STARTING
RBA – Vietnam
RBA has many years experience of advising and assisting entrepreneurs to set up and operate successful businesses in Vietnam.
RBA has the depth of expertise to advise on:
- The appropriate choice of business entity and jurisdiction for your business and its efficient operation;
- The correct procedure to be followed to incorporate and administer Vietnamese companies
- We have dedicated staff to complete bookkeeping and accounting services in compliance with Vietnamese requirements
- We can provide Xero accounting services
- Through our network of connections were are able to assist and guide you through the process of corporate bank account opening in Vietnam
- Our immigration team has the expertise to advise and assist with the procedure required to obtain Vietnam Employment Visa
Should you require any further information or have any inquiries, please do not hesitate to contact us.
Starting my business in Vietnam
After years of economic reform to a socialist-oriented market economy, private ownership of businesses is allowed in Vietnam. Since then, Vietnam’s economy has integrated well with the regional (e.g. ASEAN) and global economies, bringing a substantial rise in trade volumes as well as influx of foreign investment.
Due to the rapid growth of economic activities, Vietnam has become an appealing option for business setup for many foreign investors. Currently, business in Vietnam consists mainly of privately-held companies and large state-owned enterprises.
With the rise of labour costs in countries like China, many foreign multinationals are turning their attention towards Vietnam which boasts a competitive, abundant and well-trained labour force. Many large US groups are also considering Vietnam as a strategic Asian market and a key link in their global supply chain.
Registration of a Limited Liability Company in Vietnam (Wholly Foreign-Owned)
Foreign investors can incorporate a Limited Liability Company (LLC) with 100% foreign capital (wholly foreign-owned) as an investment vehicle in Vietnam.
A wholly foreign-owned LLC can be set up with only one member (sole individual or sole foreign corporate member) and up to 50 members. The management structure of an LLC consists of a Members’ Council, with a director or general director. An LLC cannot issue company shares to the public or otherwise. The members are responsible for the debts and other liabilities of the LLC to the extent of their capital contributions to the LLC.
In addition, an LLC is required to have at least one legal representative who is the primary representative of the company. The Legal Representative must serve as either the General Director or the Chairman of the Members’ Council and must be resident in Vietnam whether a foreign national or Vietnamese.
A wholly foreign-owned LLC is generally not allowed to engage in restricted industries such as i) transportation ii) real estate business iii) mining iv) telecommunication network (establishment, transmission and provision services) v) publishing and media vi) education and training and vii) the production of cigarettes. At Rosemont we advise and assist our clients to complete a pre-check on their intended business activities before taking any final decision on setting up their LLC Company to ensure that any potential problems are addressed at an early stage thus saving time and cost.
Registration of a Limited Liability Company (Joint Ventures)
If necessary, a foreign investor can incorporate a Limited Liability Company (LLC) with partial foreign-owned capital, as a joint venture between domestic Vietnamese and foreign investors.
Usually, the joint venture LLC must meet the Government requirement for foreigners to do business in restricted industries. The percentage of foreign ownership of the LLC is subject to a maximum level, which depends on the business activities and is subject to Government approval.
Joint Venture LLC may also be requested by some foreign investors in order to take advantage of the specialist local knowledge of their Vietnamese partner.
A Joint Venture LLC can be established with a minimum of one foreign member, and one Vietnamese member; in both cases, the member can be an individual or a corporate entity. The number of members cannot exceed 50. The management structure of a joint venture LLC is the same as for the foreign owned LLC considered above, that is a Members’ Council, with a director or general director. An LLC cannot issue company shares to the public or otherwise. Members are responsible for the debts and other liabilities of the LLC to the extent of their capital contribution to the LLC company. In addition, an LLC is required to have at least one legal representative who is the primary representative of the company. The Legal Representative must serve as either the General Director or as the Chairman of the Members’ Council and must be resident in Vietnam whether a foreign national or Vietnamese.
Registration of a Joint Stock Company (JSC) in Vietnam
The main difference between Joint Stock Company (JSC) and Limited Liability Company is that the Joint Stock Company can raise funds by issuing company shares and mobilise capital by the sale of its shares. Shareholders of a Joint-Stock Company are liable for the debts of the company limited to the amount of their capital contributions to the company.
