HOW TO SET UP A SCHOOL IN VIETNAM: A LEGAL GUIDE FOR FOREIGN INVESTORS

HOW TO SET UP A SCHOOL IN VIETNAM: A LEGAL GUIDE FOR FOREIGN INVESTORS

Vietnam continues to be one of the most attractive destinations for foreign investment in Asia. With a stable business environment, competitive operating costs, an expanding consumer market, and a strategic location for regional trade, Vietnam offers significant opportunities for foreign investors seeking to establish a long-term presence.

However, setting up a foreign-invested company in Vietnam is different from establishing a purely domestic company. Foreign investors must comply not only with enterprise registration procedures but also with investment regulations, market access conditions, capital contribution requirements, foreign exchange rules, and sector-specific licensing requirements where applicable.

Therefore, before entering the Vietnamese market, foreign investors should carefully determine the proper investment structure, business lines, ownership ratio, capital plan, licensing roadmap, and post-establishment compliance obligations.

Prospective clients seeking assistance with procedures for setting up a foreign-invested company 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

I. COMMON FORMS OF FOREIGN INVESTMENT IN VIETNAM

When a foreign investor wishes to conduct business in Vietnam, there are several possible investment structures. In practice, two of the most common forms are establishing a new foreign-invested company or acquiring shares/capital contribution in an existing Vietnamese company.

Choosing the correct form from the beginning is important because each structure has different procedures, timelines, legal risks, and compliance requirements.

1.1. Establishing a company with 100% foreign-owned capital

A foreign investor may establish a company in Vietnam with 100% foreign-owned capital, provided that the intended business lines are open to foreign investment and the investor satisfies applicable market access conditions.

Under this model, the foreign investor directly establishes a new legal entity in Vietnam and has full control over the company’s management, operation, capital structure, business strategy and profit distribution.

This form is often selected by investors operating in sectors such as trading, manufacturing, logistics, technology, consulting, professional services, education, food and beverage, or other service-related industries, subject to the relevant legal conditions.

The main advantages of this structure include:

Full control over business management and operation;

Better protection of internal know-how, technology, procedures and business strategy;

Clear ownership structure;

Greater flexibility in decision-making and profit distribution;

Direct implementation of the investor’s business model in Vietnam.

However, foreign investors should note that setting up a 100% foreign-owned company usually involves more procedures than establishing a domestic company. In many cases, the investor must first apply for an Investment Registration Certificate, and only after obtaining this certificate may the investor proceed to register the company and obtain the Enterprise Registration Certificate.

In addition, the investor must review whether the proposed business lines are unrestricted, conditional, or prohibited for foreign investors. Some business sectors may require additional approvals, sub-licenses, minimum capital, local conditions, or restrictions on foreign ownership.

1.2. Purchasing shares or capital contribution in an existing Vietnamese company

Instead of establishing a new company, a foreign investor may enter the Vietnamese market by purchasing shares or receiving transfer of capital contribution in an existing Vietnamese enterprise.

This is a common form of investment where the investor wishes to acquire an existing business, cooperate with local partners, or take advantage of an established customer base, staff, premises, licenses, supply chain or operating system.

The main advantages of this model include:

Saving time compared with establishing a new company from the beginning;

Using the existing business structure and operation;

Accessing available customers, contracts, personnel, premises and market channels;

Allowing faster market entry in certain cases;

Supporting mergers, acquisitions and strategic partnerships.

However, this structure requires careful legal due diligence. The foreign investor should review the target company’s business lines, ownership structure, licenses, tax status, accounting records, debts, contracts, labor matters, intellectual property, land or lease arrangements, product compliance, and any previous administrative sanctions.

In certain cases, the foreign investor must register the capital contribution or share acquisition with the competent authority before completing the transaction. This is especially relevant where the transaction causes the foreign investor’s ownership ratio to reach certain legal thresholds, involves conditional business lines, or relates to land-use issues in sensitive areas. Foreign investors are also subject to Vietnam’s market access conditions under the Law on Investment 2020 and its guiding regulations.

Therefore, although share acquisition may appear faster than setting up a new company, it may carry hidden legal risks if the investor does not conduct proper due diligence before signing the transaction documents.

II. KEY BENEFITS OF SETTING UP A FOREIGN-INVESTED COMPANY IN VIETNAM

Establishing a foreign-invested company in Vietnam provides foreign investors with a formal and lawful business presence. When the investment structure is prepared properly, the investor may gain several important advantages.

2.1. Clear legal status

A foreign-invested company is legally recognized as a Vietnamese legal entity. It may sign contracts, lease offices or factories, recruit employees, open bank accounts, issue invoices, conduct business activities and participate in commercial transactions in accordance with its registered scope.

A clear legal status is especially important for foreign investors who wish to operate long-term in Vietnam rather than relying on informal arrangements or local nominees.

2.2. Access to investment incentives

Depending on the business sector, location and project scale, certain investment projects may be eligible for investment incentives, such as tax incentives, land-related incentives or other investment support measures.

Incentives are often associated with encouraged sectors, high-tech projects, manufacturing, research and development, industrial zones, economic zones or projects located in areas with special socio-economic conditions. Whether an investor may enjoy incentives depends on the specific project and applicable regulations.

