Setting up a company in Vietnam | Shield GEO

A limited-liability company is a legal entity established by its members through capital contributions to the company. Liability of members is restricted to the extent of their capital contributions.

There is no minimum capital requirements for foreign investors intending to establish a LLC in Vietnam. Investors can be corporations or individuals. LLCs may be established by a single investor (single-member LLCs) or multiple investors (multiple member LLCs). Multiple member LLCs consist of at least two (2) stockholders, up to a maximum of 50 members. The regulations for single-member and multiple-member LLCs are mostly similar.

Depending on the ownership structure, LLCs established by foreign investors may take the form of either:

All charter capital has to be fully paid up within 90 days of establishing the LLC.

Management

The management structure of a LLC comprises of the members’ council, the chairman of the members’ council, the director or general director and a controller. A board of supervisors is also required where the LLC has more than 11 members. The Members’ Council is the highest decision- making body of the LLC and comprises of all capital contributing members.

Accounting/ Auditing requirements

Preparation of financial statements is mandatory for each company, and the balance sheet and profit and loss account of the company have to be filed with the Ministry of Finance, the local tax authorities, Department of Statistics and other local authorities subject  to requirements by the law within ninety days from the end of the financial year.

All foreign-invested business entities must have their annual financial statements audited by an independent auditor operating in Vietnam. Banks, non-banking credit institutions and foreign banks’ branches are required to rotate audit firms after five consecutive years.

In addition, foreign invested enterprises and organisations incorporated and operating in Vietnam reporting in a foreign currency are also required to prepare an additional set of financial statements translated into VND to be submitted to the authorities. These translated financial statements must also be audited.

2. Joint- stock company (JSC)

A joint-stock company is established through a subscription for shares in the company. Under Vietnamese law, only JSCs are permitted to issue shares to the public and may be listed on stock exchanges.  The charter capital of a JSC is divided into shares, and each shareholder holds shares corresponding to the amount of capital contributed to the company. JSCs may either be 100% foreign-owned or may take the form of a joint venture between both foreign and domestic investors.

Investment Capital Requirements

A JSC must have a minimum of three shareholders, with no maximum. Shareholders are generally free to assign their shares to other persons, except in a few cases where restrictions exist.

A JSC’s charter capital equals the the aggregate value of the issued shares that the founding shareholders and the other shareholders have subscribed and recorded in the charter of the JSC.

Management

A JSC’s governance structure comprises of a General Meeting of shareholders, the board of management, the chairman of the board of management and the general director. A Board of Supervisors is also required where the JSC has more than 11 individual shareholders, or if a corporate shareholder holds more than 50% of the shares of the joint-stock company.

The GSM is the highest decision-making body of a JSC, while the Board of Management manages the day to day operations of the JSC. The BOM is required to have at least 3 members, with a maximum of 11. The number of members of the BOM who must reside permanently in Vietnam is stipulated in the JSC’s charter.

Accounting /auditing requirements

Similar to the LLC, JSCs are also required to prepare and submit audited financial statements to the appropriate authorities within ninety days from the end of the financial year.

Steps for Incorporation

Incorporation in Vietnam is generally considered a lengthy and bureaucratic process.

Step 1: Check the proposed company name; obtain a business registration certificate as well as a tax registration certificate from the local business registration office under the Department of Planning and Investment

The first step in the incorporation of a Vietnamese entity is to submit the relevant documents in accordance with Government Decree 43/2010/ND-CP (15 April 2010) on enterprise registration, as amended by Government Decree 05/2013/ND-CP (9 January 2013) (“Decree 43”).  Provided the application file for enterprise registration fully satisfies the conditions for issuance of an enterprise registration certificate, information about that file shall be transferred to the database of the Department General of Taxation (Ministry of Finance). The Department General of Taxation will then create a unique enterprise code number and transfer it to the national database within two working days from the date of receipt of information from the national database of information. The provincial business registration office will then issue it to the enterprise. This code number is both the business registration code number and the tax code number of that enterprise (Article 8 of Decree 43).

Agency: Department of Planning & Investment

Time: 14 days

Cost: VND 200,000

2) Make a company seal

The company obtains a company seal from a seal maker.

