Procedure of Registering a Company in Vietnam

1. Introduction: Navigating Company Registration in Vietnam

Vietnam has emerged as a significant player in the global economy, attracting increasing attention from foreign investors seeking to capitalize on its dynamic growth and favorable business environment. This growing interest underscores the necessity for a clear and comprehensive understanding of the procedures involved in establishing a business presence within the country. Registering a company in Vietnam requires navigating a specific legal and administrative framework, and a thorough grasp of this process is paramount for a successful market entry. This report aims to provide an expert-level analysis of the key stages involved in registering a company in Vietnam, offering actionable information derived from current regulations and practices. By outlining the essential steps and considerations, this analysis intends to serve as a valuable resource for businesses seeking to establish operations in this promising market.

2. Overview of Business Structures in Vietnam

The legal framework in Vietnam offers various types of business entities that can be registered, catering to different needs and scales of operation. Among the most common structures, particularly for foreign investors, are the Limited Liability Company (LLC) and the Joint Stock Company (JSC). A Limited Liability Company can be further categorized into a Single-Member LLC, where ownership is held by one individual or organization , and a Multi-Member LLC, which can have between two and fifty members. The liability of the members in an LLC is limited to the amount of their capital contribution. A Joint Stock Company, on the other hand, requires a minimum of three shareholders and has no upper limit. The charter capital of a JSC is divided into shares, and shareholders are liable for the company's debts only to the extent of their shareholding.  

Besides LLCs and JSCs, other business structures available in Vietnam include Partnerships, where two or more individuals agree to carry on a business together ; Sole Proprietorships, owned and run by one person; Business Cooperation Contracts, which involve collaboration between parties for a specific project or business activity ; Representative Offices, which are not independent legal entities and are established by foreign companies for market research and liaison activities; and Branches of Foreign Companies, which are dependent units of a foreign enterprise authorized to conduct business operations in Vietnam.   

The establishment and operation of these business entities are primarily governed by the Law on Enterprises (Law No. 59/2020/QH14) and the Law on Investment (Law No. 67/2014/QH13, subsequently replaced by Law No. 61/2020/QH14). These legal documents lay the foundation for the procedures related to business registration, licensing, and the rights and obligations of businesses operating in Vietnam. The choice of the most suitable business structure is a critical initial decision for foreign investors, as it significantly influences the subsequent registration process, the extent of liability, and the ongoing operational requirements. Therefore, a careful evaluation of business goals and the specific characteristics of each legal entity type is essential.   

3. Detailed Steps for Company Registration

3.1. Pre-Investment Phase (if applicable)

Certain investment projects in Vietnam necessitate obtaining pre-investment approval from the relevant Vietnamese authorities before proceeding with the formal registration process. This preliminary step is typically required for projects that are large in scale, operate within specific sectors deemed sensitive or of national importance, or are located in areas with particular strategic significance. Examples of project types that may require such special approval include the construction of residential housing projects, the development of airports, seaports, and air transport businesses, petroleum processing ventures, casino operations, infrastructure projects within industrial and export-processing zones, nuclear power plants, golf courses, and projects involving special land use rights or located on or near islands, borders, coastal areas, or sensitive heritage sites. Projects that require the relocation of inhabitants or the repurposing of certain types of forests or rice crops may also fall under this category. Determining whether a proposed investment requires pre-investment approval is a crucial early step, as this process can add considerable time to the overall registration timeline. The Ministry of Planning and Investment (MPI) often plays a central role in this phase, acting as a key government body overseeing foreign investment management and the issuance of investment licenses for such projects. Investors in these specific sectors must therefore be prepared to engage with the MPI and potentially other relevant ministries to secure the necessary initial approvals before moving forward with the standard registration procedures.   

3.2. Investment Registration Certificate (IRC)

For all foreign-owned investment projects in Vietnam, the first mandatory step in the company registration process is to obtain an Investment Registration Certificate (IRC). This certificate serves as the primary legal document establishing the right of a foreign enterprise to invest within Vietnam. The principal government authority responsible for issuing the IRC is the Department of Planning and Investment (DPI) in the province or city where the business intends to be located. However, it is important to note that for investment projects situated within industrial zones, export processing zones, high-tech zones, or economic zones, the Management Board of these specific zones may act as the relevant licensing authority for the IRC.  