2.3. Greater credibility with partners and authorities

A properly established foreign-invested company may create stronger credibility with suppliers, customers, banks, landlords, employees and government authorities. This is particularly important where the company needs to enter into long-term contracts, import goods, apply for sub-licenses, recruit foreign employees or cooperate with local partners.

2.4. Better risk control

Legal compliance from the beginning helps foreign investors avoid unnecessary risks, including invalid business scope, licensing delays, foreign ownership issues, capital contribution problems, tax risks, foreign exchange issues and difficulties when expanding the business later.

A well-structured company also makes it easier to amend business lines, increase capital, change investors, open branches, obtain licenses, or restructure the business in the future.

2.5. Long-term market development

Vietnam remains a promising market for foreign investors due to its competitive labor costs, improving infrastructure, growing consumer demand, export-oriented economy and participation in multiple international trade agreements.

A foreign-invested company allows investors to build a long-term operational base in Vietnam and develop a sustainable market strategy.

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.

III. IMPORTANT LEGAL ISSUES FOREIGN INVESTORS SHOULD CONSIDER BEFORE ESTABLISHMENT

Before setting up a foreign-invested company, investors should not focus only on company registration. They should review the full legal roadmap for the intended business model.

3.1. Market access conditions

Foreign investors must check whether the intended business lines are open to foreign investment. Vietnam’s investment regulations classify certain sectors as prohibited, restricted, or conditional for foreign investors. If a business sector is subject to market access conditions, the investor may need to satisfy requirements on ownership ratio, investment form, scope of activities, partners, capital, licenses or other conditions.

For example, trading, distribution, education, logistics, real estate, advertising, tourism, e-commerce, food and beverage, and certain professional services may require deeper legal review before establishment.

3.2. Investment capital

Vietnamese law does not impose a universal minimum capital requirement for all foreign-invested companies. However, the proposed capital must be reasonable and suitable for the business plan, operating expenses, office or factory lease, recruitment plan, equipment, import volume and project implementation schedule.

For conditional sectors, minimum capital may be required by law. Even where no statutory minimum applies, the licensing authority may still assess whether the proposed capital is realistic for the project.

3.3. Business location

The company must have a lawful business address in Vietnam. For certain activities, the location may need to be suitable for the registered business lines. For example, manufacturing projects may require factory premises; education projects may require specific facilities; food or cosmetics businesses may need to consider storage, hygiene and product compliance requirements.

A residential apartment used only for living purposes is generally not suitable for company registration unless the relevant area is legally permitted for commercial or office use.

3.4. Business lines and sub-licenses

Some investors assume that registering a company is enough to start business immediately. In practice, this is not always correct.

Depending on the business model, the company may need additional licenses after incorporation. For example, trading and distribution activities by foreign-invested enterprises may require a business license; education institutions may need education operation approvals; food businesses may need food safety procedures; alcohol, cosmetics, medical devices, pharmaceuticals or chemicals may require sector-specific permits or product declarations.

Therefore, the investor should identify all post-establishment licenses before commencing business.

3.5. Capital contribution and banking compliance

Foreign investors must contribute capital in accordance with the approved investment documents and applicable foreign exchange rules. Capital contribution should be made through the proper investment capital account where required.

Incorrect capital transfer, late capital contribution or inconsistent banking records may create difficulties when the company later increases capital, distributes profits, changes investors or applies for amendments.

IV. BASIC PROCEDURE FOR SETTING UP A FOREIGN-INVESTED COMPANY IN VIETNAM

Although the specific procedure depends on the investor’s nationality, business sector, location and investment structure, the process commonly includes the following steps.

Step 1: Review the investment structure and business lines

The investor should determine whether the company will be wholly foreign-owned or jointly owned with Vietnamese partners, what activities the company will conduct, whether market access restrictions apply, and whether any sub-licenses will be required after incorporation.

Step 2: Prepare foreign investor documents

Foreign investors usually need to prepare documents proving legal status and financial capacity. For individual investors, this may include passports and bank statements. For corporate investors, this may include incorporation documents, board resolutions, financial statements and authorization documents.

Foreign documents may need to be legalized, notarized and translated into Vietnamese before submission.

Step 3: Apply for the Investment Registration Certificate

Where required, the investor submits the application for the Investment Registration Certificate to the competent authority. The dossier should clearly describe the investor, investment capital, project objectives, location, implementation schedule and proposed business activities.

Step 4: Apply for the Enterprise Registration Certificate

After the Investment Registration Certificate is issued, the investor proceeds to establish the company and obtain the Enterprise Registration Certificate. This certificate records the company’s legal information, including company name, address, charter capital, legal representative and enterprise code.

Step 5: Complete post-establishment procedures

After incorporation, the company should complete tax registration, open bank accounts, register digital signatures and e-invoices, contribute capital on time, prepare accounting records and internal corporate documents, and display the company signboard at the registered address.

Step 6: Apply for sub-licenses where required

If the company operates in a conditional business sector, it must obtain the relevant sub-license or approval before conducting business. This step is essential for sectors such as trading, distribution, education, food, alcohol, cosmetics, logistics, tourism, employment services and other regulated industries.

Prospective clients seeking assistance with procedures for setting up a foreign-invested company 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.