ESTABLISHMENT OF A FOREIGN-INVESTED COMPANY IN VIETNAM
In this section, we discuss the various options that a business has for market entry into Vietnam and overview the entity types, requirements, and processes, as well as some key considerations that will help ensure a company is set up for success.
Prospective clients seeking assistance with procedures for establishing a foreign-invested enterprise in Vietnam are kindly invited to contact Dai Quang Minh Law Firm via Hotline: 0932 191 299; Zalo: 0932 191 299; Email: info@quangminhlawfirm.com; Viber: (+84) 337 926 405; WhatsApp: (+84) 337 926 405; WeChat: (+84) 337 926 405 (ID: pouniverse) for complimentary consultation and comprehensive, efficient, and accurate legal services.
In addition, Dai Quang Minh Law Firm provides a wide range of services, including sub-licenses, business registration, investment, foreign labor, and ongoing legal advisory services for both domestic and foreign enterprises.
Contact:
- Zalo: 0932.191.299
- Gmail: info@quangminhlawfirm.com
- Viber: (+84) 337926405/ (+84) 869672216
- WhatsApp: (+84) 337926405/ (+84) 869672216
- Wechat: (+84) 337926405 (ID: _pouniverse)/ (+84) 869672216 (ID: DQM_Verna)
- Telegram: (+84) 337926405/ (+84) 869672216
There are also tips for what the procedures are if you are seeking a Vietnam presence without first setting up a legal entity, and what the procedures are for closing a business, should the need arise.
Establishing a company typically requires moderate or greater amounts of investment capital than other entry modes and can require several months to complete all steps in the process, before the company becomes operational. This is an expected risk of a fixed investment strategy, and for these reasons, it is important that investors first understand the Vietnam business, financial, consumer, or local cultural landscapes, and the options that might best help realize the goals of the investment.
I. Choosing A Corporate Structure
Vietnam permits 100% foreign ownership of a business for most sectors. Yet before choosing which type of company to open in Vietnam, it is important to consider different aspects of the target entity types, such as differences in structure, legal liability, statutory compliance requirements, time required to establish it, what types of activities it can engage in, and more. These considerations help to identify the appropriate business constraints, costs, requirements and risks, necessary to enable the company’s future targeted capabilities, developments, and growth. The below links explain these factors for each of the main entity types that can be set up in Vietnam.
II. There Are Several Types Of Foreign-Invested Corporate Vehicles In Vietnam, There Are Three More Common Of These Are:
|
Comparison of Business Structures |
|||
|
|
Representative Office |
Branch Office |
100% Foreign-Owned Enterprise |
|
Separate legal entity |
No |
No |
Yes |
|
Liability |
Extension of parent company |
Extension of parent company |
Liability limited to capital contribution. |
|
Naming of the Entity |
Must be same as parent company |
Must be same as parent company |
Can be the same or different from parent company |
|
Permitted Activities |
Only market research and coordination. No business activities that yield profit. |
Commercial activity within parent company’s scope |
Can be the same or different from the parent company |
|
Is an Annual Tax Return filing required? |
No |
Yes |
Yes |
|
Audit required? |
Yes. RO is required to file an annual RO's activities Report prepared by itself to be submitted to the licensing authority, not through an independent auditing firm. |
Yes |
Yes |
|
Summary of Pros |
Easy registration procedure |
Can remit profits abroad |
- Limited liability to capital contribution - Freely engage in any registered business lines that are not banned by local laws |
|
Summary of Cons |
- Cannot conduct revenue generating activities - Parent company bears liability |
- Limited to certain industry sectors - Parent company bears liability |
- Cannot issue shares - Maximum of 50 shareholders - Foreign investor can choose to establish a joint stock company in Vietnam. |
Why choose Dai Quang Minh LawFirm
With years of practical experience in legal consulting, Dai Quang Minh Law Firm is a pioneer in corporate support services, specializing in fast and affordable company formation. Below are the reasons to choose business registration services at Dai Quang Minh Law Office:
Human Resources: Established in September 2009, with over 15 years of practical experience, Dai Quang Minh Law Firm brings together a team of lawyers and legal experts with long-standing expertise in private economic groups nationwide.
Consulting Policy: Clients are gifted a completely free legal consulting package when using services at Dai Quang Minh Law Firm.
Professionalism and Experience: Dai Quang Minh Law Firm has a workforce with in-depth knowledge of business formation, ensuring a swift and accurate consulting process.
Time-Saving: Using Dai Quang Minh Law Firm's services helps you save precious time as we handle the entire process and related procedures.
Legal Insight: Dai Quang Minh Law Firm ensures that all relevant legal regulations are strictly followed in accordance with the law.
Customization: Our consulting services are highly adaptable to your specific needs, allowing you to choose options suitable for your business.
Trusted Partner: Dai Quang Minh Law Firm has built a reputation for providing affordable business setup consulting to many enterprises and individuals nationwide.
Confidentiality Assurance: Dai Quang Minh Law Firm is committed to the absolute protection of your personal and business information.
Detailed Support: Dai Quang Minh Law Firm provides detailed advice and support regarding the process and requirements to help you better understand business formation.