The application process for the IRC typically involves several key stages. First, the investor must prepare a comprehensive application dossier that includes various documents providing details about the investment project and the investor. This dossier is then submitted to the appropriate DPI or the Management Board, either in person at their offices or potentially online through the National Information System on Foreign Investment (NISFI). The authorities will then undertake a review and assessment of the submitted application to ensure its compliance with relevant regulations and national development goals. Upon successful review, the IRC is typically issued within 15 working days from the date of submission of a complete set of documents. It is worth noting that this standard timeframe may be extended for investment projects operating in sectors that are not governed by the World Trade Organisation (WTO) agreements.  

The specific documents required for the IRC application can vary depending on the nature of the investment and the legal structure of the investor, but generally include the following: an application for the implementation of the investment project, detailing the project's objectives, scope, and implementation plan; a proposal of the investment project, which should include comprehensive details such as the capital structure, the intended business activities, the scale of investment, and any lease agreements or land use requirements ; financial statements of the investor for the past two years, along with potentially additional information to demonstrate the investor's financial capacity to undertake the project ; legal papers of the investors, such as the Certificate of Incorporation or equivalent document if the investor is an organization, and identification documents if the investor is an individual, along with the legal papers of their authorized representative, if applicable ; a lease agreement or a Memorandum of Understanding (MOU) for the premises intended to be used as the location for the project and the company's head office ; and any other documents that may be relevant to the specific investment project or required to demonstrate the eligibility and capacity of the investor in accordance with Vietnamese law. In some cases, notarized and legalized copies of the investor's legal documents, as well as passports of the investors and a register of directors, may also be required.   

3.3. Enterprise Registration Certificate (ERC)

Following the successful acquisition of the IRC for foreign-invested companies, the next crucial step is to obtain the Enterprise Registration Certificate (ERC), also commonly referred to as the Business Registration Certificate. The ERC is the fundamental license required for all companies operating legally in Vietnam, irrespective of whether they are foreign-invested or domestically owned. For foreign-invested enterprises, the application for the ERC is typically initiated after the IRC has been secured. The authority responsible for issuing the ERC is the Business Registration Division of the DPI in the specific province or city where the business will be headquartered. To further facilitate the registration process, additional offices of the Business Registration Division may be established in major cities like Hanoi and Ho Chi Minh City upon the decision of the relevant local People's Committee and with the approval of the MPI.  

The process of applying for the ERC involves preparing a comprehensive application dossier and submitting it to the local Business Registration Division of the DPI. This submission can be done either in person by visiting the DPI office or, increasingly, online through the National Business Registration Portal. For domestic companies, the review of the application by the DPI typically takes between three to five working days. However, the review process for applications from foreign-invested companies may extend to a period of 3 to 15 working days, depending on the complexity of the application and the specific requirements of the business sector. Upon the successful completion of the review, the Department of Planning and Investment will issue the Enterprise Registration Certificate, officially recognizing the business as a legal entity in Vietnam.  

The core documents that are typically required for the ERC application include an application form for enterprise registration, which must be completed according to the guidelines provided by the MPI; the company charter, which is a critical document outlining the governance structure of the company, the rights and responsibilities of shareholders or members, and other internal regulations ; a list of all members of the board (if applicable to the chosen business structure); a list detailing the appointed legal representatives of the company; and letters of appointment and authorization for the legal representatives and other key company officers, if applicable. Depending on the specific circumstances and the type of business entity, notarized and legalized copies of the investor's legal documents, such as the Certificate of Incorporation, the company's charter, a business profile, and the passport or identification card of the legal representative, may also be required.  

The ERC itself contains essential information about the company, including its officially registered name, the address of its registered office, the specific business lines it is permitted to engage in, the amount of its charter capital, and the details of its legal representative(s). Notably, the number assigned to the ERC also serves as the company's tax registration number, streamlining the initial tax identification process. 

3.4. Utilising the National Business Registration Portal

The National Business Registration Portal, accessible at https://dangkykinhdoanh.gov.vn , serves as the official online platform for business registration and related information in Vietnam. This portal offers a wide range of functionalities designed to streamline the process for both domestic and foreign investors. One of its primary functions is to facilitate online business registration, allowing users to submit their applications and supporting documents electronically. The portal also enables users to search for information on registered companies, providing access to details such as company name, registration number, address, business lines, and legal representative.  

