Nominee Agreement is a solution for investment in Vietnam

Nominee Agreement is a common solution for investment in Vietnam

Post date: 14-06-2021

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Nominee Agreement is a solution for investment in Vietnam

Nominee Agreement is a solution for investment in Vietnam

A nominee agreement in Vietnam is an arrangement between two parties where one party as Vietnamese person or legal entity consents to acting as a director, secretary, shareholder or company owner for a company which is owned by another party as foreign individual or legal entity else in foreign countries.

Nominee agreement is very popular in the world, but it is relatively new in Vietnam and  commonly used as an solution for investment in Vietnam. Nominee agreement has become more and more significant over the years for foreigners who wish to invest or do business in Vietnam as a emerging economy.

Nominee agreement is a common solution for  investment in Vietnam because of following reasons:

- Nominee agreement has simplified procedures for investment in Vietnam. The procedures for incorporation of  a company in Vietnam by a Vietnamese investors has easier than the same by foreign investors.
- Incorporation of a company in Vietnam by a foreign investor requires the proof showing its financial capacity for capital contribution, while it no needs it for Vietnamese investor. Then, the nominee agreement is a common solution for investment in Vietnam by foreign investors.     
- There are some restrictions in some conditional business in Vietnam for foreign investor, but they are normal for Vietnamese investors. Then the nominee agreement is a common solutions for investment in Vietnam by foreign investors.
- Audited financial statements are required by Audit Law for foreign own capital companies in Vietnam, while the financial statement of Vietnamese company is not required audit. Then the nominee agreement will reduce audit fees for investment in Vietnam.
- Nominee agreement runs the business by local staffs with low salary package will make good profit for foreign investment in Vietnam.

These are advantages of nominee agreement for investment in Vietnam by foreign investors, however, nominee agreement will face many risks for control and supervision of  the business in Vietnam and repatriation of profit as well, which will need a trust and qualified party in Vietnam.

How Nominee Agreements Work:

A nominee agreement, where one person consents to acting as a director, secretary, shareholder or company owner, generally consists of terms which accomplish the following:
- Deed of Indemnity: The persons or company acting as the nominee must be indemnified against the potentially harmful actions carried out by the person who actually runs the company.
- Power of Attorney: A power of attorney is provided authority to run and act for the company. A power of attorney will essentially state that the purchaser has unlimited authority to act for the company and that they are the beneficial owners of the shares.

Lawyer Vietnam Law Firm will assist foreign investor for nominee agreement and legal consultation for investment in Vietnam if any.

Lawyer Vietnam Law Firm

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