Choosing an appropriate business form and business sectors to invest and set up the company in Vietnam depends on aspects including the short and long term plan, capital contribution, number of investors, the business lines, and the scale of the projects. As a foreign investor, doing business in Vietnam can be conducted through direct investment with a 100% foreign-owned company or indirectly investing in a domestic Vietnamese Company but ownership limitations might be applied relying on the business sector of the company. Foreigners can expand their market and do business in Vietnam by setting up their business presence in the forms of a Limited Liability Company (LLC) with one or multi-member limited liability company, a joint stock company (JSC), a representative office (RO), a partnership company, a branch office (BO), and a business cooperation contract (BCC).
A foreign-owned Limited Liability Company (LLC) is the most popular business form for foreign-owned startups in Vietnam. To form a foreign-owned LLC, there are two stages that we must go through, which are getting an Investment Registration Certificate (IRC), and an Enterprise Registration Certificate (ERC) respectively by the Department of Planning and Investment.
Under the provisions of the Vietnamese law, the company registration process is more complex compared to its neighboring countries, and the processing time is also longer, approximately 45 to 60 days to be fully completed. Therefore, a thorough preparation is needed. The whole procedures are divided into 3 main steps, the first one is to obtain the Investment Registration Certificate (IRC), then Enterprise Registration Certificate (the “ERC”) and the last one comprises a range of supporting steps to complete the 100% foreign owned LLC in Vietnam and the company operates in accordance with the laws of Vietnam.
Besides the form of limited liability company, joint stock company, representative office are also a popular form of business, most suitable for foreign organizations that want to access, expand markets and undertake a long-term investment in Vietnam. The conditions for establishing a representative office of a foreign organization are quite simple and easy to implement, of which the most important factor is that the foreign organization has been operating at least one year from the date of company establishment, providing a enterprise registration certificate and audited financial report of the latest fiscal year issued by the competent agency or organization where the foreign organization is located.
The procedures and timelines setting up a Representative Office (RO) in Vietnam from six to eight weeks, the RO license is valid for five years but can be extended for another five years.
Recently, Vietnam has been considered to be one of the optimal markets for foreign entrepreneurs to establish their presence in the country. Besides the form of Limited Liability Company and representative office, joint-stock company is also one of the preferable variants. Distinguished from the limited liability company form, joint stock company form is allowed to assign its charter capital into equal portions of shares and is assigned to its shareholders. The shareholders can be anyone, including foreign citizens. Therefore, a joint stock company can be either solely owned by foreigners or can be a joint venture between foreigners and locals. Although foreigners can open a solely foreign-owned joint stock company, there is also a risk of being limited to a number of business lines that a JSC can join.