SETTING UP A LIMITED LIABILITY COMPANY VIETNAM

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.

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Setting up a company with 100% foreign ownership requires several steps in order, basically, 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.

LATEST UPDATES ON SETTING UP A 100% FOREIGN OWNED LIMITED LIABILITY COMPANY (LLC) IN VIETNAM

Elements should be introduced before setting up a 100% foreign-owned company in Vietnam

Clarifying the company’s business sectors and scope
In accordance to the WTO commitments, Vietnam allows 100% foreign-owned businesses to be established with common specific sectors, including:

Qualification and professional services, consisting of legal services; accounting and tax services; architectural, technical, and synchronous technical consulting services; computer services, research and development services, and management consulting services;
Construction services;
Insurance services;
Banking services.

Business sectors prohibited and limited to the foreign investors
However, the WTO agreement does not allow a 100% foreign-owned company to participate in a number of other sectors. There are a large number of prohibited sectors prohibiting a 100% foreign-owned company to participate, noticeably trading, administrative and judicial services, public opinion polling, business travel services, public postal services, and so on.

Meanwhile, there are also a number of business sectors that allow a 100% foreign-owned company to participate with specific limitations, notably comprising insurance and banking, educational services, health and social, tourist services, advertising, and so on.

Checking the capital source and identifying business scale

There are a number of business sectors for foreign investors to open their company in Vietnam with minimum capital requirements. According to the Law, these requirements vary depending on the specific industry, or business factors. Specifically, language schools or vocational schools are popular businesses for foreign investors, whose the minimum capital is required to be 20 million VND, not including the rental fee for the business location. Real estate businesses, for another instance, is required to have at least 20 billion VND worth of capital. The variation is different for other sectors, including Finance and Fin-tech, Banking, and Insurance.

Within 90 days starting from the date of issuing the enterprise registration certificate, investors must pay the determined charter capital in full. If they fail to meet the deadline under any circumstances, the company will be dissolved.

Company Establishment Address

One of the most important requirements for foreign investors to establish their company in Vietnam is to have a registered business address.

Although the business is already set up and ready to run in Vietnam, a permanent address cannot be acquired in time to complete the registration process. In this case, foreign investors could flexibly use a virtual office as a legal address for accomplishing the registration process. Once the company has been well founded, the investors can change the virtual address to a physical registered address afterwards as desired.

For the Department of Planning and Investment to check the active status of the company, the company should submit documents to serve as proofs that the company is legally registered under the provisions of the Law

Resident director in Vietnam

A 100% foreign-owned LLC may have more than one legal representative of the company in Vietnam. The legal representative is either a founder investor or authorized representative, Vietnamese or foreigner, he/she is appointed as a director or general director and acts without power of attorney to represent the company. The legal representative must be represented in Vietnam to manage the company operation daily, arbitral disputes, and court proceedings. So, foreign founder investor-directors or authorized representatives ought to apply for a work permit exemption certificate, and a work permit respectively in Vietnam in order to have long term residence permission.

What are the required documents to set up a 100% foreign owned limited liability company in Vietnam
The requirements depend on whether the company will be fully owned or partially owned by foreign investors, individual or organization investors. Other documents must meet the requirements and conditions for business investment as prescribed by Vietnam investment law 2020 and will be provided by the foreign investors if the company registers the conditional business sectors.

The documents required to apply for a 100% foreign owned LLC in Vietnam

#1- The legal documents of the individual and organization foreign investor:

For organizational investors:
Consular legalization of a business incorporation certificate;
Passport of the legal representative(s) and passport of authorised representative(s) of the Investor for the Corporate Investor (All passport pages);
The power of attorney for the authorized representative of the capital contribution of the investment organization;
Letter for bank account balance confirmation and latest audited financial report for the previous two years (the balance of account must be equal to or more than the value of the charter capital of the company in Vietnam)
For individual investors: Legalized copies of passports from the individual investor and the legal representative(s).

#2- Mandatory submission forms for setting up a 100% foreign owned LLC in Vietnam

Company/ enterprise charter;
Letter of application for company establishment
List of capital contributors
List of authorized representatives
Authorization letter or Power of Attorney
Letter of authorization representing the capital contribution
Investment project establishment proposal
Letter of explanation on the financial capacity of the investor

#3 - Lease contact for the head office in Vietnam and documentations related to proof of ownership

Lease & Rental Contract for House, Apartment, Office;
Notarized true copies of documentations related to proof of ownership

Procedures and timelines for setting up the 100% foreign owned LLC in Vietnam

Steps	The scope of works	Timelines
Step 1	Application for Investment Registration Certificate (the “IRC”	3-4 weeks
Step 2	Application for Enterprise Registration Certificate (the “ERC”)	1 week
Step 3	Post-Licensing procedures (including Tax and seal registration, payment of the business license tax, bank account opening and publication of notifications of company establishment)	1 week

What are the compulsory steps involved in setting up the 100% foreign owned LLC in Vietnam

In order for the company to operate in accordance with the laws of Vietnam, the company must ensure the fulfillment of all obligations and required documents as prescribed. The following compulsory steps for setting up a 100% foreign owned LLC in Vietnam apply for the most