Set up a business in Vietnam

1 January 2023 • by © the France-Vietnam Chamber of Commerce and Industry (CCIFV). Reproduction rights reserved.

This article is for informational purposes only and aim to summarize the different entities available for foreign investors to set up in Vietnam and the procedures to do so. While Vietnam is a highly attractive investment destination for foreign investors, it still has a complex process for establishing a company, professional assistance is therefore highly recommended to guide you through different steps.

1 - Types of Business Entities

Limited Liability Company

Limited Liability Company (LLC) is the most common form of investment for foreign investors cause the member is responsible for the debts and liabilities of the company to the extent of the amount of capital that he has contributed or committed to contribute to the company. LLCs constitute a new legal entity but are not allowed to issue shares.

LLCs can be broken down into single member LLCs, where there will only be one owner, and multiple member LLCs, where there will be more than one stakeholder. A LLC with one member can be converted into a LLC with two members or more, by adding new capital from other investors, or the investor transferring part of its capital to others. These owners can be private individuals or companies. LLCs can generally be 100% owned by foreign investors, except in some business lines where a Vietnamese stakeholder is required (advertising services, telecommunication services, travel agencies and tour operator services, etc.).

Joint Stock Company

A Joint Stock Company (JSC) constitute a new legal entity established through a subscription for shares in the company. The charter capital of a JSC is divided into shares and each shareholder holds shares corresponding to the amount of capital the shareholder has contributed to the company. Shareholders are responsible for the debts and liabilities of the company to extent of the amount of their contributed capital.

A JSC is required to have at least three shareholders. There is no limit on the maximum number of shareholders in JSC. Under Vietnamese law, this is the only type of corporate structure that can issue shares.

person working at a desk, seen from above, pointing at a book

Representative Office

A Representative Office (RO) offers a low-cost entry for companies with business relations or investment projects in Vietnam. It is a common option among newcomers to the Vietnamese Market and it usually prepares for a future commercial implantation. ROs are prohibited to conduct commercial or revenue-generating activities, and it does not constitute an independent legal entity.

Branch Office

A Branch Office (BO) can conduct business activities in Vietnam, but it does not constitute an independent legal entity. To set up a BO, a parent company must have conducted business in its home country for at least five years. BOs are limited to certain types of service businesses, such as foreign law firms, finance, banking, etc.

2 - Procedure

Please note that any foreign documents or supporting information provided to complete these steps will need to be notarized, legalized by consular officials, and translated into Vietnamese by competent authorities.

Step 1 - Investment registration certificate application

The first step in the Vietnamese corporate establishment process is an application for an Investment Registration Certificate (IRC). This is required for all projects seeking to set up new entities in Vietnam (regardless of foreign ownership percentage) and establishes the right of the foreign company to invest within Vietnam.

It usually takes at least 15 days to issue the IRC from the date when documents are submitted.

Step 2 - Enterprise registration certificate application

The Enterprise Registration Certificate (ERC) is required for all projects that seek to set up new entities within Vietnam. The ERC is delivered by the Provincial Department of Planning and Investment.

From the completion of this step, the entity legally exists. It usually takes at least 3 days to issue the ERC from the date when documents are submitted.

Person writing on a digital tablet using a stylus

Step 3 - Post licensing procedures

Once the IRC and ERC have been issued, additional steps must be taken to complete the procedure and start business operations. This includes:

- Seal Registration and Notification;
- Bank account opening;
- Annual business license tax payment (around 90 USD);
- Public announcement of company establishment.
- Etc.

Specificities

For BOs and Ros which does not constitute an independent legal entity, IRC and ERC are not required to set up. Thus, the process is different. The foreign investors will need to apply for a specific RO/BO license from the Provincial Department of Industry and Trade before completing post licensing procedures.
It usually takes at least 7 days.