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Set up a company in Vietnam – If your interested in doing business in Vietnam and have arrived at the decision to set up a company in Vietnam, this article will serve as an easy to understand step wise guide about company incorporation in Vietnam. Follow the guidelines here on and get on with the process of registering your company in Vietnam.
#1 Selecting the right kind of entity to suite your business needs.
If you are ready to set up your company in Vietnam, the very first thing you will need to do is select the the type of entity you wish to register. The following are the types of business entities that can be formed in Vietnam under Vietnam’s enterprise law are:
- Limited Liability Company
- Joint Stock Company
- Representative Office
- Branch Office
- Business corporation contract
- Public Private partnerships such as BOT, BIT etc
All of the above entities can be formed by an individual or a registered corporation hence the kind of entity you need to have for yourself in Vietnam is a matter of your objectives with which you wish to open a company. The registration records however show that in Vietnam most of the companies are limited liability companies (LLC). Investors prefer this option because limited liability companies in Vietnam are easy to incorporate and simple to operate.
Shareholding pattern & Legal representative
#2 Investor equity and CEO i.e legal representative.
The next step is to know the requirements to form a company in the backdrop of the business entity which you have decided to form. Here are the pre-requisites for company registration in Vietnam.
Shareholders for an LLC & JSC
Basically, the formation of a limited liability company in Vietnam requires at least 1 investor. Conversely, to form a joint stock company at least 3 investors should be present. In Vietnam, for most business lines an investor does not require to have a local as a shareholder.
In Vietnam, an equity holder can also act as the CEO of the company. It is also permissible to appoint a CEO who is not an equity holder. This person can either be a local resident or a foreigner. In Vietnam, the government refers to this person as the legal representative of the company. If the legal representative is not a capital contributing member and a foreigner then he/ she will need a work visa and work permit to legally work in Vietnam.
As per the existing law, once a company has been incorporated, the legal representative of the company is required to remain in country to manage the affairs of the company. This becomes a problem in a one member LLC where the equity holder is the legal representative of the Vietnam entity as well as the director of another entity which is located overseas and where they may be required to remain out of Vietnam. In these cases, an alternate legal representative must be appointed.
One easy solution is to appoint a management company like Mahan to oversee the affairs of the Vietnam entity. To do this the entity needs to provide a time bound power of attorney and company seal to the management company. In turn, the management company, after consultation will appoint an independent CEO/ legal representative. The benefit of this arrangement is that the onus of sponsoring a work permit now lies squarely with the management company who may or may not choose to appoint a foreign national as a CEO.
It is worthwhile to note that in Vietnam, the seal of a company is an integral part of any business transaction as the seal and authorized signature are required for any document to be considered an official correspondence.
Business requirements to set up a company in Vietnam
# 3 – Getting a legal address to register your entity.
A local Vietnam address is necessary to register a company. This address becomes the registered address of the company post incorporation. To use an address for office registration a notarized copy of the lease agreement and the land use rights certificate of the property must be submitted. The latter is to ascertain that the lessor executing the lease agreement is indeed the owner of the property. The other reason for having this is to determine if infact the property can be used for commercial purposes. The land use right certificate will have this information listed and it is a common for a landlord to provide a copy of this to the lessee at the time of signing a lease agreement.
The registration/ official company address the a company cannot be an apartment address. A townhouse address however maybe used to register a company if the land use right certificate permits residential and commercial activity.
When using a serviced office or a co-working space, in addition to having a lease agreement, the serviced office or the co-working company also needs to provide a copy of their business licensees as well as a notarized copy of their lease agreement with the building owners which should expressly permit them to sub lease the premises to a 3rd party.
#4 – Minimum capital investment to set up a company in Vietnam
To set up a company in Vietnam there is no stipulated minimum investment capital. Essentially, the government assesses the required investment capital vis-a-vis the number of business lines being registered as well as the nature of the business. For this reason it is not possible to set up a company in Vietnam with an investment capital $1.
The rule of thumb is that the paid up capital should be sufficient to carry out the intended business. In our professional opinion a sufficient investment capital for most businesses is around USD 9,600. The breakdown of the USD 9,600 is as follows.
rent – 400/ month
X staff – 300/ month
costs – 100/ month
From this simple calculation, you will notice that the monthly operational costs are around USD 800. This translates to USD 9,600 per year. Hence a paid up capital of USD 9,600.
#5 Preparing the application dossier to register a company in Veitnam
An investor has to typically fill out 7 forms to setup a company in Vietnam. In most cases, the assistance of a company like Mahan will be required to fill out the paperwork as all the documents are in Vietnamese. Additionally, a company like Mahan also has the necessary expertise to answer some not so apparent questions and guide an investor through the process. To give you an idea of the application pack, the following forms typically need to be filled out. In certain cases, the investor might have to complete additional paperwork. This depends on the business lines being registered.
