VietAlco one member limited liability company

As wine manufacturing and trading is conditional business line, we have to meet some conditions below: No.. Form of enterprise We would like to establish an one member limited liability

1 Business sector

As wine market in Vietnam is greatly potential, we would like to open a wine manufacturing company Our company will involve in 3 business lines below:

1101 Boiling, refining and distilling various types of strong

liquor

Vietnamese wine market has shown impressive growth in the recent years Most of people who are from 15-70 years old in Vietnam consume alcohol Below are some impressive data in Vietnamese wine consumption:

 Vietnamese people are among the top alcohol consumers in the world, according

to the 2016 Global Burden of Disease Study, a survey on the consumption of alcoholic beverages in 195 countries and territories taken between 1996 and 2006

 In 2017, according to the Lancet medical journal, each Vietnamese consumed 8.9 liters of pure alcohol also surpassed Japan (7.9 liters), China (7.4 liters) and India (5.9 liters)

 From 2010 – 2017, Vietnam ranked the first in alcohol consumption growth at 89,4%, following is India at 37,2%

Figure 1: Average annual liters of alcohol consumed per person in 2017 and % change

from 2010

However, most of the amount of consumed wine in Vietnam is from household businesses or self-made alcohol which do not have safety certificate According to VnExpress, in 2019 Tet holiday, almost 1000 people suffered alcohol poisoning because

of bererages which did not meet safety standard Moreover, imported wine in Vietnam is extremely expensive, because of import duties which can go up to 120% and through the fact that each intermediary (importer and restaurant) will each take its share before consuming

For the reasons above, we suppose that an alcohol manufacturing company with safe and hygienic products is really potential We want to establish a company which will produce and trade rice wine and grape wine

So what are the laws and regulations to open this kind of company?

As wine manufacturing and trading is conditional business line, we have to meet some conditions below:

No.

Name of

conditional

business

Condition

Current legal regulations

Authority

40 Production

of alcohol

a) The enterprise is established

in accordance with law

b, Having lines of machinery, equipment and technological processes for wine production that meet the production scale

c, Meet food safety standard as prescribed

d, Meet environment protection requirements

e, Meet the regulations for wine labeling

f, Having qualified and professional technicians suitable

to the liquor production line

Article 8 of Decree No

105/2017/N Đ-CP

-The Ministry

of Industry and Trade (for production of industrial alcohol with the scale of

03 million liters/ year or more);

- Provincial

or Municipal Department

of Industry

and Trade (for production of industrial alcohol with the scale of less than 03 million liters/ year);

- The Division of Economics, the Division

of industry and trade under district People’s

Committee

41 Trading of

alcohol

1 The requirements for issuing the License for wine trading and distributing include:

a) The enterprise is established

Article 11 and Article

12 of Decree

No

- The Ministry of Industry and Trade;

in accordance with law.

b, Having full right to use or

own warehouse system with the

minimum area is 150m2

c, Wine planned to be traded

must ensure food safety

conditions as prescribed

d, Having a system of wine

distribution on at least 02

provinces (there must be at least

01 wine wholesalers in each

province);

e, Having a introduction

document or contract of the

wine-making trader, other wine

distributors or foreign wine

suppliers

f, Having a commitment made

by the enterprise on the

compliance with the

requirements for fire prevention

and fighting, and environment

105/2017/N Đ-CP

- Provincial

or Municipal Department

of Industry and Trade;

- The Division of Economics, the Division

of industry and trade under district People’s Committee

protection as prescribed by law;

2 The requirements for issuing the License for wine

wholesaling:

a) The enterprise is established

in accordance with law

b, Having full right to use or own warehouse system with the minimum area is 50m2

c, Wine planned to be traded must ensure food safety

conditions as prescribed

d, Having a system of wine wholesaling in the province where its premises are situated (there must be at least 03 wine retailers);

e, Having an introduction document or contract of wine manufacturer, wine distributor

or other wine wholesaler,

f, Having a commitment made

by the enterprise on the compliance with the requirements for fire prevention and fighting, and environment protection as prescribed by law;

2 Form of enterprise

We would like to establish an one member limited liability company

As an one member limited liability company with the owner is individual, we have some advantages:

 Fully control the business

As we want to found a stable business, so an one member limited liablility company is a great choice The owner will have fully control of the business, which helps the company to avoid conflicts or disagreement in operating the business Moreover, our manufacturing process (rice wine and grape wine) is not

so complicated, the cost for operating is not too big, a person to be the owner is suitable enough for the company as the he/she can control all the activities of the business

 Limited liability

The owner is liable for the debts of the company within the capital contribution.

