Doing business in Vietnam can be a lucrative opportunity, but there are some hurdles you must first clear. One of the most important steps is registering your business with the Vietnamese government. This process can be daunting if you're not familiar with the requirements, so we've put together this guide to help you through it. In this article, we'll discuss business registration in Vietnam for foreigners, as well as the different types of businesses you can register in Vietnam. We'll also give you tips on how to check company registration in Vietnam and what to do if your business is not registered correctly.

Can Foreigners Own Business in Vietnam?

The answer is yes. As of 2018, foreigners are allowed to own businesses in Vietnam, with certain restrictions. Foreigners and foreign-owned businesses are subject to a number of regulations and fees, so it's important to understand them before you begin the business registration process.

Is this Hard for Foreigners to Do the Business Registration in Vietnam?

The business registration process for starting a business in Vietnam as a foreigner is not overly complicated, but it does require knowledge of Vietnamese business laws and regulations. You’ll need to have a clear business plan and understand the different types of businesses you can register in Vietnam. You should also be familiar with the required documents and fees associated with business registration in Vietnam.

Finally, you’ll need to know the Vietnam business registration number format and how to check company registration in Vietnam. It is important to ensure that all business information is accurate, as mistakes can cause delays or even lead to business closure.

What are the Different Types of Businesses You Can Register in Vietnam?

Establishing a presence in Vietnam provides foreign entities with numerous options for setting up their business, such as forming a Limited Liability Company (LLC) with one or more members, developing a Joint Stock Company, creating a Partnership, constituting a Branch Office, and/or opening Representative Offices. Additionally, investors can also contribute capital to existing local companies by purchasing shares/stakes in the organization.

Limited Liability Company (LLC)

Establishing an LLC is the most common type of business form in Vietnam, just like in many other countries around the world. A Limited Liability Company is created when any organization or individual contributes capital to that company. International investors may construct a Limited Liability Company within Vietnam in one of two ways:

• A 100% Foreign-Owned Enterprise (i.e. all members are foreign investors); or

• A foreign-invested Joint Venture Enterprise between foreign investors and at least one domestic investor.

LLC includes Single-Member Limited Liability Companies and Multi-Member Limited Liability Companies.

Single Member LLC (SLLC) in Vietnam

As stated in Article 73 of the Law on Enterprise, a Single Member Limited Liability Company (SMLLC) is owned by an individual or organization that is solely accountable for any liabilities incurred by the company up to the amount of its charter capital.

When an investor decides to transfer just a portion of the registered capital, their Single-Member Limited Liability Company (SLLC) must be officially converted into a Multi-Member Limited Liability Company. This transition process requires that both the SLLC and its new member are filed in an Enterprise Registration Certificate from the Business Registration Office for validation.

Multiple Member LLC (MLLC) in Vietnam

A Multiple Member LLC (MLLC) is an organization comprised of one to fifty members, which could be any combination of individuals or businesses. Each member holds shared responsibility for the debts and liabilities incurred by the company based on their individual capital contributions.

Transfers and assignments of capital are permissible, yet prior to the transfer of all or a portion of their respective contributions, investors must make the offer available to each other investor on an equal basis.

In order to become a member of the business, one must be registered with the Business Registration Office and possess a valid Enterprise Registration Certificate.

In general, foreign investors should obtain the following Certificates to do their business in Vietnam:

• obtaining an Investment Registration Certificate (IRC). Prior to creating a financial entity, any foreign investor must have an Investment Project and complete the steps required to earn an Investment Registration Certificate (IRC).

• obtaining a Business Registration Certificate (BRC), often referred to as an Enterprise Registration Certificate (ERC)

Following receipt of both Certificates, investors are obligated to complete their tax registration, pay a business license fee and make the initial capital contribution.

Notes:

• Foreign investors who are looking to establish an LLC in Vietnam don't have any legal minimum capital requirements. Each member's investment is considered equity (charter capital) and must be provided within 90 days of the company registration.

• Limited Liability Company (LLC) members must be financially accountable for the LLC obligations relative to their capital contributions that have been invested in the business.

• To put it another way, the responsibility of an LLC founder is limited to the sum listed in the company's registration.

• LLCs are usually organized and managed through a "Members' Council," which is headed by a Chairman. They also appoint an Executive Director, as well as an Inspection Committee (or Board of Supervisors/Inspection Committee if there are more than 11 members). Their rigorous structure ensures oversight from the highest levels to ensure efficient functioning.

• All businesses operating as a Limited Liability Company (LLC) in Vietnam must have one legal representative residing within the country. While there is no limit to the number of representatives, their titles, rights, and duties are outlined in detail within each company’s charter.

• An LLC in Vietnam cannot issue shares.

• In general, foreign investors should pursue the following process to do business in Vietnam:

• +In order to do business in Vietnam, foreign investors are mandated to acquire an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI) located within any applicable provincial government.