Agency: Sealmaker

Time: 8 days

Cost: VND 165,000 – VND 370,000 for bronze seal

3) Registration of the seal-sample at the Police Department

In Vietnam, most business transaction documents must be signed and stamped in order to be considered valid and legal. When registering the seal at the police division, the company representative also has to lodge a copy of the enterprise’s Business and Tax Registration Certificate and also present his or her identity card.

Agency: Local Police Office

Time: 1 day

Cost: VND 50,000

4) Open a bank account

It is worth noting that the minimum deposit to open an account differs by bank. To open the account, applicant will require a bank- issued application form, the company seal, the company’s business registration certificate, and the resolution of the management board on the authorised signatures.

Agency: Bank

Time: 1 day

Cost: No charge

5) Publish the registration contents on the National Business Registration Portal (NBRP)

Under Decree No. 05/2013/NĐ-CP dated 09/01/2013, enterprises are required to post their registration contents on the National Business Registration Portal (NBRP)within 30 working days since the date of the establishment or the amendment registration.

They are also required to pay a publication fee of VND 300,000 as per Circular No. 106/2013/TT-BTC of the Ministry of Finance dated August 9, 2013.

Agency: National Business Registration Portal (NBRP)

Time: 5 days

Cost: VND 300,000

6) Pay business license tax

The business license tax is paid to the tax authority where the enterprise registers its tax reports or through designated commercial banks. This is an annual tax and is paid in the first month of the enterprise’s operating year and in the month it obtains its tax registration certificate and tax code. Companies established during the first 6 months of the year are required to pay the entire annual business license tax and 50% if established in the second half of the year.

Agency: Tax office or commercial bank

Time: 1 day

Cost: VND 1,000,000

7) Buy pre-printed VAT invoices from the Municipal Taxation Department or obtain and print self-printed VAT invoices

All companies are required to use self-printed VAT invoices from 1 January 2011. As such, a newly established enterprise is required to order its VAT Invoice Books from a publisher and register the circulation of its VAT Invoices with the Municipal Taxation Department.

To register for self-printing, the company founders must submit a standard-form along with (a) a sample of the company’s self-printed invoice, including all statutory details; (b) a map showing the location of the company’s office or copy of the lease contract if the premises are leased, certified by the ward commune people’s committee; (c) the general director’s identification card; (d) a copy of the business registration certificate; and (e) and the tax registration certificate as well as a copy.

Agency: Municipal Taxation Department

Time: 10 days

Cost: about VND 200,000 per book

8) Register with the local labour office to declare use of labour (Municipal Department for Labour, Invalids and Social Affairs).

Within 30 days of starting operations, the employer must register all employees and their qualifications with the Labour Office.

Agency: Municipal Department for Labour

Time: 1 day

Cost: no charge

9) Register employees with the Social Insurance Fund for the payment of health insurance and social insurance.

All employees who have contracts for 3 months or longer must be registered with the Social Insurance Fund. The employer must complete a form provided by the Hanoi Social Insurance along with the following information: the employee name and date of birth, salary (as stated in the labour contract), the social insurance book serial number (for employees already issued with those books), a certified copy of the company’s business registration certificate, and a copy of each labour contract.

The Social Insurance Office will issue an insurance registration book for each new employee that was not issued such book by the previous employer within 30 days of receipt of the application. Health insurance certificates are issued during the first month of the year.

Agency: Social Insurance Fund

Time: 1 day, simultaneous with previous procedure

Cost: no charge

10)  Registration for trade union with Vietnam General Confederation of Labour

The employer must register with the local trade union or industry trade union (as defined below) no later than 6 months from the date it starts operations.

The term “trade union” includes (a) provincial or municipal-level confederations of labour under the Vietnam General Confederation of Labour; (b) central-level industry trade unions; (c) trade unions of corporations under the Vietnam General Confederation of Labour; (d) confederations of labour of districts, towns, and provincial cities; (e) local-level industry trade unions, (f) trade unions of processing zones, industrial zones, and high-tech zones; (f) trade unions of corporations; and (g) superior trade unions of other establishments. These trade unions are responsible for establishing a trade union for the company, according to the provisions of the Labour Code, the Law on Trade Unions, and the Charter of the Trade Union of Vietnam, to represent and protect the lawful and legitimate rights and interests of the employees and the labor collective.

If a company trade union is not established within 6 months, the superior trade union shall appoint a provisional executive committee of the trade union.

Agency: Confederation of Labour

Time: 7 days

Cost: no charge