A local nominee appointment in Vietnam is a significant component for foreigners who want to do business in the country. Often, the local nominee is appointed as a company shareholder to shield the actual owner’s identity, meaning foreign investors can get involved in business sectors that have restrictions regarding foreign investment.
Many foreigners have favored a local nominee structure as it solves numerous issues they might encounter when doing business in Vietnam. A nominee structure company means Vietnamese partners can offer to hold a company’s assets on behalf of a person or another company as a service.
Additionally, the nominee will act on behalf of other individuals or the company on many other administrative tasks. However, as the foreign investor will still run the company, the local partner only plays a non-executive role and has minimal decision-making power.
In this article, we will help you determine if a local nominee suits your business needs and whether it is safe to use the service to start a business in Vietnam.
Beneficial Owner vs. Registered Owner
As explained above, a local nominee shareholder is a separate third party who is officially registered as (one of the) owners of the company. The company registration process (including the issuance of IRC and ERC) will be under the person or organization’s name.
As a result, the nominee shareholder is also called the registered owner. In other words, the registered owner holds the shares for the benefit of another investor (in this case, a foreigner). Since the investment capital is still the investor’s property, they are called the beneficial owner.
Nominee Arrangement Process in Vietnam
Setting up a nominee structure company is more straightforward than other legal entities in Vietnam.
To proceed with the local nominee appointment, the foreign investor (or beneficial owner) must contribute capital to set up a local company in Vietnam under the name of the registered owner – who is a Vietnamese national or entity.
Upon the finalization of a nominee agreement, the registered owner is obliged to act on behalf of the beneficial owner to handle and manage several primary tasks and issues of the local entity: daily administration, potential legal matters, resource procurement, financial arrangements, communications, and more.
All these should be done under the beneficial owner’s instruction, direction, and supervision to ensure the positive performance of their investment.
Benefits of a Nominee Structure
There are many reasons why foreign investors use a nominee structure in Vietnam.
- It keeps the beneficial owner’s identity confidential to prevent direct competitors from finding out.
- It protects the rights of foreign investors and effectively enforces shareholders’ rights on behalf of the investors.
- A nominee structure company enables simpler foreign investments in Vietnam, especially in business sectors partially or entirely closed off to foreign investments.
- It streamlines the company registration process and eases corporate compliance tasks such as opening a bank account and clearing and settling publicly traded shares on the beneficial owner’s behalf. Consequently, a nominee structure company can help overcome more complex technical and legal challenges in Vietnam.
- With a nominee structure, a beneficial owner can receive the benefits of Vietnam’s tax system. Because the company functions as a local entity, it can enjoy all the applicable tax incentives according to Vietnamese tax laws.
Advice for Using a Local Nominee in Vietnam
Even though many local consultants can help with the process of setting up a nominee structure company, not all of these agencies are created equal. Some agencies will offer foreign investors much less protection than others, while others are just downright unreliable and will turn your business expansion dream into a nightmare.
For instance, an untrustworthy agency might offer an agreement that is not valid or, worse, no agreement at all.
Therefore, it is vital that you carefully research and consult experts before you invest. A proactive approach to protecting foreign investors in a local nominee arrangement will make all the difference for you.
Make your business registration fast, hassle-free, and compliant. Contact us now, and we will send you a free quotation on our local nominee agreement.
InCorp Vietnam is a leading provider of global market entry services. We are part of InCorp group, a regional leader in corporate solutions, that encompasses 8 countries in Asia-Pacific, headquartered in Singapore. With over 1,100 legal experts serving over 15,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup, and advice based on local requirements to make your business perfectly fit into the market with healthy growth.
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