Company Registration

How to Start a Company in Vietnam?

Establishing a company or any kind of business entity in a foreign jurisdiction is always a challenging task due to different legal system, environment and peculiar rules and regulations. Opening a business entity in Vietnam is no different. This piece of writing sheds some light on the step by step process of starting a company in Vietnam and the necessary documentation for successfully incorporating it.  

Types of Business structures that can be opened in Vietnam

According to the business ecosystem in Vietnam, the Companies exist in two basic forms. These are:

• Limited Liability Company^[1] (LLC)
• Joint Stock Company (JSC)

Between the above two forms of business entities, LLCs are the most common form of business entity for the foreign visitors in Vietnam because of their relative simplicity in operations while JSCs have numerous requirements such having a minimum of three shareholders. JSC as a business structure is preferable for those businesses who wish to issue shares and mobilise share capital by listing itself on the stock exchanges in the future.

However, if the foreign investors do not wish to open a company officially in Vietnam, then they have the following options:

• Representative Office
• Business Co-operation Contract (BCC) with a Vietnamese partner

It must be noted that the above two alternatives have their own limitations and the same are viable for specific scenarios and situations.

What are the main official positions in a company in Vietnam?

Following are the main positions that a company must have in Vietnam:

1. Legal Representative: a company in Vietnam must have at least one legal representative residing in Vietnam. However, there can be more than one legal representative appointed for a company.
2. (General) Director: The (General) Director is the position holder that is responsible for operating the company on a day to day basis.

It must be noted that for the above two positions, the office holder can have a nationality other than that of Vietnam. However, he must be having a work permit for Vietnam.

• Chief Accountant: This is a position equivalent to that of a Company Secretary in other jurisdictions. The office holder is appointed after the company has been established and takes on the responsibility of the company after incorporation only.

Procedure of Opening a company in Vietnam

Following is the step-by-step procedure along with their respective timeline for incorporating a company in Vietnam:

1. To begin with, the promoters need to obtain an Investment Registration Certificate (IRC). The application for IRC takes a time period of three weeks for approval from the department.
2. The next step is to obtain an Enterprise Registration Certificate (ERC) for the new company. The statutory period for an application of ERC is one week.
3. The third important step involves post licensing procedures such as arranging a Company Seal and publication of notifications of company establishment. This process again takes a time period of one week.

The statutory time limit mentioned is indicative of the time limit the authorities take in processing of the application and not reflect the time taken by the promoters in the preparation of the applications or for reviewing them or translation process etc.

Documents required for the registration of company in Vietnam

Following are the standard documents required for a enterprise receiving investments from outside Vietnam:

1. Documents of the investor:

In case of individual investor: Passport of the investor

In case of a corporate investor: incorporation certificate, extract of the Director and Address Register, Charter and all the amendments of that

• Legal Representative’s Identification card or passport
• Identification card or passport of the authorised representative of the Investor for the Corporate Investor
• Bank letter of the Investor. The balance of account must be equal to or more than the value of the charter capital of the new company
• Lease Documents or MoU for the head office of new company and documentation related to the landlord 

The legal documents of the foreign investor may vary depending on the jurisdiction of the investor. However, the standard documents remain the same as mentioned above.

Some of the other requirements for opening a company in Vietnam include the following:

1. Registration of business lines and business objectives: it is mandatory for every new company to get the registration its business lines and investment objectives. Such registration shall be subject to limitations and conditions regarding the investment sectors in Vietnam. Almost all sectors of business are open for 100% FDI except the following:

Total bar: Military and related printing:

Partial restrictions: requires a Joint Venture with a Vietnamese partner in sectors like tourism, advertising, logistics etc.

• Capital of investment project and charter capital: The IRC must contain the details of the capital for the investment project and ERC must have the details of the company charter capital.
• Investment capital is the total funds or assets that will be invested into the investment project and includes the following:
• Loans;
• Capital contributed by the investors; and
• other capital source
• Charter capital: is the paid up capital of the company which is recorded on ERC.
• Opening of a bank account: companies can open their bank account once they have received their ERC and completed the post licensing activities. The bank account has to be opened with a Vietnam based bank.

Conclusion 

Vietnam has been rising as a major manufacturing hub and as a substitute to Chinese manufacturing. With a strategic location, competitive and competent labour force at competitive costs and an open FDI environment makes Vietnam an attractive destination for the foreign investors to expand their business operations by opening a company in Vietnam.  

Read Our Article: How to set up a Limited Liability Company in Vietnam?