Process Optimization: Our consulting helps optimize the business setup process, minimizing potential risks and difficulties.
Excellent Customer Experience: Dai Quang Minh Law Firm is dedicated to providing the best customer experience through professional advice and enthusiastic support.
Focus on Business Plans: By utilizing our registration services, you can focus on developing your business plans and core activities instead of worrying about legal procedures.
Company set up process in Vietnam
An LLC, or 100 percent Foreign-Owned Enterprise, generally requires 3 to 4 months to establish in Vietnam. A Representative office can generally be set up in half that time.
For LLCs, while some sectors may require a ‘Pre-Investment Approval’, most skip to their service provider directly applying for the required Investment Registration Certificate (IRC), which requires 15 - 20 working days, unless the sector of intended operation is not governed by the WTO, in which case it may take longer. This step may include securing a physical business address to be aligned with the master plans in case the to-be-registered business lines have special requirements regarding the location.
With the IRC in hand, an organization may pursue the subsequent steps, applying for an Enterprise Registration Certificate.
|
Step |
Name |
Description |
Documentation Required |
Processing Time |
|
Step 01 |
Pre-investment Approval |
For some types of investment, companies need to seek the approval of Vietnamese authorities prior to starting establishment procedures. Varies in timeframe and documentation required. |
Varies depending on type of investment. |
Varies |
|
Step 02 |
Investment Registration Certificate (IRC) Application |
Required of all projects seeking to set up new entities in Vietnam regardless of foreign ownership percentage. |
- Certificate of incorporation - Financial statement / Bank Letter - In-principal lease agreement - Passport of the owner/director of investor and legal representative of new company |
From 15 working days |
|
Step 03 |
Enterprise Registration Certificate (ERC) Application |
Required of all projects seeking to set up new entities in Vietnam. |
- Certificate of incorporation - Passport(s) of the legal representative of new entity and authorised representative(s), if any |
From 3 working days |
|
Step 04 |
Post Licensing Procedures |
Includes: - Seal Registration and Notification - Bank Account Registration and Notification - Registration of Buying New Token for Tax - Online Declaration - Business License Tax Payment - Labour Registration |
Not specifically listed; relates to business operational compliance. |
~30 working days |
III. Requirements for setting up a business
Minimum capital requirements
For most sectors and business lines, Vietnam requires no minimum capital requirements. However, the registered capital will be assessed by The Department of Planning and Investment for whether it is adequate to cover the expenses of the business until it generates enough revenue to cover its costs, usually for the first year or two of operation, based on the calculation of the investors. It is possible to set up a basic business services company with less than USD 10,000 in some cases, but in most cases, it would be at or above this threshold, depending on the nature of the business, and which province/city the business is located.
Under the prevailing regulations, some industry sectors required a minimum capital, including:
- Security;
- Multiple-level sales;
- Education, language centers, or, vacational schools;
- Transportations;
- Banking;
- Finance;
- Insurance;
- Postage and telecommunication;
- Sports; and,
- Tourism.
Charter capital and total investment capital
The total investment capital of the company can combine both charter capital and loan capital. Loan capital, or mobilized capital, covers shareholders’ loans or third-party finance. Charter capital, or contributed capital, together with loan capital (if any) must be registered with the license issuing authority of Vietnam. Please note that mobilized capital is not always required to be registered, which means the total investment capital may be equal to the contributed capital.
Once approved, Investors cannot increase or decrease the charter capital amount without prior approval to make amendments from the local licensing authority.
Capital contribution schedules
Capital contribution schedule shall be specified first in the IRC, company charter.
Members and owners of a limited liability company (LLC) must contribute charter capital within the capital contribution schedules set out in these documents and within the contribution timeframes established by the Law on Enterprises.
IV. Registered address and resident director
Company registered address
A business requires a legal address in Vietnam in order to incorporate a company in the country. Most businesses require that it have its own physical location, such as an office or building leased or acquired.
Legal Representative
A company is required to have a Legal Representative (LR) – and may have one or more. A qualifying resident director requires a residential address in Vietnam. Please note that the address in Vietnam is required to register as current address of the LR in the ERC for establishment; Their residency status may be addressed separately.
Prospective clients seeking assistance with procedures for establishing a foreign-invested enterprise in Vietnam are kindly invited to contact Dai Quang Minh Law Firm via Hotline: 0932 191 299; Zalo: 0932 191 299; Email: info@quangminhlawfirm.com; Viber: (+84) 337 926 405; WhatsApp: (+84) 337 926 405; WeChat: (+84) 337 926 405 (ID: pouniverse) for complimentary consultation and comprehensive, efficient, and accurate legal services.
In addition, Dai Quang Minh Law Firm provides a wide range of services, including sub-licenses, business registration, investment, foreign labor, and ongoing legal advisory services for both domestic and foreign enterprises.
Contact:
- Zalo: 0932.191.299
- Gmail: info@quangminhlawfirm.com
- Viber: (+84) 337926405/ (+84) 869672216
- WhatsApp: (+84) 337926405/ (+84) 869672216
- Wechat: (+84) 337926405 (ID: _pouniverse)/ (+84) 869672216 (ID: DQM_Verna)
- Telegram: (+84) 337926405/ (+84) 869672216
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