A JSC is required to have at least three shareholders, whether individuals or corporate entities and who can be Vietnamese or foreign. There is no upper limit to the number of shareholders. The founding shareholders must together subscribe to at least twenty per cent (20%) of the ordinary shares that are issued.
The management of a JSC comprises the Management Board (elected at the shareholders’ meeting), the director or general director. Similar to LLC, JSC is required to have at least one legal representative and if more than one, the chairman and the general director must both be legal representatives.
To qualify for listing on the Vietnam Stock Exchange a company is required to be in the legal form of a Joint Stock Company.
Registration of a Commercial Branch in Vietnam
A commercial branch is the subsidiary of the foreign parent company, that has been formed in accordance with Vietnamese law. It is important to note that a commercial branch is not a separate legal entity from its foreign parent company.
The main requirement to establish a Commercial Branch is that the foreign parent company must have operated in its home jurisdiction for at least five years.
The branch is permitted to conduct trading and commercial activities, including executing contracts, earn profit to remit to the parent company in its home jurisdiction as well as opening a bank account in Vietnam.
A commercial branch is not tax-resident in Vietnam. Hence, corporate income tax and the effect of international tax treaties require careful consideration before a decision is taken whether to open a commercial branch or an LLC.
Registration of a Representative Office in Vietnam
Representative office of a foreign business entity is not constituted as an independent legal entity.
A representative office has limited rights and is only permitted to i) conduct market surveys ii) find business opportunities on behalf of parent company iii) oversee the business development of the parent company in Vietnam.
A representative office is not allowed to engage any direct commercial and profitable activities including issuing quotations, invoices and signing contracts in the name of the representative office. Consequently, this type of business entity is not subjected to Vietnam corporate income tax.
This form of entity is suitable for foreign investors who are interested in developing business networks with local Vietnamese customers but is not yet prepared to register a Vietnamese company.
Summary of Registration procedures in Vietnam
The Registration of a business entity in Vietnam can appear to be time-consuming when compared to developed countries like Singapore and Hong Kong but with our expert guidance investors should expect that it can take up to one month to complete the company registration formalities. The time taken by the government to review the application could be longer depending on the proposed business activities, area of incorporation and the quality of incorporation documents. We will ensure that the incorporation and all supporting documents are prepared in accordance with the relevant regulations and provide all the material information to enable the application to proceed successfully and with the minimum of delay.
General business registration process
We offer an inclusive three stage process, working with you at each stage to ensure an efficient and successful outcome to your business application:
Pre-registration
- We will work with you in the initial consultation and advice on the proposed business activities, the appropriate type of entity to register and the preparation of a detailed business plan.
- We will prepare an itemised list of the documents required to support the business application and provide a due diligence checklist.
- We will prepare the appropriate application form to be filed and obtain the investment certificate and Charter of the Company
- Finally, we will provide an analysis and feasibility plan of the proposed project
Registration
- We will complete a detailed review and assemble all application documents to ensure all documents are complete and in correct form to avoid unnecessary delay and rejection by the authorities.
- When complete we will submit all the material documents to relevant government agencies to obtain investment certificate.
Post-registration
- We will arrange for the company seal to be produced in the correct form and registered with police department
- Prepare and submit application for a tax code at the Municipal Taxation Department.
- Pay business license tax
- Open the corporate bank account
- Ensure that legal notice of the authorisation is published
- Complete the labour registration to declare the employment of staff and labour
- Register employees with Social Insurance fund
- Register with a trade union
Required documents for all applications including Commercial Branch and Representative Offices, LLC’s and Joint Stock Companies
Foreign investors have to be prepared to provide the parent company’s (i) certificate of incorporation, (ii) business registration license (if any), (iii) Memorandum and Articles of Association (also known as Company Constitution), (iv) audited financial statements v) passport of the chief representative or branch head.
Company Documents have to be translated into Vietnamese and be certified and legalized by the Vietnam Embassy. We recommend that we are provided with scanned copies of all the company documents for our professional review and screening before incurring what can be the significant costs of translation, certification and legalization.
