Register Your Company in Vietnam

Are you looking to register a company in Vietnam? Registering a company in Vietnam may appear complex especially for foreign companies.

Inreach is here to help you make a proper plan and proceed to successfully register your company in Vietnam.

1. Understand the Types of Companies in Vietnam

Limited Liability Company (LLC)
Joint-Stock Company (JSC)
Partnership
Representative Office
Branch Office

2. Preparation Stage

Determine Business Activities: Decide on the business activities and ensure they comply with Vietnamese law.
Choose a Business Name: The name must be unique and compliant with naming regulations.
Find a Legal Representative: The company must have at least one legal representative residing in Vietnam.

3. Documentation

Prepare Necessary Documents:
- Business registration form
- Charter of the company
- List of members and their details (for LLCs and JSCs)
- Identification documents of the founders
- Office lease agreement
- Bank statement proving sufficient capital

4. Submission

Submit Application: Submit the application for business registration to the Department of Planning and Investment (DPI) in the province/city where the company is located.
Pay Registration Fee: Pay the required registration fee.

5. Post-Registration

Obtain Business Registration Certificate: Usually issued within 3-5 working days.
Seal Engraving: Order a company seal and register it with the Business Registration Office.
Tax Registration: Register for tax at the local tax office and obtain a tax code.
Open a Bank Account: Open a corporate bank account.
Additional Licenses: Depending on the business activity, additional licenses may be required.

Types of Companies in Vietnam: Pros and Cons

1. Limited Liability Company (LLC)

Pros:

Limited Liability: Owners’ liability is limited to their capital contribution.
Simple Structure: Easier management with fewer regulatory requirements.
No Minimum Capital Requirement: Flexible capital requirements.

Cons:

Limited Transferability of Shares: Shares are difficult to transfer.
Capital Contribution Restrictions: Capital must be contributed within 90 days of the business registration.

2. Joint-Stock Company (JSC)

Pros:

Unlimited Shareholders: Can raise capital easily through the issuance of shares.
Transferability: Shares are easily transferable.
Potential for Public Listing: Can be listed on the stock exchange.

Cons:

Complex Management: Requires a board of directors and more complex governance.
Higher Compliance Requirements: More stringent reporting and compliance standards.

3. Partnership

Pros:

Combined Expertise: Partners can combine skills and resources.
Simple Formation: Easier and less costly to form than a corporation.

Cons:

Unlimited Liability: Partners have unlimited liability for the partnership’s debts.
Disputes: Potential for conflicts between partners.

4. Representative Office

Pros:

Simple Setup: Easier and faster to establish.
Market Research: Ideal for conducting market research and establishing a presence without heavy investment.

Cons:

Limited Activities: Cannot engage in profit-generating activities.
Dependent: Operates as a liaison office for the parent company.

5. Branch Office

Pros:

Operational Autonomy: Can engage in profit-generating activities.
Expansion: Useful for foreign companies looking to expand into Vietnam.

Cons:

No Separate Legal Entity: The parent company is liable for the branch’s debts.
Compliance Requirements: Must adhere to Vietnamese regulations and reporting requirements.

By following the above steps and understanding the pros and cons of each company type, you can make an informed decision on the best way to register and start your business in Vietnam.

Types of Businesses Requiring a Local Partner and JSC Registration

1. Telecommunications

Requirements: Foreign investors can own no more than 49% of the equity in a telecommunications company that provides network infrastructure services.
Local Partner: Mandatory to have a local partner holding the majority stake.

2. Broadcasting and Media

Requirements: Foreign ownership is restricted to 49% in television broadcasting services.
Local Partner: A local partner is required to hold the majority share.

3. Insurance

Requirements: Insurance companies must have at least 51% local ownership.
Local Partner: Essential to partner with a local entity holding the majority share.

4. Logistics and Freight Forwarding

Requirements: Foreign investors are restricted to owning a maximum of 49% in freight forwarding and logistics companies.
Local Partner: Necessary to have a local partner with a controlling interest.

5. Advertising

Requirements: Foreign investors can only hold up to 99% of the capital in an advertising company, but practical constraints often necessitate local partnerships.
Local Partner: Typically required to navigate regulatory and market entry challenges.

6. Education and Training

Requirements: For certain education and training institutions, especially in higher education, foreign ownership is limited.
Local Partner: A local partner is often required to meet ownership regulations.

7. Real Estate

Requirements: Foreign ownership in real estate businesses is capped at 49%.
Local Partner: Essential to have a local partner who holds the majority stake.

Pros and Cons of Forming a JSC with a Local Partner

Pros:

Market Access: Eases entry into sectors restricted for foreign investors.
Local Expertise: Benefits from the local partner’s knowledge of the market, culture, and business environment.
Regulatory Compliance: Ensures compliance with local laws and regulations.
Network and Connections: Leverages the local partner’s established relationships and network.

Cons:

Shared Control: Requires sharing control and decision-making with local partners.
Profit Sharing: Profits must be shared according to the equity distribution.
Potential Conflicts: Risks of disputes or conflicts of interest with local partners.
Complex Agreements: Necessitates clear, detailed agreements to outline the responsibilities and expectations of each party.

Conclusion

Understanding the regulatory landscape and the necessity of local partnerships is crucial for foreign investors looking to establish a business in Vietnam. Joint-Stock Companies (JSCs) with local partners not only facilitate market entry but also ensure compliance with Vietnamese laws, making them a strategic choice for foreign investment in restricted sectors.