Furthermore, the National Business Registration Portal allows prospective business owners to reserve their desired company name, ensuring its availability and compliance with regulations before proceeding with the full registration process. Once an application is submitted online, users can track its status through the portal, providing transparency and allowing for better planning. The portal also serves as a repository of legal documents and guidelines related to business registration, offering valuable resources for understanding the regulatory framework. For online submissions, the portal provides the option of using either a business registration account, which is issued through the system, or a digital signature, offering flexibility in authentication methods. While the National Business Registration Portal offers significant convenience through online submission, it is important to note that in some instances, the physical submission of hard copies of documents may still be required by the authorities.  

The establishment of the National Business Registration Portal represents a significant step towards modernizing and simplifying the process of company registration in Vietnam. By offering a centralized platform for various registration-related activities, the portal enhances transparency and accessibility for both domestic and international investors. The availability of online services has the potential to substantially reduce the time and costs traditionally associated with company registration, particularly benefiting international investors who may be initiating the process from outside Vietnam.  

4. Post-Registration Compliance

Once the Enterprise Registration Certificate (ERC) has been successfully obtained, several crucial post-registration compliance steps must be undertaken to ensure the company can legally commence and continue its operations in Vietnam.

4.1. Obtaining the Company Seal and its Registration

Following the issuance of the ERC, the company is required to create its official company seal. The legal representative of the company is typically responsible for arranging the carving of the seal. After the seal is created, the company must officially notify the specimen of the seal to the relevant authority, which is usually the Business Registration Office where the company was registered. While the ERC legally recognises the company's existence, the company seal serves as a physical emblem of its official status and is a requirement for various business transactions and the authentication of official documents.  

4.2. Tax Registration and Obtaining the Tax Identification Number

In Vietnam, the process of tax registration is generally integrated with the application for the ERC, as the unique number assigned to the ERC also serves as the company's tax identification number. However, after receiving the ERC, the company will need to engage further with the local Tax Department to fulfil other tax-related procedures, such as registering for specific taxes relevant to its business activities. Regulations also require the company to prominently display its tax code at its registered business location. This integration of the tax identification number with the ERC aims to simplify the initial administrative burden for newly established companies. 

4.3. Opening a Corporate Bank Account

Opening a corporate bank account is an indispensable step for any company intending to conduct business operations in Vietnam. This account is essential for managing the company's finances, receiving payments, and making necessary expenditures. The ERC is a prerequisite for opening a corporate bank account, as it serves as the primary proof of the company's legal establishment. Having a dedicated corporate bank account is crucial for adhering to financial regulations and facilitating smooth business transactions within Vietnam.   

4.4. Labour Registration Requirements

If the company intends to employ staff in Vietnam, it is necessary to register these employees with the relevant labour authorities. This includes providing details of the employees and their employment terms. Furthermore, compliance with Vietnamese labor laws is essential, particularly regarding obtaining the necessary work permits and visas for any foreign employees. Adhering to these labor registration and compliance procedures is vital for operating legally and maintaining good standing with the authorities. 

4.5. Payment of Business License Tax

Companies operating in Vietnam are typically required to pay an annual business license tax. This payment is usually due starting from the second year of the company's operation. The specific amount of the business license tax can vary depending on the type and size of the business. This annual tax is an ongoing operational cost that businesses must factor into their financial planning.   

4.6. Public Announcement of the Company's Establishment

Finally, there is a requirement to make a public announcement of the company's establishment. This is typically done either in a designated government gazette or through the National Business Registration Portal. This public notification serves to officially inform the public and relevant authorities about the creation of the new business entity, ensuring transparency and adherence to legal requirements.  

5. Key Requirements and Considerations

Beyond the step-by-step registration process, several key requirements and considerations are crucial for successfully establishing and operating a company in Vietnam.

