FAQ

Can you deliver the goods FOB China?

Yes, we can, but we prefer and always recommend using FCA, CFR/CIF, and DAP Incoterms for smoother, more cost-effective deliveries; we can also assist freight organizations.

Can you provide relevant documentation?

Yes, we can provide most documentation, including certificates of analytical conformity, insurance, certificates of origin, and other required export documents.

What is the average delivery time?

For samples, the lead time is about 7 days. For mass production, the lead time is 20.30 days after receiving the deposit. The lead time takes effect after we receive your deposit and we obtain your final approval for your product. If our lead time does not meet your deadline, please check your requirements at the time of sale. In all cases, we will try our best to meet your needs. In most cases, we are able to do this.

How long does it take for an IRC to be issued?

Authorities are required to issue the IRC within 15 days from the receipt of the valid application. Time also needs to be allowed for collation of documents and completion of application forms, which can take quite some time to facilitate.

How long does it take for an ERC to be issued?

When an investor has received their IRC, their ERC will then be processed by the Business Registration Division of the Department of Planning and Investment. The authority is to issue the certificate within 3 working days from the receipt of completed application, but again the application documentation and forms can add time to the process.

What is a legal representative?

An enterprise’s legal representative is an individual who can exercise the rights and obligations for and on behalf of that enterprise. Generally, only a legal representative can sign contracts for the company with other parties, although Power of Attorneys can be issued to delegate certain powers to others in the organisation.

Do I have to reside in Vietnam if I am a legal representative?

A company can have more than one legal representative. However, the law requires that at least one legal representative resides in Vietnam. If all legal representatives are outside of Vietnam for more than 30 days, they must authorise another party to exercise their rights.

What can I use as my Vietnam company’s registered address?

All companies in Vietnam require a fixed place of business (the registered address) for registration and ongoing compliance. Using a private house can be permitted for company registration (depending upon the business lines and purpose), however apartments cannot be used. Virtual offices will usually not be satisfactory to the authorities, although a dedicated desk within a serviced office space is ordinarily sufficient to meet the requirements. Lawyers and other service providers can lease out part of their offices for clients where they hold permission to sub-lease and have a real-estate leasing license, but this is not common in Vietnam.

What documents are required to establish a company in Vietnam?

The key documents that need arranging are detailed below. Note that “legalised” documents require different processes in different countries, with a Vietnamese Embassy abroad generally required to be part of the process when documents are processed outside of Vietnam. For corporate investors: · Legalisation of the company’s legal documents (Certificate of Incorporation, Charter, Business profile, etc.) · Original bank statement/bank letter/audited financial statements · Notarised passport/ID card of the legal representative of the Vietnam company by People’s Committee in Vietnam/legalised passport · Notarised passport/ID card of representative(s) who is (are) authorised by the investing company by People’s Committee in Vietnam/legalised passport · Lease contract · Documentation in relation to the leasing right of the landlord For individual investors: · Notarised passport of the owner(s) by People’s Committee in Vietnam/legalised passport · Original bank statement(s)/bank letter · Lease contract · Documentation in relation to the leasing right of the landlord

When are investors required to contribute their charter capital?

Upon establishing a company in Vietnam, investors are required to contribute their charter capital (akin to share capital, although there are no formal “shares” issued for limited liability companies in Vietnam) within 90 days from the ERC’s date of issuance. For foreign investors, the capital must come from their bank account abroad, and this needs to be sent to a Direct Investment Capital Account (DICA) opened by the Vietnamese company, before it can be transferred to the company’s operating account and used for operating purposes.

What are the immediate post-licensing requirements of a company in Vietnam?

After establishing a company in Vietnam, several post-licensing procedures are required to be completed. These can be divided into two elements: Corporate finalisations: · Application for making public notification of the new company’s establishment · Purchasing a company seal · Application for announcement of the seal specimen to the relevant authority · Draft decision of appointment of the General Director/Director Compliance & registration: · Appointment/registration of chief accountant with authorities · Payment of annual business licence fee · Opening of bank accounts, and registration of accounts with authorities · Tax registrations, including VAT registration and e-invoice application · Registration of accounting system, chart of accountants, and associated elections · Labour registrations

What is included in financial due diligence?

