Appointing a Nominee Director is a relatively new but a commonly used investment method in Vietnam. This investment tool has become more and more significant over the years for foreigners who wish to start a business in this booming economy. When talking about starting a business in Vietnam with nominee arrangement, the nominee structure is straightforward: a local nominee, or a nominee party/registered owner, will hold a company’s assets on behalf of the real owner, or a nominating party/beneficial owner, through a loan agreement. Furthermore, the nominee party will act on behalf of the nominating party in performing day-to-day administrations.
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The purpose for foreigners to utilise this investment mechanism in Vietnam is to make themselves anonymous or to participate in business categories that are not open for foreign investments, or in business sectors that require additional permits or licenses. Though the nominee party is the acting party, the nominating shall be in charge of all necessary resources preparation, especially for financial arrangement, to ensure a positive investment outcome.
In this article, you can understand why nominee arrangement can be a great investment alternative for you interested in starting a business in Vietnam.
Starting a Business in Vietnam Using Nominee Arrangement
Benefits of Nominee Arrangement in Vietnam
The nominee structure is an effective investment alternative that is so common that it is applied by businesses across the globe, including those in Vietnam.
Here is how foreign investors can benefit by using a nominee structure in Vietnam:
- It simplifies your investment in Vietnam without introducing a lot of risks and challenges. It is particularly useful for investments in sectors that are restricted for foreign investments.
- It shields the identity of the beneficial owner and divert the attention of competitors in the market.
- Your rights as the shareholders will be effectively protected and the registered owner only acts on your behalf.
- It helps you avoid technical and legal implications due to its simpler structure and registration. In Vietnam, different laws and regulations applied distinctively to foreign companies and local companies and laws enforced on foreign businesses are always more complex.
- Foreign investors can enjoy Vietnam’s tax benefits applicable to a local company through a nominee structure.
RELATED: a Guide to Using a Nominee Shareholder to Start a Business
Process of Nominee Arrangement in Vietnam
It is much easier to set up a local nominee company in Vietnam as compared to other forms of legal entities. First of all, a foreign investor must make capital contribution to start a local company by using the local nominee’s name. The local nominee can be either a Vietnamese company or a Vietnamese individual.
Once the nominee arrangement and agreement is completed, it is the responsibility of the nominee party to act on the nominating party’s behalf to handle tasks including every day’s business operations, legal issues, financial arrangements communications, administration, and resources purchase.
Even though the mentioned tasks are performed by the nominee party, they must be all under the instruction and supervision of the nominating party: the foreign investor.
Important Advice When Using a Nominee Structure
A lot of agencies in Vietnam can help with nominee arrangement but not all of them can deliver an effective outcome. Worse, some are downright unreliable and they will vanish into thin air once they have collected the processing fee from investors.
The most common issues of unqualified and phony agencies are little to non-existing protection for foreigners, long processing time and other legal implication. Therefore, research is key to finding a credible and authentic nominee arrangement agency.
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