5.1. Registered Office Address Regulations

A fundamental requirement for company registration in Vietnam is having a fixed place of business, which serves as the company's registered address. This address is not just a formality but is essential for ongoing compliance and official communication. Notably, regulations stipulate that apartments cannot be used as registered office addresses. However, the use of a private house as a registered address might be permissible, depending on the specific business lines and the intended purpose of the company. For certain types of businesses, particularly those offering business or consultancy services, the use of a virtual office address that meets local compliance requirements may be an option. It is also important to be aware that the Department of Planning and Investment (DPI) may conduct checks to verify the legitimacy of the provided address during the incorporation process. These specific regulations regarding the registered office address underscore the need for careful selection of the business location to ensure compliance from the outset. The restrictions, such as the prohibition on using apartments, highlight the importance of securing a proper commercial or residential address that aligns with the intended business activities.  

5.2. Appointment and Responsibilities of the Legal Representative

Every company registered in Vietnam is legally obligated to have at least one legal representative. This individual must either be a resident of Vietnam or, if a foreigner, hold a valid work permit for the country. The legal representative holds significant responsibilities, including managing the company's daily operations and acting as the primary point of contact for all legal and administrative matters with government authorities and other entities. The requirement for the legal representative to be a resident or hold a work permit emphasizes the need for local accountability and presence within Vietnam. This role is pivotal in ensuring the company's compliance with Vietnamese laws and regulations.  

5.3. Regulations Regarding Charter Capital and its Contribution

During the company registration process in Vietnam, the amount of charter capital, which represents the initial investment in the company, must be declared. For most Limited Liability Companies (LLCs), there is no legally mandated minimum amount of charter capital. However, it is expected that the declared amount should be reasonable and sufficient to cover the company's initial operating expenses until it begins to generate revenue. It is important to note that certain specific industries, such as banking, insurance, and real estate development, may have their own stipulated minimum charter capital requirements. For Joint Stock Companies (JSCs), there might also be industry-specific minimum charter capital requirements. Once the Enterprise Registration Certificate (ERC) is obtained, the members or shareholders of an LLC are generally required to contribute the full amount of the registered charter capital within a period of 90 days. Any subsequent increase or decrease in the company's charter capital will necessitate obtaining prior approval from the relevant local licensing authority. While a universal minimum charter capital does not exist for most LLCs, the declared amount is still subject to assessment by the DPI to ensure its adequacy for the planned business activities. Failure to contribute the declared capital within the specified timeframe can result in penalties or adjustments to the company's registered capital.  

5.4. Ongoing Compliance and Reporting Obligations

After successfully registering a company in Vietnam, businesses are subject to a range of ongoing compliance and reporting obligations. These are essential for maintaining legal standing and avoiding potential penalties. Key compliance requirements include corporate tax registration and the submission of monthly or quarterly Value Added Tax (VAT) and Corporate Income Tax (CIT) filings. Companies are also required to prepare and submit annual audited financial reports to the General Department of Taxation (GDT), the Department of Planning and Investment (DPI), and the Statistics Office. If the company has foreign investment, it may also need to submit annual investment activity reports to the DPI. Compliance with labor laws, including the registration of employees and ensuring foreign employees have the necessary work permits, is another ongoing responsibility. Businesses must also ensure the payment of the annual business license tax, which typically starts in the second year of operation. Depending on the nature of the business, there may also be requirements for the renewal of specific business licenses and sub-licenses. Adhering to all these government regulations is paramount for the continued legal operation of the company in Vietnam. The complexity of these ongoing compliance requirements often leads businesses, especially foreign-invested enterprises, to seek professional services for assistance with accounting, tax, and legal matters.   

6. Conclusion: Key Takeaways and Advice

Registering a company in Vietnam involves a systematic process that includes several key stages: determining the need for pre-investment approval (for specific project types), obtaining the Investment Registration Certificate (IRC) for foreign-owned projects, securing the Enterprise Registration Certificate (ERC) as the basic operating license, and fulfilling various post-registration compliance requirements. Thorough preparation is essential at each stage, and a comprehensive understanding of the relevant legal requirements is crucial for a smooth and efficient registration process. Utilizing available resources such as the National Business Registration Portal can significantly aid in navigating the procedures and accessing necessary information. Given the complexities of the legal and administrative framework, it is highly advisable for businesses, particularly those new to the Vietnamese market, to seek professional legal and business consulting services. Expert guidance can prove invaluable in ensuring compliance, avoiding potential pitfalls, and effectively navigating the intricacies of company registration in Vietnam. A strategic and well-informed approach, coupled with attention to detail, will ultimately contribute to the successful establishment and operation of a business in this dynamic and growing economy.

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