• +Acquiring a Business Registration Certificate, commonly noted as "BRC" for short, or an Enterprise Registration Certificate ("ERC") is the second step required during registration.

After obtaining both certificates, investors are responsible for completing their tax registration process, paying the business license tax, and making the necessary initial capital contribution.

Joint-Stock Company (JSC)

A JSC is formed by prospective investors who subscribe and purchase shares in the company.

Generally, these stocks may be transferred as desired (unless there are limitations on founders' ownership during the first three years of operation or any other constraints specified within the charter). However, voting preference shares must remain with their original holders. In order for a new shareholder to take possession of said stock, they must first be entered into the shareholders’ registry maintained by the corporation; their transfer will then officially take effect at this time.

Notes:

• A minimum of three shareholders is required to form a JSC, however, there is no limit on the maximum number of shareholders who can be part of such companies.

• When establishing a JSC, the charter capital is distributed among shareholders depending on how much each founding shareholder has contributed to the Company. There are no restrictions placed upon foreign investors regarding their minimum required charter capital. Notably, all JSCs must have ordinary shares but may also carry preferred shares such as voting preference stocks, dividend-based shares, and redeemable stock amongst other types of preferred securities designated in its own Charter document.

• JSC's organizational composition usually consists of the shareholder general assembly, executive board, chairman of the executive board, chief executive officer (CEO), and council of supervisors (in cases where there are at least 11 shareholders or if corporate shareholders possess more than 50% equity).

• A Joint Stock Company (JSC) may be completely foreign-owned or consist of a partnership between both international and local investors.

• Shareholders must acquire capital or form equity investments within 3 months of the Company's formation.

Partnership (PC)

According to Article 172 of the Law on Enterprise, a Partnerships Company (PC) is an enterprise with two or more partners and has its own legal status.

Notes:

• A PC is similar to a limited liability partnership in other jurisdictions. Such partnerships require at least two general partners and may also incorporate limited partners ("capital contributing members"). Whereas the primary responsibility for all debts of the PC rests with the general partner's personal property, limited partners are only liable for their initial capital contributions.

• A PC can not issue shares.

• A partnership is a one-of-a-kind investment opportunity that may be formed between two separate general partners. The liability of the general partner has no limit when it comes to running their shared partnership, making this an incredibly unique and profitable venture.

Branch

If a foreign corporation or overseas merchant desires to do business in Vietnam, they are authorized to set up a branch. This branch is associated with the enterprise and is responsible for managing certain duties under approval from its parent company. The type of services offered by the branch must fit within that umbrella organization's scope of operations.

Notes:

• Unfortunately, not all foreign businesses are eligible to open branch offices in Vietnam; for example, companies that specialize in financial services such as accounting and credit rating agencies cannot operate branches here. Furthermore, commodities trading platforms may not function under the umbrella of a Vietnamese branch office.

Representative Office (RO)

A Representative Office (RO) is a unit of the enterprise that has been given the authority to act on behalf of and protect its interests, without forming an independent legal entity under Vietnamese law.

As a representative office (RO) in Vietnam, you are only permitted to do the following: promote business, identify and speed up trade opportunities, and monitor the delivery of contracts signed between your parent company and local partners. In a summary, a RO is only permitted to:

• Act as a liaison office;

• Conduct market research; and

• Promote its parent company's business and investment opportunities.

• Consequently, representative offices can provide an extensive range of supportive services to their overseas parent firms. This is a popular form of legal representation in Vietnam and is perfect for when beginning your entry into the market.

Business Cooperation Contract (BCC)

By entering into a BCC, foreign investors can join forces with at least one Vietnamese partner to embark on business ventures in the global market.

Investing in a Business Collaboration Contract (BCC) doesn't require the formation of any new legal entity. Those who invest in a BCC are responsible for sharing the profits or products produced by this agreement and hold unlimited liability towards its debts.

Public and Private Partnership Contract (PPP)

By partnering up a government and private entity, Public-Private Partnerships (PPP) are investment forms that enable infrastructure projects and public services to be carried out through contractual stipulations. Clause 1 of Article 27 of the Law on Investment outlines this agreement precisely.

As stipulated in Article 3 of Decree, No. 63/2018/ND-CP which governs Public-Private Partnership investments, PPP contracts are composed of Build–Operate–Transfer (BOT), Build - Transfer (BT), Build - Transfer– Operate (BTO), and so on such as: Build– Own– Operate (BOO), Build –Transfer –Lease( BTL), Build − Lease− Transfer(BLT )and Opera te− Manage (O&M).

The public and private sectors are both encouraged by the government to take part in PPP contracts. The privileges, obligations, and laws applicable to these foreign investors will be outlined in the signed contract for their investment into a number of areas such as:

• Infrastructure for commerce, science, and technology, hydrometeorology, economic zone, industrial zone, high-tech zone, centralized information technology zone, information technology application;

• Power plants and power transmission lines; Infrastructure for healthcare, educational and training, cultural, sport, and relevant services, offices for government authorities;

• Transportation infrastructure and relevant services;

• Lighting systems, clean water supply systems, water drainage systems, water/waste collection and treatment systems, social/resettlement houses, cemeteries;

• Infrastructure for agriculture and rural development, services for enhancing the correlation of agricultural production with the processing and consumption of agricultural products; and

• Other sectors according to the Prime Minister's decisions.

