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.
Stipulations on Foreign Ownership
In order to attract more outside investment Vietnam has changed the foreign investment laws significantly, allowing foreigners 100% ownership of any of the previously mentioned entities. There are very few restricted lines of business in Vietnam, and those few include the following industries: tourism, advertising, oil & gas exploration, and mining. Furthermore, the Vietnamese government has earmarked certain high-priority industries to encourage foreign investment with attractive tax incentives, and these are mainly focused on the high-tech and ag-tech industries.
Minimum Capital Amount
There is no official minimum capital requirement for establishing a 100% foreign-owned company in Vietnam. The only official stipulation from the government is that the foreign entity must have enough capital to run operations and hire a team sustainably while doing business in Vietnam. However, based on our experience of setting up thousands of companies in Vietnam, we suggest that foreign companies inject SGD 34,00 to 54,000 to establish themselves and successfully register their business.
Set Up Time
As opposed to developed nations like Singapore, the time to establish an entity in Vietnam is longer. Again, based on our experience, you can expect a total of 40-60 days to incorporate a 100% foreign-owned company in Vietnam.
How We Can Help
With the changing regulations, setting up a company in a foreign country such as Vietnam can be difficult and frustrating, but it doesn’t have to be. By employing an experienced and reliable service provider, you can start doing business without the hassle and without stress. As the trusted partner of over 15,000 clients across APAC, InCorp Global can help you jumpstart your market entry process. Contact us and get started today.
FAQs
These are the 4 types of business entities you can consider when setting up a company in Vietnam:
- Limited Liability Company (LLC)
- Joint Stock Company (JSC)
- Representative Office (RO)
- Branch Office (BO)
Yes, 100% foreign ownership is allowed when setting up an LLC in Vietnam.
Unlike LLC which has a simple corporate structure, establishing a JSC in Vietnam 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, chairman of the management board and a director or a general director that is to be appointed as the company’s legal representative.
