An investor can choose from six different types of business when entering the Vietnam market: Representative Office; Limited Liability Company; Joint-Stock Company; Branch Office; Joint Venture; Public Private Partnership.
This section explains the main legal entity types in the below sections, while a comparison table of these types can be reviewed in our Comparison of Entity Types guide, here.
Representative Office
A Representative Office (RO) offers a low-cost entry option for many companies, and are among the most common for companies that are first-time entrants to the Vietnamese market.
RO’s are often suitable for companies that may be seeking to gain a better understanding of the Vietnamese market with a smaller initial investment, and may be used to pave the way for a larger presence within the country in future years.
RO's are currently permitted to engage in the following activities:
- Conducting market research;
- Acting as a liaison office for its parent company;
- Promoting the activities of its head office through meetings and other activities that lead to business at later stages.
Requirements and registered capital
Registered capital is not a statutory requirement for setting up an RO in Vietnam.
Time to establish
ROs can be set up in between six to eight weeks. We recommend hiring a professional service to deal with the myriad of laws and procedures. Given the absence of in-country revenue and associated licensing requirements, the setup process for this option does not entail as many bureaucratic procedures as others.
An RO license is valid for five years but can be extended for another five years.
Limited Liability Company – 100% Foreign-Owned Enterprise
Typically, investors seeking to setup a LLC will be looking at Vietnam’s ‘100% Foreign-Owned Enterprise’.
An LLC is an incorporated company, with limited legal liability, while a joint stock company is a variation of the same, but which is intended by the investor to become a publicly traded company.
Requirements and registered capital
For most sectors and business lines, Vietnam requires no minimum capital requirements. However, the registered capital will be assessed by The Department of Planning and Investment for whether it is adequate to cover the expenses of the business until it generates enough revenue to cover its costs. It is possible to setup a basic business services company with less than USD 10,000 in some cases, but in most cases it would be at or above this threshold, depending on the nature of the business.
It is best to verify whether your business may require minimum capital investment however, given that some industry sectors (business lines) do have requirements.
Examples include:
- Finance, Banking, Insurance and Fin-tech;
- Language centers or Vocational schools;
- Real estate companies;
Ownership
LLCs can be broken down into two types: single-member LLCs which have only one owner, and multiple-member LLCs, which will have more than one stakeholder. These owners can be private individuals or companies, depending on the requirements of a given investor.
Time to establish
Under the laws of Vietnam, setup time for a 100 percent LLC will be divided into two stages:
- Obtain Investment Registration Certificate: 15 days
- Obtain Enterprise Registration Certificate: 03 working days
Branch Office
Branch offices (BO) in Vietnam are limited to certain types of service businesses, such as finance and banking. BOs are service providers and provide services other than those specified in specialized legislative documents . BOs may also hire staff directly.
Branch Offices are permitted to engage in the following activities:
- Rent offices;
- Lease or purchase the equipment and facilities required for operations;
- Recruit local and foreign employees;
- Remit profits abroad;
- Purchase and sell goods and commercial activities per licensing;
- Set up accounting, marketing, and HR departments to represent the parent company.
Requirements and registered capital
The BO will need to obtain an establishment license and have a seal with the name of the parent company. The BO will also need to appoint a branch manager who is a Vietnam resident.
Ownership
Foreign companies may appoint a manager from their countries of origin; however, this employee must get a Vietnam work permit to be hired as a BO manager.
Time to establish
BO can be set up within 07 working days (excluding the time for seeking approval from other departments if required).
Joint Venture
A Joint Venture (JV) is a partnership of companies that are created for a specific business purpose. The owning partners of a foreign-invested Joint Venture can comprise at least two foreign entities or at least one foreign and at least one local entity.
Ownership
Statutory guidelines on foreign ownership, impose a minimum contribution of 30 percent. Beyond this, foreign investors may choose a majority stake with ownership exceeding 50 percent, or a minority share ownership of less than 50 percent in most sectors, given that most industries are open to up to 100% foreign ownership. However, the government also mandates minimum contributions for domestic partners in JVs in some industries.
These business fields require a foreign investor to form a joint-venture with a local partner to enter the market:
- Advertising services;
- Agriculture, hunting, and forestry related services;
- Telecommunication services;
- Travel agencies; Tour operator services; Entertainment services;
- Electronic gaming businesses;
- Container handling; Customs clearance services; Auxiliary transport services;
- Internal waterways transport, rail and road transport services.
For investors purchasing stakes in state-owned enterprises equitized on Vietnam’s exchanges, the JSC structure is required.
Requirements and registered capital
The capital requirements for JVs are the same as for 100 percent FOEs, which is discussed in our Setting Up a Business in Vietnam guide here.
Time to establish
Under the laws of Vietnam, setup time for a 100 percent LLC will be divided into two stages:
- Obtain Investment Registration Certificate: 15 days
- Obtain Enterprise Registration Certificate: 03 working days
However, the time it takes to find a JV parter, conduct appropriate checks and due dilligences, and negotiate a deal may take anywhere from 3 to 6 months.
Public Private Partnership
A Public Private Partnership (PPPs) entails a partnership between a foreign or domestic enterprise and the government for the completion of key infrastructure projects. Vietnamese authorities are aggressively pursuing PPPs for a variety of infrastructure projects as a means of filling gaps left by a reduced role of state-owned enterprise, rising population, and increasing urbanization.
The types of PPPs are:
- Build – Transfer - Operate (BTO);
- Build – Lease – Transfer (BT);
- Build - Operate - Transfer (BOT);
- Operate – Manage (O&M);
- Build – Own - Operate (BOO);
- Build - Transfer - Lease (BTL); and
- Mixed type.
