Here’s good news for investors and foreign companies planning to set up a business but still unsure of what type of company in Vietnam suits them best. Premia TNC is just a tap of the finger away! With our experience in company incorporation, among other services, we can confidently assist foreign investors.
Premia TNC understands that launching a business in Vietnam involves a lot of work, like creating a marketing scheme, hiring staff, raising money, and choosing the perfect company type. So, we present the options foreign investors have to launch a company in Vietnam.
Foreigners’ Options on Company Types in Vietnam
Indeed, investors have to go for a company that works best for their business, works out tax issues, and provides a liability shield for owners. Below are the options that the foreign investors could take into consideration for their business plan in Vietnam:
Limited Liability Company
I. Requirements and Capital
A Limited Liability Company (LLC) in Vietnam can be established with a minimum of one person by setting up capital for the business. The registered capital requirement varies depending on the industry and the specific business activities.
II. Ownership
An LLC with partial foreign ownership can qualify as a joint venture if it includes one or more foreign members. Foreign stakeholders benefit from partnering with a domestic professional or conducting business within specific industries. On the other hand, a wholly foreign-owned LLC can have at least one owner of any nationality. These businesses enjoy similar legal rights to domestic firms, including the ability to engage in free business activities. They can operate in most industries, such as manufacturing, trading, education, and information technology. Additionally, wholly foreign-owned LLCs can embark on production operations, offer services, and trade with both Vietnamese and foreign clients.
III. Time Taken to Establish
The time required to establish an LLC in Vietnam can vary, but typically ranges from one to three months. This period includes the preparation and submission of required documents, approval from relevant authorities, and registration of the business.
IV. Pros and Cons
One of the primary advantages of an LLC is limited liability, meaning the company owner is only legally responsible to the extent of the contributed capital to the business, thereby reducing personal risk compared to a sole proprietorship. The structure also allows for single ownership, providing the sole privilege to decide on the firm’s operations and running. Additionally, the LLC has a simple structure that is easy to manage. However, there are disadvantages to consider. The company cannot issue shares to raise capital, which can limit financial growth options. Furthermore, there is little expectation from partners wanting to cooperate as a group because the owner’s risk is limited only to the contributed capital.
Joint-Stock Company
I. Requirements and Capital
A Joint-Stock Company (JSC) in Vietnam requires a minimum of three shareholders, with no upper limit on the number of shareholders. Initially, there is no set capital requirement for forming a JSC. Additional conditions for mandatory listing include having over 100 stockholders, holding no overdue liabilities, and being profitable in the most recent financial year.
II. Ownership
A JSC can be wholly or partly foreign-owned by individuals of any nationality. Shareholders are provided with shares of stock as evidence of ownership. Additionally, these shares can be legally transferred among shareholders, providing flexibility in ownership and investment opportunities.
III. Time Taken to Establish
The process of establishing a JSC is relatively straightforward, though more complex compared to an LLC or partnership. The exact time frame can vary based on the specifics of the business and the efficiency of regulatory processes, but it generally involves several steps, including registration, obtaining necessary licenses, and complying with initial listing requirements if applicable.
IV. Pros and Cons
One of the main advantages of a JSC is its flexibility in raising capital. The company can quickly issue shares to an unlimited number of investors, making it a preferred choice for many capital funders. Shareholders benefit from limited liability, as their financial responsibility is restricted to the amount of their investment, reducing personal financial risk. The procedure for assigning and transferring shares is relatively simple, which enhances the attractiveness of JSCs for potential investors. Additionally, JSCs can operate in a wide range of industries due to their efficient capital-raising capabilities.
Representative Office
I. Requirements and Capital
Setting up a Representative Office in Vietnam does not require registered capital, making it an attractive option for businesses aiming to minimize initial costs. The absence of a statutory requirement for registered capital allows companies to enter the market with reduced financial commitments.
II. Ownership
A Representative Office in Vietnam is fully owned by its parent company. This structure allows the parent company to maintain complete control over the RO’s activities, ensuring alignment with the overall business strategy.
III. Time Taken to Establish
The process to establish a Representative Office in Vietnam is relatively quick, typically taking about 7 working days under Vietnamese law. This timeframe excludes any additional time that might be needed to seek approval from higher departments, if required.
IV. Pros and Cons
Setting up a Representative Office in Vietnam offers advantages such as a low initial investment and a quick setup process, typically completed within 7 working days. There’s no registered capital requirement, reducing the financial burden for market entry. Representative Offices can conduct market research, act as liaisons, and promote parent company activities. However, they are restricted to perform commercial activities and cannot engage in profit-generating activities independently. ROs also rely heavily on their parent company for funding and strategic direction.
Branch Office
I. Requirements and Capital
To establish a Branch Office (BO) in Vietnam, certain criteria must be met. The BO needs to obtain an establishment license and have a seal bearing the name of the parent company. Furthermore, a branch manager who resides in Vietnam has to be appointed by the BO. The manager can be a local hire or a foreign employee who has obtained a Vietnam work permit.
II. Ownership
Foreign companies have the flexibility to appoint a manager from their home country, provided the individual secures a Vietnam work permit. This allows for direct control and oversight from the parent company, ensuring alignment with the company’s objectives and policies.
III. Time Taken to Establish
The process to set up a Branch Office in Vietnam may take up to 6 months. This timeframe excludes any additional time that might be required for seeking approval from other relevant departments.
IV. Pros and Cons
Branch offices provide substantial benefits, particularly for service-oriented industries such as finance and banking. They provide operational autonomy to lease offices, procure equipment, and hire local and foreign staff. BOs can remit profits abroad, enhancing financial flexibility. They establish departments for accounting, marketing, and HR, ensuring efficient operations and effective representation. However, they are limited in the services they can offer, and the requirement for a resident branch manager adds regulatory complexity. Despite challenges, understanding requirements and ownership rules helps in decision-making for establishing a Branch Office in Vietnam.
How PREMIA TNC Helps in Registering Companies in Vietnam
Premia TNC understands how tough it is to decide which company type foreign investors will choose in Vietnam. Hence, even at this stage, we offer our help by providing information and all the support needed to register a business in Vietnam.
We take pride in guiding investors over the government requisites, removing clients’ confusion, and giving clarity to the entire business setup process. With our professional assistance, foreign investors can launch their companies in a relatively brief period. In this way, investors can devote their precious time to other decisions to make sure the business grows in Vietnam.
