The content of this guideline is a bit complicated and below is a ‘simplified’ explanation. This guideline is most relevant for those investors seeking to amend their licences and are caught between the old and new laws.
Official Correspondence 5122/BKDHT-PC was issued on 24 July 2015 and provides the following guidelines:
1. With respect to investment applications submitted before the new law came into effect
a. If these applications meet all the requirements of the old law, the licensing authority may issue the Investment Registration Certificate (IRC)(as the new investment licence to approve a project is now called) to the investor based on the 2014 Investment Law, provided that the investor agrees in writing that the licence is issued based on the new law. In this circumstance, the licensing authority does not need to require the investor to amend the application papers based on the 2014 Investment Law.
b. If the applications do not meet the requirements of the old law, the investors must amend the applications based on the new law.
2. With respect to investment applications for projects in sectors that do not require the Government to provide additional guidelines on investment policies
a. The investor must submit application papers as set out in Article 37.2(a) of the 2014 Investment Law.
b. The licensing authority must issue the IRC within 15 days from the date of receipt of the application if the following conditions are met:
– the application file is complete
– the scope of the project is not within sectors where investment is prohibited per Article 6 of the 2014 Investment Law
– if the investor is foreign, all the conditions in respect of market entry regarding foreign investment must be satisfied as set out in treaties to which VN has acceded (including bilateral investment treaties and WTO).
3. With respect to procedures to deal with requests to amend the Investment Licence (IL)/Investment Certificate (IC) (as approvals were called under the old law)
a. If the request is the amend the ‘content of the business registration’ of the company, the investor must apply to have a new Business Registration Certificate (BRC) issued in accordance with the new 2014 Enterprise Law.
The content of the IL/IC on business registration will no longer be valid from the day the BRC becomes valid. However, the content of the IL/IC in respect of the investment project remains valid.
It is unclear and confusing as to what is the difference between the content of business registration and scope of the investment project and what will remain valid and what will not.
What does the above mean?
Under the old Investment Law, a foreign investor needs only to obtain an IL/IC which is both the incorporation certificate approving the establishment of the project company as well as the approval of the project to be carried out by the project company.
Under the new 2014 Investment Law and new 2104 Enterprise/Company Law, a foreign investor (like a local investor) must now get two licences:
(i) a separate BRC (which is the incorporation certificate of the project company; and
(ii) an investment approval for the project to be carried out by the project company (IRC).
Thus, for existing companies that do not yet have BRCs, the idea is if they ask to amend the scope of business registration activities of the company, they will now be issued a BRC.
b. If the request is to amend the scope of the investment project, a new IRC will be issued to the investor to replace the project scope in the IC/IL. However, the content in the IC/IL on business registration remains valid. Again, it is unclear as to what this means as it seems the content on business registration is the same as the project scope.
c. It the request is to amend both business registration activities and project scope, the investor must apply first for a BRC and then apply for the IRC as set out in (a) and (b).
d. The investor can also apply to replace the IL/IC with the BRC and IRC, an application can also be made to apply for the BRC first and then the IRC after. These licences have to be issued within 3 business days.
It seems this is the best approach when any amendment is to be applied for to avoid confusion between the validity of licences issued before the new law.
4. With respect to the establishment of branches, representative offices of companies
a. Foreign invested companies licensed in Vietnam may set up branches and representative offices.
b. There is no need to have a separate investment project.
5. With respect to amending to add new business activities for foreign invested companies
a. Foreign invested companies may do so without the need to have a new investment project.
b. They must meet all the conditions for market entry as discussed above.
6. Other matters
Assets contributed as capital (that are not VND, gold or foreign currency) must be valued in accordance with Article 37 of the new 2014 Investment Law, This is new. However, the licensing authorities are not allowed to require the investor to submit any other valuation papers that are not required by Article 37.
DN Legal, 6 August 2015 (www.daonguyenlegal.com)