Company Formation in Vietnam
Why Start a Company in Vietnam?
Vietnam’s economy has shown promising growth after gaining admittance in the World Trade Organisation (WTO). This opened doors to foreign investors as a result of which company formation in Vietnam started gaining immense popularity. Hi-tech companies have claimed that Vietnam offers a great potential for research and development as a result of its state-of-the-art infrastructure and highly adept workforce. Additionally Vietnam also has a flourishing manufacturing sector due to the introduction of a large number of Open Economic zones and lucrative tax incentives. Additionally, the apparel industry in Vietnam is on its way to becoming a booming sector.
Investors can easily set up a company in Vietnam provided they abide by the rules and regulations put forward by the Vietnamese law, commitments and treaties. However, one of the most prominent hindrances in setting up a business in Vietnam can be attributed to its complicated licensing procedure.
Procedure for Company Formation in Vietnam
In order to establish a foreign capital company in Vietnam, the following procedure has to be implemented
- Apply for Investment Registration Certificate
- Apply for Business Registration Certificate
- Post licensing (Notification for specimen and registering tax code)
- Other necessary certificates depending on your business line in accordance with the regulations of Vietnam Laws
Requirements for Business Registration in Vietnam
Basic Requirements for Vietnam Company Formation
- Director - Under Vietnamese laws, it is not regulated that the director of the company is Vietnamese; he/she could the foreigner depending on the demand of the company. However, for the legal representative of the company, in case there are more than two legal representatives, there must always be at least one legal representative who resides in Vietnam. Such person must authorize another person in writing to perform the legal representative’s right and obligations when leaving Vietnam.
- Minimum Capital - The required minimum capital depends on the business line, objectives, scale of the investment project
- Location of project - It must meet all requirements of local plan;
- Tax - Fully paying related tax under regulations of the laws.
Documents Required for Opening a Business in Vietnam
Under the Vietnamese law, the following legal documents are required to be provided by the Investor to establish a foreign capital company in Vietnam:
- Documents proving the legal personality of the investor (certificate of incorporation for the company investor, ID or passport for the individual investor)
- Documents proving the financial capacity of the investor
- Documents proving the experience of the investor
- Other drafted under the laws
Advantages of Company Registration in Vietnam
- Starting a business in Vietnam does not require minimum capital. However, there are some exception, these include – securities, aviation services, real estate, insurance, banking and securities.
- Foreign investors who incorporate a company in Vietnam can own 100% shares in the business in certain sectors.
- Vietnamese companies recording tax losses can carry them forward for up to 5 years
What Business to Start in Vietnam?
Under the Vietnamese law, in order to set up a company in Vietnam, the foreign investors are allowed to establish a company in the form of Liability Limited (with one or multi-member), Joint Stock Company, Partnership, or a Sole Proprietorships.
Multi-Member Limited Liability Company
This structure of LLP can consist of minimum one and maximum 50 members that can be organisations, individuals, or a combination of both. Members are liable for debts and other liabilities of the enterprise up to the value of promised capital contribution to the enterprise, except in cases specified by laws. Stakes of members shall be transferred in accordance with the laws. Multi-member Limited Liability companies must not issue shares. Organisational structure - the Board of members, the Chairperson of the Board of members, a Director/General Director and maybe Control Board.
Single-Member Limited Liability Company
A Single-Member Limited Liability Company is an enterprise under the ownership of an organisation or individual; the company’s owner is liable for the company’s debts and other liabilities up to the value of promised capital contribution. Single-Member Limited Liability companies cannot issue shares. Organisational structure of Single-Member Limited Liability Company under the ownership of an organisation shall apply one of the following organisational models.
- The company's President, Director/General Director, and Controller
- The Board of members, Director/General Director, and Controller
Shareholders may be organisations and individuals; the minimum quantity of shareholders is 03; the maximum quantity is not restricted. Shareholders are only liable for the enterprise’s debts and other liabilities up to the value of the value of promised capital contributed to the enterprise. Joint-stock companies are entitled to issue various types of shares to raise capital. Bonds, convertible bonds, and other bonds as prescribed by law and the company’s charter; entitled to issue bonds, convertible bonds, and other bonds as prescribed by law and the company’s charter. Organisational structure - The General Meeting of Shareholders, the Board of Directors, and the Director/General Director and maybe the Control Board.
At least 02 partners are co-owners of the company who run the business together in a common name. Apart from general partners, the company may have contributing partners. General partners are individuals who are responsible for the company’s obligations with all of their property. Contributing partners are only liable for the company’s debts up to the value of capital contributed to the company. Organisational structure - The Board of partners.
Sole Proprietorships must not issue any kind of shares. Each individual may establish only one sole proprietorship. The owner of a Sole Proprietorship must not concurrently be a household business owner or partner of a partnership.
Time Required for Setting Up a Company in Vietnam
Based on objectives, scale, location, time, schedule for project execution of the investor and project decisions on investment policies of the competent authorities, implementing duration is varied as follows:
- The National Assembly’s decisions: about 180 working days from the date of submitting the application dossier.
- The Prime Minister’s decisions: about 90 working days from the date of submitting the application dossier.
- The People’s Committees of provinces’ decisions: about 90 working days from the date of submitting the application dossier.
- The department of Planning and Investment’s decisions: about 30 – 45 working days from the date of submitting the application dossier.