COMPANY FORMATION IN VIETNAM

For foreign investors, forming a company in Vietnam generally involves establishing a Foreign-Owned Enterprise (FIE), most commonly a Limited Liability Company (LLC). Vietnam permits 100% foreign ownership in most sectors, though some, like advertising or banking, have restrictions. The process requires obtaining an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC) from the Department of Planning and Investment (DPI). Business entities for foreigners Limited Liability Company (LLC): The most popular structure for foreign investors. It limits shareholder liability to their capital contribution and can be owned by a single foreign investor or multiple shareholders. Joint-Stock Company (JSC): Suitable for larger businesses or those that need to raise significant capital. JSCs must have at least three shareholders but have no upper limit. Representative Office (RO): A liaison office for a foreign parent company. It cannot engage in commercial, revenue-generating activities. This is a low-cost option for market research and promotion. Branch Office: An extension of a foreign parent company that can conduct economic activities. However, it is an extension of the parent company and does not limit its liability. Joint Venture: A partnership between a foreign and Vietnamese company. This structure is often required in sectors with foreign ownership restrictions. Key requirements Local address: A registered business address in Vietnam is mandatory for all entity types. Legal Representative: Every company must have at least one legal representative who is a resident of Vietnam. Charter capital: For most sectors, there is no set minimum capital, but the declared amount should be adequate to cover business expenses until the company becomes profitable. Certain fields, like education, finance, and banking, have specific minimums. The capital must be paid in full within 90 days of receiving the ERC. Documentation: Foreign documents (e.g., passport, parent company's incorporation certificate) must be consular legalized, notarized, and translated into Vietnamese. Step-by-step formation process Reserve a company name: Submit a proposed name to the DPI for approval and reservation. The name must be unique and is reserved for 30 days. Obtain the IRC: This is required for all foreign investment projects. The application includes a business proposal, a financial viability plan, and documents for the investor and legal representative. This typically takes 15–45 working days. Obtain the ERC: After receiving the IRC, you can apply for the ERC, which formally registers the legal entity. This process usually takes 3–5 working days. Complete post-licensing procedures: This involves obtaining a company seal, opening a corporate bank account for capital deposit, and paying the business license tax. Obtain sub-licenses (if applicable): Specific sectors (e.g., real estate, telecommunications, banking) require additional operational licenses from relevant authorities. Complete tax registration: Your ERC number also serves as your tax code. You must register with the tax department and, if applicable, for VAT. Ensure compliance: Foreign-owned businesses must submit quarterly and annual reports on investment implementation and annual audited financial statements.