The standard forms to set up a company in Vietnam are as follows.
i. Form I.1 : Written request for the implementation of investment procedure (Article 33,34,35,37 of Invemstent law)
(Mẫu I.1, Văn bản đề nghị thực hiện dự án đầu tư, (Điều 33, 34, 35, 37 Luật đầu tư)
ii. Form I.3, Proposal of investment project, (Applies to projects not subject to investment policy decision – Clause 2, Article 37 of the Investment Law)
(Mẫu I.3, Đề xuất dự án đầu tư (Ứng dụng đối với dự án ko thuộc diện Quyết định chủ trương đầu tư – Khoản 2 Điều 37 Luật đầu tư)
iii. Explanatory statement, financial capacity and experience of investor’s experience.
BẢN GIẢI TRÌNH NĂNG LỰC TÀI CHÍNH và NĂNG LỰC KINH NGHIỆM CỦA NHÀ ĐẦU TƯ
iv. Appendix I-2, Proposal for business registration one member limited liability company/ Phụ lục I-2, GIẤY ĐỀ NGHỊ ĐĂNG KÝ DOANH NGHIỆP CÔNG TY TNHH MỘT THÀNH VIÊN
v. Company Charter/ ĐIỀU LỆ
vi. NOTIFICATION Regarding the use of the enterprise’s seal sample/ THÔNG BÁO Về việc sử dụng mẫu con dấu của doanh nghiệp
vii. Authorization letter/ GIẤY ỦY QUYỀN
viii. Appointment of legal representative
With this paperwork completed, you are ready to go through the process of company registration which is essentially a four step procedure i.e.
- Applying for an Investment registration certificate (IRC).
- Applying for a Business registration certificate (BRC).
- Registering the company seal
- Making a public announcement
In a nutshell, an Investment registration certificate is an approval from the government of Vietnam to carry out investment activities in the stipulated business lines. It contains details of the investor, the approved business lines, location of the investment project, approved investment capital and other guidelines for the execution of the project. Click here to see an example. We provide English translated versions to all our clients. You can read the translated version by clicking here.
The business registration certificate on the other hand provides information of the entity namely the business registration number, the shareholders, office address, phone number, email address etc of the company. Click here to see an example. We provide English translated versions to all our clients. You can read the translated version by clicking here.
The most important piece of information in the business registration certificate is the business registration number which is at the top of the certificate under the title and in Vietnamese is referred to Ma so thue or MST. This is also the tax registration number of the company. All official transactions of the company must state this number.
Also read our article on
Starting a business in Vietnam | How to apply for an investment registration certificate for a Limited liability company in Vietnam
Unlike Singapore, there is no need to get prior approval for a company name. The way this works in Vietnam is at the time of registration you are required to provide 3 names in the order of your preference. If this 1st name is taken, you will be allotted your 2nd choice. If the 2nd name is taken you will be allotted your 3rd choice. When you work with our consultancy, we will make check ahead to ensure you get your 1st choice. If this is not possible we will let you know before we draft the application pack.
Once the documents are submitted to the government, an investment registration certificate is issued in 20 working days. Post this, the application for a business registration certificate is submitted. The business registration certificate is issued in 5 working days. Company seal preparation and registration takes 1 working day. Public announcement and registration on the national registration portal takes 1 working day. All in all, after 30 working days a foreign company in Vietnam will have legal status and can start operations.
You can now go ahead and open a bank tài khoản, register your tax code, etc. The newly formed company is also liable to pay the annual business license tax which should be filed within 10 days after registration. Basically, all businesses operating in Vietnam must pay an operating tax annually. The tax amount is dependent on the total investment capital. Typically this ranges from USD 100 – 200 per year. After receiving a business license it is possible to apply for a sub licenses if the business required it eg. a F&B business my additionally require a food safety and hygiene certificate..
#6 – Get a chief accountant after you setup your company in Vietnam.
Unlike Singapore, there is no need to appoint any company secretary in Vietnam. The company must however appoint a chief accountant within 6 months of operation.
The role of this chief accountant is to sign off on all the bank documents such as. withdrawal slips, payment orders etc as well as company documents such as. payment vouchers, VAT invoices etc. In practice, the director of the company can also sign off as the chief accountant. This is common/ acceptable practice for small companies who open a company bank accounts immediately after incorporation and have not yet appointed a chief accountant.
In the long term however the accountant who handles all the booking keeping and tax reporting typically assumes the role of the chief accountant. In one member LLC companies where there are only 1 or 2 staff and a part time accountant, the practice of the director as the chief accountant may continue. This is not recommended however.
This is essentially the end of the company registration process in Vietnam. If you would like to learn more about Vietnam’s economic policy towards foreign investment or industry trends in a particular sector before you decided to setup a company in Vietnam, please click here.
If you are new to Vietnam and looking at setting up company in Vietnam, Mahan can support with the entire registration process as listed above. Additionally, we can advise you on the following key aspects
– Location Planning and Analysis i.e where to setup your company.
– Market research, product sourcing, partner Identification prior to setting up a company i.e we can act as your local partner saving you the hassle of setting up a company in Vietnam.
– Staffing & HR and Labor laws including candidate search, screening, interviewing and hiring.
– Tax compliance and profit repatriation
Want to setup a company in Vietnam or need a business registration certificate for your company. Get in touch!