Is Local Nominee a Safe Way to Start Business in Vietnam?

A local nominee appointment in Vietnam is a significant ingredient for foreigners who want to do their business in the country. Often, the local nominee is appointed as a shareholder of a company in order to shield the real owner’s identity; it is also used for foreign investors to get involved in business sectors that are restricted for foreign investments.

Many foreigners have favoured a local nominee structure as it is a solution to issues they might encounter when doing business in Vietnam. A nominee structure company means a company’s assets are held on behalf of a person or another company.

Other than that, the nominee in the company will act on behalf of the other individuals or the company on many other administrative related tasks.

In this article, we will help you figure out if a local nominee suits your business needs and whether it is safe for you to start your business in Vietnam.

Beneficial Owner vs. Registered Owner

As mentioned, a local nominee shareholder in a company is an unrelated third party who is officially registered as the holder of shares of the company.

This nominee shareholder is also called the registered owner. In other words, the registered owner holds the shares for the benefit of another person (in this case a foreigner), and this foreigner is called the beneficial owner.

Nominee Arrangement Process in Vietnam

The process of setting up a nominee structure company is simpler than other forms of legal entities in Vietnam.

In order to proceed with the local nominee appointment, a foreign investor (or the 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 a Vietnamese entity.

Upon the finalisation of a nominee agreement, the registered owner is obliged to act on behalf of the beneficial owner to handle and manage the following tasks and issues of the local entity: daily administrations, business operations, potential legal matters, resource procurement, financial arrangements, communications, etc.

All these should be done under the instruction, direction, and supervision of the beneficial owner to ensure a positive performance of the investment.

Benefits of a Nominee Structure

There are many reasons why foreign investors use a nominee structure in Vietnam.

1. It keeps the beneficial owner’s identity confidential to prevent direct competitors from finding out.
2. It protects the rights of foreign investors and effectively enforces shareholder’s rights on behalf of the investors.
3. A nominee structure company makes simpler foreign investments in Vietnam possible, especially in business sectors that are partially or entirely close to foreign investments.
4. It facilitates the company registration process and eases related business tasks such as bank account opening, clearance and settlement of publicly traded shares on a beneficial owner’s behalf. In addition, a nominee structure company can help overcome more complex technical and legal challenges in Vietnam.
5. By using a nominee structure, a beneficial owner can take advantage of the Vietnamese tax system. According to the Vietnamese tax law, a foreign beneficial owner can enjoy all the tax incentives applicable to a local company.

Advice for Using a Local Nominee in Vietnam

Even though many local consultants can help with the entire process of setting up a nominee structure company, not all of these agencies are created equal. Some agencies will offer foreign investors a lot less protection than others, while some are just downright unreliable and will turn your business expansion dream into a nightmare.

For instances, an untrustworthy agency might offer an agreement that is not valid or worse, no agreement at all.

Therefore, it is important that you carefully research a consultancy before you invest. Cekindo believes that our proactive approach to protect the foreign investors in a local nominee arrangement will make all the difference for you.

Register your business fast, hassle-free and legally. Contact us now, and we will send you a free quotation on a local nominee agreement we offer.