In order to evaluate a transaction as well as a target company, Financial Due Diligence (FDD) is a critical tool to explore and analyse the financial position of that company, the value drivers and dependencies, the internal systems and processes, and the risks and limitations existing and arising. Although the Tax Due Diligence (TDD) can be separated from FDD, tax risks can significantly impact the market value of the target company. Therefore, we usually combine the TDD in the FDD to analyse the compliance of the target company. Particularly, in Vietnam, analysts conduct an FDD exercise by obtaining and reviewing extensive information (documents and data) of the target’s key areas including operations background, finance, accounting, tax and employment etc. to identify key findings, issues and risks of such company or transaction that an investor/buyer is considering to invest. Below are some specific items that an FDD may include: · Business background and operations (corporate and ownership structure, organisational structure, key operations, products/services, customers and suppliers etc.) · Financial Analysis (detailed analysis and comments on trading results (revenue and expenses), assets and liabilities, owner’s equity, related party transactions, working capital, cash flow etc.) · Accounting compliance (accounting team, system and key process, procedures and policies etc.) · Tax compliance (VAT, CIT, Foreign Contractor Withholding Tax) · Labour & Human resources compliance (focus on PIT and compulsory insurances)

What are the key differences between an audit and financial due diligence?

Commissioning party: An audit is undertaken by the target company while the commissioning party of Financial Due Diligence (FDD) can be the buyer or the seller. Objective and scope: The goal of an audit is to verify that the target company is following all of the compliance rules and presenting accurate financial records and other information. The goal of FDD is to provide potential investors a detailed view and commentary of a target company’s performance and observe all associated risks. A due diligence may expand to review and analyse business plan, future aspects, corporate and management structure and legal issues, whilst audit does not. Assurance: While an audit is an assurance service, FDD is a service based on business transaction and is non-assurance because it is focusing on risks. Data: FDD may use available audit reports’ data and outcomes to conduct a detailed review, analysis, assessment and comments. The audit does not use FDD. Content: Audited records typically only show general queries a potential investor might have. They do not provide any insightful and objective aspects. Audit reports provide data about market trends over the years but do not show in detail the factors behind these trends. FDD reports try to give the most in-depth and structural analysis of all the factors that influence market trends. Through a FDD, a prospective investor can obtain insightful information about the business operation, commercial, finance, accounting, tax insights. Repetitiveness: An audit is a recurring event while a FDD is an occasional event.

How long does due diligence take?

In Vietnam, it often takes from 6 to 8 weeks or longer to complete a due diligence exercise depending on the availability of information required for review. 6-8 week is the ideal time to complete a full review and assessment, however further discussions, clarifications and adjustments against the due diligence’s (draft) findings may lengthen the process.

Is related party transaction (RPT) legal in Vietnam?

Under the law of Vietnam, related-party transactions (RPTs) are transactions arising between parties having related-party relationships during their production and business process. Particularly, parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties can be enterprises or individuals, including close members of the family of any such individual. RPTs of foreign invested companies, especially multinational companies, are common transactions which occur between companies which are part of the same group/parent company due to common or complementary activities to provide goods and services together. However, if the purpose of RPT is to decrease profits in order to avoid tax obligations, it may be considered as a transfer pricing activity which is strictly regulated by the Vietnamese tax authority. Consequently, in order to prevent transfer pricing, taxpayers in Vietnam are requested to comply with Transfer Pricing documentation, unless they fall into an exemption category.

How long do corporate valuations take?

A corporate valuation is a process that estimates the value of a corporate entity, and is generally conducted by a seller/seller’s consultant for its initial valuation or an investor/investor’s analyst. There are several methods to determine the value of a business, with the most common and practical components including: earnings multiples, discounted cash flow, debt and assets components etc. In practice, an initial corporate valuation report may take around 4 weeks on average once all required information is made available. Furthermore, the corporate valuation can be adjusted depending on the result of the Due Diligence performance and deal negotiation.

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