How to Set Up a Company in Vietnam
To start a business in Vietnam, there are several types of legal entities that foreigners can choose from. The most common and popular ones include Limited Liability Company (LLC) and Joint Stock Company (JSC). Other choices are Representative Office (RO) and Branch Office (BO).
Company Incorporation Options in Vietnam
1. Limited Liability Company (LLC)
An LLC is a legal entity in Vietnam that allows 100% foreign ownership. One of the 4 types of business entities in Vietnam, the LLC, also known as Limited Liability Company, is an appealing choice given that any financial obligations of the company are independent of members’ personal assets. As such, by establishing an LLC, the personal assets of shareholders are protected as the liability is limited only to their capital contributions/shares.
Another advantage of setting up an LLC is that it requires one founder only, making it one of the legal entities with the simplest corporate structure. If an LLC has more than two owners, a chairman of the Members Council needs to be appointed. Moreover, the maximum number of members is 50. With that being said, LLC is highly suitable for small and medium-sized enterprises (SMEs).
LLC, however, is not allowed to be listed on the Vietnamese Stock Exchange and issue public shares.
2. Joint Stock Company (JSC)
Setting up a JSC in Vietnam comes with its set of requirements, similar to starting an LLC. JSC is another legal entity or business that can be owned 100% by foreign entrepreneurs in Vietnam. There are, however, some major differences between LLC and JSC.
Unlike LLC which has a simple corporate structure, establishing a JSC requires a minimum of three or more shareholders/founders. The regulations do not stipulate the maximum number of founders. The structure of a JSC must consist of a management board that is supervised by an annual general meeting and an inspection committee, a chairman of the management board and a director or a general director that is to be appointed as the company’s legal representative.
Furthermore, a JSC is allowed to be listed on the Vietnamese Stock Exchange and issue public shares, provided that the capital of the company is over VND 10 billion (as of 5th May 2021, it stands at VND 10.9 billion based on conversion rates from US$475,000).
3. Representative Office (RO)
The main purpose of establishing a RO is to gain presence in the Vietnamese market. Through RO, entrepreneurs can analyse the market trends in the country and conduct activities such as promoting products of parent companies, controlling and monitoring the quality of products and disseminating information. Any activities that are considered to be able to bring profits are strictly prohibited.
Since the activities that can be done by a RO are limited, the process of setting up such a company in Vietnam is less complicated. It is common that after gaining presence and establishing a reputation, entrepreneurs will usually decide to set up a foreign-owned company in Vietnam.
4. Branch Office (BO)
Just like in other countries, a BO is an extension of its parent company. Commercial activities that generate income are allowed. And it is not necessary to incorporate or start a separate legal entity in Vietnam.