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Vietnam, with its dynamic economy and strategic location, offers numerous opportunities for foreign investors. When considering entering the Vietnamese market, investors can choose different types of business structures: Representative Office, Limited Liability Company (LLC), Joint-Stock Company, Branch Office, Joint Venture, and Public-Private Partnership. Each option has unique features, requirements, and benefits tailored to different business needs and strategic goals.
1. Representative Office (RO)
A Representative Office (RO) offers a low-cost entry option for companies new to the Vietnamese market. This structure is particularly suitable for those seeking to gain market insights with a smaller initial investment and set the stage for future expansion.
Permitted Activities:
- Conducting market research
- Acting as a liaison for its parent company
- Promoting the parent company’s activities through meetings and other initiatives
Requirements and Capital:
- No registered capital requirement
Time to Establish:
- Approximately 7 working days (excluding any additional approval time)
2. Limited Liability Company (LLC) – 100% Foreign-Owned Enterprise
A Limited Liability Company (LLC) is an incorporated entity that provides limited liability protection, whereas a joint stock company is similar but intended by the investor to become a publicly traded company. It is a popular choice for investors aiming for full ownership and operational control.
Requirements and Capital:
- No minimum capital requirement for most sectors
- Registered capital should be adequate to cover business expenses until profitability
Ownership:
- Single-member LLC: One owner
- Multiple-member LLC: More than one owner (can be individuals or companies)
Time to Establish:
Under the laws of Vietnam, the time to set up a 100 percent LLC will be divided into two stages:
- Investment Registration Certificate: 15 days
- Enterprise Registration Certificate: 3 working days
3. Branch Office (BO)
Branch Offices (BO) are ideal for service-based businesses such as finance and banking. BOs can perform a wide range of activities and directly hire staff.
Permitted Activities:
- Renting offices
- Leasing or purchasing equipment
- Recruiting employees
- Remitting profits abroad
- Engaging in commercial activities as a licensed
- Setting up internal departments
Requirements and Capital:
- Establishment license and seal with the parent company’s name
- Appointment of a Vietnam-resident branch manager
Time to Establish:
- Approximately 7 working days (excluding additional approval time)
4. Joint Venture (JV)
A Joint Venture (JV) is a collaborative partnership created for specific business purposes. It can involve at least two foreign entities or a mix of foreign and local entities.
Ownership:
- Minimum foreign ownership: 30%
- Majority or minority ownership based on industry regulations
- Some sectors require a JV with a local partner
Applicable Sectors:
- Advertising, agriculture, telecommunications, travel, entertainment, gaming, transport services, etc.
Time to Establish:
- Obtain Investment Registration Certificate: 15 days
- Obtain Enterprise Registration Certificate: 3 working days
- Finding a JV partner and negotiations: 3 to 6 months
5. Public-Private Partnership (PPP)
Public-Private Partnerships (PPPs) involve collaboration between private enterprises and the government to develop key infrastructure projects. This model is crucial for addressing the infrastructure needs driven by urbanization and economic growth.
Types of PPPs:
- Build – Transfer – Operate (BTO)
- Build – Lease – Transfer (BT)
- Build – Operate – Transfer (BOT)
- Operate – Manage (O&M)
- Build – Own – Operate (BOO)
- Build – Transfer – Lease (BTL)
- Mixed types
Vietnam offers diverse business structures to cater to different investment strategies and industry requirements. Whether you’re a first-time entrant looking to explore the market through a Representative Office or a seasoned investor aiming for a significant infrastructure project via a Public-Private Partnership, understanding these options is crucial for making informed decisions. Each structure presents unique benefits and challenges, making it essential to choose the one that aligns best with your business objectives and long-term goals.
***ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient, and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for in-depth legal advice in Vietnam and internationally. If you need any advice, please contact us for further information or collaboration.
