Foreigner investors must thoroughly understand legal issues and required documents in order to establish a company in Vietnam timely and conveniently.
You must first take into account the provisions of the Enterprise Law and related documents in order to understand what is necessary to establish a company, but at the very least, you must be ready with the following points:
Forms of Business in Vietnam
Foreign investors could establish a company in Vietnam under of the following forms:
- Limited-liability company
A limited-liability company formed by foreign investors in Vietnam may be under the forms of either:
+ A foreign-invested joint-venture company between foreign investors and at least one domestic one; or
+ A 100% foreign-owned enterprise;
- Joint-stock company
A joint-stock company must have at least three shareholders. The company may either be 100% foreign-owned; or a joint venture between both foreign investors and domestic ones.
This form of foreign investment in Vietnam may be setup between a legal entity or an individual and the individual general partner. The partner has unrestricted liability for the operations of the partnership
- Forming Business cooperation contract (BCC)
- Opening Representative office in Vietnam
- Opening Branch in Vietnam
- Build-operate-transfer (’BOT’), Build-transfer (’BT’) and Build-transfer-operate (’BTO’) Contracts
- Public and Private Partnership Contract
Have your business name prepared before establishing company in Vietnam
When considering what it takes to start a business, this is the first thing that every businesses must properly plan. Because naming the entity is the initial step, just like with a person. Therefore, the next stages can only be prepared for a corporation once the company name has been decided.
Depending on the type of enterprise to choose a company name that fully meets the conditions in Article 37 of the Enterprise Law 2020. In which, the enterprise name must have the following characteristics:
- Business name consists of two elements: Type and proper name. Proper names must be used with letters of the Vietnamese alphabet, letters F, J, Z, W, numbers and symbols.
- The name of the enterprise must be associated with the head office, branch, representative office and business location.
- Prohibitions on naming an enterprise: It is not permitted to use the name of the State agency to make the whole/part of the proper name; have the same name as another enterprise; or cause confusion with other enterprises; using signs and phrases that go against historical, cultural, ethical, or other fine customs.
Determine the company’s headquarters’ location to establish company in Vietnam
Enterprises must choose a location for the company’s headquarters after deciding on a company name as the following step in the establishment of a business. The conditions stated in Article 42 of the Enterprise Law must be met with the head office location:
“The head office of the enterprise is located in the Vietnamese territory, is the contact address of the enterprise and is determined according to the geographical boundaries of the administrative unit; have phone number, fax number and email (if any).”
As a result, the company’s head office location must be in Vietnam, chosen in accordance with administrative boundaries, and will serve as the enterprise’s contact information.
Determine the type of the company in Vietnam.
It is clear that choosing the type of company to be established in Vietnam is one of the crucial steps in determining what is needed to start a company. Because the Enterprise Law’s provisions and other guiding texts define the following types of enterprises:
- Single member limited liability company (established by an individual/organization) or limited liability company with two or more members (with 02 – 50 members contributing capital to establish the company), responsible for the amount of capital contributed.
- A joint stock company has at least 03 shareholders or more and there is no limit to the maximum number of shareholders. These people are liable to the extent of the shares they own.
- A private enterprise owned by an individual who is responsible with all assets.
- Partnership company is a company with at least 02 members who are owners of the company, doing business together and may have additional members contributing capital.
As a result, it is clear that there are numerous different types of businesses, each with their own characteristics and membership bases. In order to prepare for other situations, you must decide what type of business you want to start before you can establish a company.
Prepare the appropriate charter capital for establishing a new company in Vietnam
Charter capital is the total value of assets contributed or committed to contribute by members of the company or the company owner when establishing the company (according to Clause 34, Article 4 of the Enterprise Law 2020). Charter capital is set for different types of limited liability companies, partnerships and joint stock companies.
The minimum or maximum required charter capital of a corporation is not specifically regulated in Vietnam. Therefore, determining the charter capital that is appropriate for the company’s economic position, the founder’s financial ability, and the type of business is one of the necessary requirements to establishing a business in Vietnam.
There are several types of business where the founder of the company must ensure financial capability through the minimum charter capital, even though there are no particular restrictions regarding charter capital.
Securities companies in Vietnam: Pursuant to Clause 1, Article 175 of Decree 155/2020/ND-CP, when doing securities brokerage business, the minimum charter capital is 25 billion VND; securities trading requires 50 billion VND; securities underwriting required 165 billion VND and securities investment consulting required 10 billion VND.
Multi-level sale company: According to Point b, Clause 1, Article 7 of Decree No. 40/2018/ND-CP, when registering for multi-level sale, the charter capital must be at least 10 billion VND.
According to Clause 1 of Article 5 of Decree 17/2012/ND-CP, a limited liability corporation providing auditing services must have a legal capital of 05 billion VND.