Manufacturing and trading alcohol are risky business line, so we think this form of enterprise will decrease the risk in operating the company

3 Dossiers and procedures necessary to establish the enterprise under Vietnamese Law

Step 1: Preparing information about the company

 Prepare legal capital and declare charter capital: 4 billion VND (in cash)

 Prepare the form of the enterprise: One member Limited Liability Company

 Prepare the name of the company: Công ty TNHH một thành viên VietAlco -VietAlco One member Limited Liability Company (-VietAlco Co., Ltd)

 Choose the legal representative: the Chairman

 Choose the business sector:

o Distilling and making alcohol – 1101

o Drink wholesaling – 4633

o Alcohol retailing – 4723

o Freight transport by road (by truck) – 4933

 Prepare the location of the company: No 57A, Tran Phu Street, Ninh Thuan Province

Step 2: Draft the enterprise registration documents

Including:

 Citizen identity card, a notarized copy of the passport for individual Or company registration certificate, documents proving equivalent legal status of the legal representative

 Requesting form to get the enterprise registration certificate

 Charter of the company

Step 3: Submit prepared dossiers to Business Registration Office

 After preparing the dossiers, the enterprise shall submit them to the Business Registration Office (of Department of Planning and Investment) of the same district with the location of the enterprise

 Wait about 3-5 days to get the certificate

Step 4: Publicize company information on the national web portal

 Publicly announce on the national web portal within 30 days since being granted enterprise registration certificate according to the order, procedure and fees following regulations

Step 5: Get business license to produce alcohol

 Get a business license to produce alcohol before the company start to operate

4 Ownership and Organizational structure

After consulting many domestic wine production and trading enterprises, we select the ownership for our companies as individuals

According to Article 85 of the law of enterprise 2014, one member limited liability company owned by an individual has a present of the company, director or general director So we decided to build the structure of our company as follows:

President

Production Manager

Manufactoring

plant

Business Manager

Sales Department

Accounting Department

Human Resources Department

In which, each part has a separate function to serve the company's purpose:

 President: contributing charter capital and making many important decisions (article 75, Vietnamese Law on enterprises 2014)

 Production Manager: managing wine processes as well as all related activities or issues

 Manufacturing Plant: manufacturing wine

 Sales Manager: managing sales activities and other activities other than manufacturing activities

 Business Department: carrying out business activities, purchase and sell products, raw materials, rent,

 Accounting Department: recording and reporting the cash flow transactions of the company, both in and out

 Human Resources Department: recruiting employees for suitable jobs, maintaining

a safe environment, compensation and benefits, labor law compliance, training and development

5 Other legal issues

 Other important things the enterprise should consider doing to establish the business are:

o Alcohol production is a business sector that requires conditions, so the enterprise must proceed to ensure necessary conditions and make dossiers

of application for licenses to meet liquor production conditions before they can operate

o Specific conditions that enterprises need to meet to be granted a liquor production license is to register for wine production business and ensure food safety and quality requirements following the regulations

o Normally, an alcohol production license will expire after 5 years When the license expires, the enterprise must review the conditions and prepare the new dossiers to apply for a new alcohol production license to continue operating

 Other important things the enterprise should consider doing to manage the business are:

o Design the sign of the company: with information such as the name of the company, address, phone number and hang the sign according to the regulations

o Buy a digital signature to pay taxes online

o Employ an accountant

o Engrave the company’s seal: the number and the appearance of the seal will

be decided by the company The seal will have the name as well as the

business number After that, the company will publish the seal sample on the national web portal

o Issue value added invoice: The company shall issue a notice of invoice issuance to the suitable authorized agencies, when permitted, they will print and order invoices for proper use Or the company will buy invoices to use instead of printing

o Make tax declaration and pay tax

o Register a bank account: The company needs to register to open a bank account for the company to be able to conduct transactions for business Then report the transaction account number to the Department of Planning and Investment In order to open a bank account, the business owner brings the seal, ID card, business registration certificate to the bank

o Contribute capital in accordance to law

References

1. Decree 105/2017/ND-CP, (2017) Decree on Alcohol Production and Business [online] Available at: https://thuvienphapluat.vn/van-ban/Thuong-mai/Nghi-dinh-105-2017-ND-CP-san-xuat-kinh-doanh-ruou-319361.aspx [accessed on November

17, 2019]

2 Law on Enterprises 2014

3 Nguyen, D (2019) Vietnam drinks its way to being Asia’s third-biggest alcohol

consumer: study - Vietnam Insider [online] Vietnam Insider Available at: https://

vietnaminsider.vn/vietnam-drinks-its-way-to-being-asias-third-biggest-alcohol-consumer-study/ [Accessed 19 Nov 2019]

4. Nam Viet Luat How to establish an alcohol business 100% successfully [online] Available at: https://namvietluat.vn/thanh-lap-cong-ty-ruou/ [accessed on

November 17, 2019]

5 vnexpress.net (2019) Gần 1.000 người bị ngộ độc rượu bia trong kỳ nghỉ Tết -

VnExpress Sức Khỏe [online] Available at:

https://vnexpress.net/suc-khoe/gan-1-000-nguoi-bi-ngo-doc-ruou-bia-trong-ky-nghi-tet-3879986.html [Accessed 19 Nov 2019]

6 Vanbanphapluat.co (2019) Decree 105/2017/ND-CP on trade in alcohol [online]

Available at:

https://vanbanphapluat.co/decree-105-2017-nd-cp-on-trade-in-alcohol [Accessed 19 Nov 2019]

7 VnExpress International – Latest news, business, travel and analysis from

Vietnam (2019) Vietnam records fifth highest increase in per capita alcohol

consumption - VnExpress International [online] Available at:

https://e.vnexpress.net/news/news/vietnam-records-fifth-highest-increase-in-per-capita-alcohol-consumption-3922338.html [Accessed 19 Nov 2019]

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