs to appoint at least one person to be the legal representative being responsible for such company. The legal representative is required to reside in Vietnam and has to authorize another person to temporarily act on his/her behalf if leaving Vietnam for a period of more than 30 days.