How to Check Company Registration in Vietnam?

It is important to double-check the accuracy of business registration information in Vietnam. To do this, you can use the Vietnamese National Business Registration Portal (NBPR) which allows business owners to check their business data and verify their business registration number. The NBPR also provides business owners with access to business information such as tax registration numbers and business certificates.

Business Registration in Vietnam for Foreigners: The Detailed Process

Step 1: Issue the Investment Registration Certificate

Prior to receiving the Investment Registration Certificate, investors are required to declare project-related information online via the National Foreign Investment Information System. Only one document is then submitted for review by the designated Investment Registration Authority.

Within 15 days of receiving a valid application, the Investment Registration Authority shall be issuing an investment registration certificate to the investor.

Step 2: Issue the Business Registration Certificate

If an investor wishes to register a business, all they need is one document that can be submitted either in person or through the National Public Service Portal online. This simple process with Business Registration Authority will ensure their venture is up and running quickly.

The business registration authority will assess the validity of your submitted documents and decide whether to grant a Business Registration Certificate within three working days.

Step 3: Issue a Qualified Business License (if necessary)

Prior to any venture into the realm of conditional investment, an investor must acquire a qualified business license. This is required in order for them to operate within this sector and make profits from their activities therein. Therefore, procuring such a license should be one of the first tasks undertaken by would-be investors before they start doing business.

Certain business activities such as retailing goods, logistics services, postal services, educational services, and e-commerce require obtaining a valid business license.

The Business Registration Documents Needed for Foreign Investors

Documents for issuance of Investment Registration Certificate

• An application form for execution of the investment project;

• A copy of the foreign investor’s passport;

• Proposal for the investment project;

• A copy of the confirmation of the bank with the balance corresponding to the investment amount

• If the project does not require any land allocation or repurposing, then a copy of the document pertaining to use rights must be provided. This includes real estate leases, certificates of land use rights, and other documents that identify permission for executing an investment project at this location.

• If the investment project necessitates appraisal and collection of public opinion concerning technology in accordance with the Law on Technology Transfer, this explanation outlines the contents of such technology.

• Complementary documents connected to the investment project, as well as standards concerning the ability and qualification of the investor in agreement with laws (if required).

Documents for Issuance of Business Registration Certificate

Depending on the particular kind of business that an Investor desires to create, they must have a set of documents ready. But generally speaking, these are some essential records that should be prepared beforehand:

• The enterprise registration application form;

• The Company’s Charter;

• The list of founding shareholders; the list of shareholders that are foreign investors. (if it is a joint-stock company); The list of members (if it is a two-member limited liability company);

• Certified copy of identity card or citizen’s identity card or passport

• (if personal); to decide on the establishment and certification of enterprise

• registration or equivalent documents and citizen identification cards or

• identity cards or passports enclosed with written authorization for capital managers in Vietnam (if it’s an organization);

• Certified copy of the granted investment registration certificate;

• Authorization Letter for LHD Law Firm.

Some Notes Before Registering a Business in Vietnam for Foreigners

• When registering a business in Vietnam, foreign investors must satisfy the conditions of each specific investment sector. These requirements can include procedure compliance, capital contribution rate, total investments, and corporate structure.

• When setting up a business in Vietnam, foreign investors must show their financial stability. This can be done by submitting evidence of the balance on their bank account or savings book with the exact amount of funds invested into Vietnam.

• It is critical for foreign investors to ensure the project's location by having a valid office lease contract in Vietnam. To legally register their company headquarters, it must be excluded from being an apartment building or dormitory address.

What Should I Do If My Business Is Not Registered Correctly?

If you find out that your business is not registered correctly, contact the Vietnamese Department of Planning and Investment (DPI) or other relevant authorities. They can help you review the business registration information and advise you on the steps needed to ensure that your business is properly registered.

Conclusion

Doing business in Vietnam can be a great opportunity for foreign investors, but it is important to make sure you are following all of the regulations and procedures correctly. Be sure to research business laws thoroughly and seek assistance from business formation specialists or law firms when necessary. This will help ensure that your business is registered properly and you are compliant with all relevant regulations.

Do not hesitate to contact us at LHD Law Firm if you have any questions or need assistance in setting up a business in Vietnam. We can provide business consulting services and legal advice on business registration, business formation, and compliance with business regulations in the country.

We look forward to hearing from you soon!

Thank you for taking the time to read this article on business registration in Vietnam for foreigners. We hope that it has given you a better understanding of the process and key considerations when setting up a business in Vietnam.

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