Company Registration in Vietnam- An Overview
Vietnam is a country situated in South Eastern Asia. It shares borders with countries like China, Laos and Myanmar. There are 63 provinces located in Vietnam. Vietnam carries out large economic activities related to agriculture.
The country is quite cheap in terms of labour when compared to other parts in Asia. Its location makes it a hub for carrying out business with China. The manufacturing capital of the world is China, however, local manufacturers in Vietnam can choose to access supply chains through Vietnam. Through this economic activities would increase.
Vietnam offers technology incentives for different companies to establish; hence many investors would consider Vietnam for the process of company registration. An investor going for company registration in Vietnam would also benefit from the double taxation treaties which Vietnam has with other countries such as South Korea, Japan and India.
Benefits of Company Registration in Vietnam
The following benefits are the benefits of company registration in Vietnam:
The cost of employing local labour in Vietnam is cheap when compared to other countries such as China and Indonesia. When statistics are considered, the monthly minimum wage of labourers adds up to USD 70 in Vietnam. This is less when compared to China.
The cost of living is Vietnam is low. Apart from this, if an investor has to take a warehouse in Vietnam, it is comparatively cheaper than China.
Vietnam shares borders with China. Hence Vietnam can gain advantage through supply chains established with China. Due to this, there is easy access to raw materials and capital goods in Vietnam.
Double Taxation Agreements
An investor going for company registration in Vietnam would also benefit from the double taxation treaties which Vietnam has with other countries such as South Korea, Japan and India. Due to this, investors would not be taxed twice for any income earned in Vietnam. Capital which is earned in Vietnam can be repatriated to domestic countries with ease.
World Class Infrastructure Facilities
Vietnam offers world class infrastructural facilities. There are more than three economic zones present in the mainland of Vietnam. There are more than 300 industrial parks and three Hi-tech parks present in Vietnam. All these benefits would attract investors to go for the process of company registration in Vietnam.
Vietnam has developed trade relations with the USA and the European Union. There are no trade issues between the above countries. Vietnam is the largest exporter of goods to the USA. Locally manufactured goods are exported from Vietnam.
The government of Vietnam has constantly developed investment policies to liberalised foreign investment in the country. This makes it easy to carry out business in Vietnam. The main motto of the government of Vietnam is ease of conducting business.
Business Structures for Company Registration in Vietnam
The following are the business structures for company registration in Vietnam:
- Limited Liability Company
- Joint Stock Company
- Branch Office
- Representative Office
Limited Liability Company
Those foreign investors who want to commence a 100% foreign-invested entity can opt for the LLC business structure. It is an ideal option especially for small and medium-sized enterprises due to its simple corporate structure which mandates just one founder. Moreover, the liability of its shareholders are limited to their shares, this protects one's personal assets.
The following minimum requirements should be fulfilled to establish LLC in Vietnam:
- Registered business address and legal representative;
- Legalised financial document;
- Notarised copies;
- Capital requirement (from 10k USD depending on the field of business).
Joint Stock Company
Establishing a joint Stock Company is slightly more complicated and has more demanding requirements. Hence a Joint Stock Company business structure is an ideal option for large companies. Large corporations tend to set up a joint stock company in Vietnam as it allows owners to issue shares and list them on the stock exchange in Vietnam. This business structure also permits 100% foreign ownership based on the business sector.
Joint Stock Company in Vietnam allows a joint venture between foreign investors and local investors. However, it can be set up when there are equal portion of shares and this form of legal entity requires minimum 3 shareholders for establishment. There is no upper limit on the number of shareholders.
Further a shareholder shall be liable only for the debts and other property obligations of the Joint Stock Company within the amount of capital that it has contributed to the joint stock company.
Also, if the foreign investors do not want to establish a company officially in Vietnam, they can consider other structures such as representative office or branch office.
In order to establish a presence in the local market one can establish a representative office. Through representative office, foreign investors can conduct research and analyse local market trends and promote marketing activities.
In order to set up a Representative Office in Vietnam, some minimum requirements must be satisfied such as the operations of the parent company overseas should be minimum 1 year from the establishment date.
A Branch Office serves as an extension of its parent company overseas. Branch office is allowed to carry out all commercial activities of its parent company and generate profits. Moreover, it doesn’t have to establish a separate legal entity in Vietnam. A Branch Office can issue VAT invoices on its own, keep accounting and financial records together or separated from its headquarters, enter into contracts or agreements if required.
Minimum Requirements to set up Company in Vietnam
The following requirements should be fulfilled in order to set up a company in Vietnam:
- Foreign Investment Certificate
A foreign investor for company registration in Vietnam should have a foreign investment certificate. This certificate confirms that the government has provided approval for investing in Vietnam.
- Regulatory Permission
Permission from the requisite authority would also be required for forming a company in Vietnam.
- Residency Requirements
There is no need to appoint a Vietnamese resident as a shareholder and director. However, a branch office, representative office and a foreign LLC would have to appoint a local representative for carrying out the requirements in Vietnam.
Procedure for Company Registration in Vietnam
The following steps have to be considered to secure company registration in Vietnam:
- Application for Investment Registration Certificate
First and foremost, the applicant (foreign company) would have to make an application to Department of Planning and Investment. This is the main authority in Vietnam that provides the certificate. Every applicant investing in Vietnam would have to make this application for registering the investment. Regulatory compliance with the relevant ministry may also be required.
- Application for the Business Registration Certificate (Enterprise Registration Certificate)
In the next step, the applicant would have to make an application to the department of planning and investment for the Enterprise Registration Certificate.
The Enterprise Registration Certificate will provide the corporate details such as the-
- Company name;
- Registered office address;
- Owner's details; &
- Legal representative(s) of the company.
Once the above steps are carried out, the applicant would have to make a public announcement that the entity has been established. The corporate seal would be made and the sample must be published in the national enterprise registration portal.
- Apply for sub-licenses/permits
Once the company registration has been secured, depending on the business line, the applicant has to consider making an application for sub-licenses/permits that may be required.
Documents required for Company Registration in Vietnam
The following documents are required for company registration in Vietnam:
- Investment Certificate
- Enterprises Certificate
- Memorandum of Association
- Articles of Association
- Business Licenses
- Passport and Visas
- Residency Information.
Post Registration Compliances for Companies in Vietnam
- Once the company receives their ERC and completes the initial post-licensing activities, it can open bank accounts with commercial Vietnam-based banks.
- Annual Shareholder Meetings have to be carried out by Public Limited Companies or JSC.
- Board meetings have to be carried out quarterly for public limited companies.
- Initial Investment, Foreign Investment and Business Registration has to be notified with the relevant authority. If there is a change in the foreign investment, then such change must be notified to the department of planning and investment.
- Minutes of the board meeting and the annual shareholders meeting have to be kept at the registered office of the company. All other records have to be present with the company.