Vietnam has one of the fastest-growing economies in the world and is expected to overtake various Southeast Asia countries in the coming years. The emerging economy of Vietnam is often seen as an attractive destination and has received a huge amount of foreign direct investments (FDIs) in the recent years. According to Vietnam’s Foreign Investment Department (Under the Ministry of Planning and Investments) up till August 2020, the country recorded a cumulative project numbering 32,539 different projects, registering an investment sum of nearly USD381.2 billion. The country of Vietnam is also seen favourably for its strategic location, with its long coast along popular sea trade route as well as its proximity to China, it offers various opportunities that can be found in the commerce and trade industry, encouraging many to start a foreign company in Vietnam. Before you register company in Vietnam, allow Tetra Consultants to share the ultimate guide on starting a business in Vietnam as a foreigner for your reference.
1) Choose Your Optimum Company Structure
The first step in the ultimate guide on starting a business in Vietnam as a foreigner is to determine your company structure that you will incorporate as. In Vietnam, there are mainly 2 different types of company structure that most foreign investors choose to incorporate as, namely an Limited Liability Company (LLC) or a Joint Stock Company (JSC).
An LLC when formed is considered to be a separate legal entity from its shareholders and directors. Hence, shareholders of an LLC formation hold limited liability and are only liable to their own respective invested sum of share capital. Debts and obligations are not made personally liable to its shareholders and directors. LLCs in Vietnam can be classified into either a single member LLC or multi-member LLC. Single member LLC requires only one member to act as both director and the sole shareholder whereas multi-member LLCs require 2 but not exceeding 50 members to start up. LLCs in general can be formed through 100% foreign ownership or it can also be set up through joint ventures with at least one Vietnamese resident as its shareholder.
Another common type of company structure that foreign investors choose to incorporate is known as a Joint Stock Company. JSC is a type of business where shares of the company’s stock can be bought and sold by shareholders. A JSC requires minimally 3 shareholders and there is no maximum cap on the amount of shareholders. Similar to the LLC formation, shareholders of a JSC hold limited liability and are only liable to their own respective invested sum of share capital. JSC is the only type of company in Vietnam that is allowed to issue bonds as well as being listed on the Vietnamese Share Exchange to sell its shares to the public.
2) Industry Regulations
The second step in the ultimate guide on starting a business in Vietnam as a foreigner is to understand and know which industries are not allowed for full foreign ownership. In general, most industries in Vietnam are allowed for full 100% ownership of the business. However, certain industries that locals have been active and fully integrated, such as tourism and logistics, do not allow for full foreign ownership. If you are still interested in entering these industries, you will likely have to find a Vietnamese joint venture partner.
3) Registered Address
The third step in the ultimate guide on starting a business in Vietnam as a foreigner is to have a registered office address located in Vietnam. The registered office address is the main correspondence location for letters and communications.
4) Reservation of Company Name
The fourth step in the ultimate guide on starting a business in Vietnam as a foreigner is to reserve your company Name with the Vietnam company registry which can be accessed via their business registration portal.
5) Registration and Obtaining Relevant License
The fifth step in the ultimate guide on starting a business in Vietnam as a foreigner is to ensure you have the relevant documents prepared for a swift and prompt registration and also the necessary licences required to operate your business. All foreign-owned firms have to apply for an Investment Registration Certificate (IRC) with the exception of Representative or Branch Offices. Upon successful application of the IRC, foreigners will have to then register their business with the Vietnam Business Registration authority to receive the Business Registration Certificate (BRC). Lastly, foreigners setting up LLCs in Vietnam will need to procure a Foreign Investment License (FIC) before operating in Vietnam.
Engage Tetra Consultants as we guide you on how to register a company in Vietnam through a smooth and hassle-free process. The team provides a comprehensive service package that includes planning and strategizing with our clients to select a suitable business entity, completing the registration and documentation processes, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more about company registration in Vietnam and our dedicated and experienced team will revert within the next 24 hours.