Legal Requirements for Company Registration in Vietnam for Foreign Investors

Legal Requirements for Company Registration in Vietnam for Foreign Investors

February 22, 2024

Navigating Vietnam’s intricate legal requirements for the formation of a company registration can make or break foreign entrepreneurs’ dreams to tap into this pulsating market. Understanding the structures, paperwork, minimum capital rules, and post-compliance norms is the crucial first step.

Vietnam has emerged as a go-to manufacturing and trading hub given its abundant talent pool and proximity to major Asian economies. However, the maze of licenses, certificates, and regulatory approvals within its socialist-oriented framework can overwhelm unaccustomed foreign business owners. Hence, it is prudent to engage with advisors who can demystify the legal requirements for the formation of a company and set up compliant, fully functional operations.

Selecting a corporate structure

When establishing a foreign-invested company in Vietnam, the preferred corporate structure is typically a limited liability company (LLC). LLCs limit the liability of foreign owners to the amount of capital they contribute. Two common LLC structures used by foreign investors are single-member limited liability companies (SLLCs) and multi-member limited liability companies (MLLCs).

The company registration process involves two key steps – obtaining an investment registration certificate (IRC) and later, an enterprise registration certificate (ERC). The IRC confirms the legitimacy of the investment project, while the ERC formally establishes the company.

Legal formation of the company
Legal formation of the company

Preparing for registration

Before initiating registration, foreign investors must clearly define the scope of their intended business activities in Vietnam. This allows verification that the proposed operations comply with the foreign investor’s home country regulations and align with Vietnam’s schedule of permissible foreign investments. The minimum capital requirements also vary based on the type of business.

In addition, foreign investors must secure a viable company office address in an approved commercial center before trademark registration. This will serve as the company’s legal address in all documentation.

Foreign stakeholders must also finalize their intended ownership structure – whether wholly foreign-owned or a joint venture with a local partner – along with appointing management positions. At least one legally competent individual must be nominated as the company’s legal representative in Vietnam.

Documentation requirements

The documentation required for registering a foreign-invested company depends on whether the investor is an entity or an individual.

Corporate investors must submit copies of their business registration/incorporation certificate from their home country, along with financial statements from the preceding financial year. Individuals need to submit valid personal identification documents.

The appointed legal representative must submit original versions of their personal ID cards, curriculum vitae, and university qualifications certificates or professional credentials. Their role also entails legal liability for the company’s compliance.

A valid lease agreement for the registered office location should also be prepared, once premises have been arranged.

Key registration regulations

Under current regulations, no minimum charter capital requirements exist for the incorporation of foreign-invested companies in Vietnam, nor maximum thresholds, except for select industry sectors with defined statutory capitalization norms. These mandated sectors include multi-level marketing, medical services and analogous verticals, wherein the minimum paid-up capital must equal the prescribed level.

When reviewing applications, officials gauge an investor’s financial ability to get approvals, judging aspects like the area invested in, project scope, company stage, and post-registration plans. With that in mind, foreign stakeholders can decide on suitable capital amounts to cover new company costs and longer-term plans around operations, scaling up, and money stability. The goal is to balance specialized terms with plain descriptions so key messages are engagingly conveyed to all audiences.

Requirements for formation of a company
Requirements for formation of a company

Ongoing compliance post-registration

After receiving formal business licenses, companies must comply with Vietnam’s tax code, accounting practices and laws regarding regular financial audits. Payroll reporting and making social insurance contributions for Vietnamese staff are also mandatory legal requirements for the formation of a company.

Depending on the nature of operations, special permits, certifications and recurring fees may apply. For instance, manufacturing units need environmental compliance certificates, alcohol distribution requires special excise tax payments and so forth.

Lastly, because they receive foreign direct investments, such companies are subject to periodic supervision and evaluation by relevant authorities. Maintaining adequate records and providing transparent disclosures is essential for continued legitimacy.

In summary, while Vietnam offers valuable prospects, overseas investors must acquaint themselves thoroughly with structures like LLCs, documentation for individuals and corporations, charter capital limits for different industries as well as ongoing tax and HR compliance. Leveraging experts like Talentnet’s corporate services provide reassurance that all legal requirements for the formation of company incorporation will be fulfilled for smooth Vietnam market entry and growth.

Let's talk

Let's talk
Added to cart
CEO Chat: Aligning Tech & People for Sustainable Growth Package: Early bird View cart
Unable to add more items. Your cart can only proceed with 01 single item.
Your cart is empty. Please add new items to continue!