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Available legal entities in Vietnam? What should the investors choose?

Last Updated: 5/6/2020

AVAILABLE LEGAL ENTITY TYPES IN VIETNAM? What should you choose?

- Limited Liability Company (LLC)

LLC is the most common legal entity type in Vietnam and an excellent choice for small and medium-sized enterprises (SMEs). Single investors can take advantage of its simple corporate structure, which requires one founder only. LLC is not permissible to issue public shares and be publicly listed on the Vietnamese stock exchange.

- Joint-Stock Company (JSC)

JSC is recommended for medium and large-sized businesses as its corporate structure is complicated and requires a minimum of three founders. Furthermore, its registration process is often delayed due to more demanding requirements. This kind of a shareholding company allows its owners to issue shares and be listed on the public stock exchange.

- Representative Office (RO)

RO is perfect for foreigners wanting to observe the local market and gain market presence before expanding. An RO is not allowed to conduct business activities that generate income and behave like an ordinary company. It is possible for the RO’s head office to sign, adjust/supplement contracts on behalf of foreign company, if s/he is authorised by its legal representative, with the power of attorney being present.

- Branch

A branch serves as an extension of its parent company. Owners of branches in Vietnam can conduct all parent company’s commercial activities and make a profit without incorporating a separate legal entity.

Foreign investors can form several kinds of legal entities with a Limited-Liability Company (LLC) and a Joint-Stock Company (JSC) being the most popular choices of company registration in Vietnam.

 

The legal entity is then categorized based on the percentage of its foreign investment. As most industries in Vietnam allow foreign entrepreneurs to own up to 100% of shares, a Wholly Foreign-Owned Enterprise (WFOE) is a common business structure in Vietnam. International investors can also find a local partner and incorporate a Joint Venture Company with local-foreign ownership.

* THE PROCESS OF VIETNAM COMPANY REGISTRATION

The incorporation process of each legal entity type is different and takes from 1 to 3 months.

In general, foreign investors should pursue the process as follows:

- International investors are obliged to obtain an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI).

- An Enterprise Registration Certificate (ERC), is the second mandatory document to be obtained during the registration procedure.

- After receiving both certificates, investors are obliged to proceed with their tax registration, pay business license tax and make their initial capital contribution.

This is just an overall look for setting up a new foreign company in Vietnam, we are one stop service provider to set up your company with a reasonable price; professional, quick and great service.

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