Overview of Company Registration in Vietnam
In South Eastern Asia, there is a country called Vietnam. China, Laos, and Myanmar are among the nations with whom it shares borders. Vietnam is divided into 63 provinces. Agriculture-related economic activity is significant in Vietnam. When compared to other Asian countries, the labor costs in the country are quite low. Due to its position, it serves as a hub for doing business with China. China is the world’s manufacturing power, but Vietnamese enterprises have the option of using Vietnam to connect to supply networks. Economic activity would rise as a result.
Overview
Many investors would pick Vietnam for the process of business registration as a result of the country's technology-based incentives for the establishment of various enterprises. An investor registering a business in Vietnam would also profit from Vietnam's double taxation agreements with other nations including South Korea, Japan, and India.
Benefits of Vietnamese Company Registration
Benefits of company registration in Vietnam include the following-
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Low-cost labour- When compared to other nations like China and Indonesia, hiring local labour in Vietnam is inexpensive. According to data, the minimum pay for workers in Vietnam is USD 70 per month. When compared to China, this is less.
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Low cost- In Vietnam, the cost of living is minimal. Additionally, Vietnam is more affordable than China if an investor needs to rent a warehouse.
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Chain of Supply- China and Vietnam are border neighbours. Vietnam can benefit as a result through supplier systems that China has created. As a result, Vietnam has simple access to capital goods and raw resources.
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Agreements to Avoid Double Taxation- An investor registering a business in Vietnam would also profit from the double taxation agreements Vietnam has with other nations including South Korea, Japan, and India. Investors would not be subject to double taxation for any income earned in Vietnam as a result. It is simple to transfer money earned in Vietnam back to one's home country.
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Facilities with World-Class Infrastructure- World-class infrastructure is available in Vietnam. The Vietnamese mainland is home to more than three economic zones. In Vietnam, there are three high-tech parks and more than 300 industrial parks. All of these advantages would entice investors to proceed with the Vietnam company registration process.
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Trade Relations- Trade ties between Vietnam and the United States and the European Union have grown. Between the aforementioned nations, there are no trade problems. The majority of commodities exported to the USA come from Vietnam. Vietnam exports manufactured goods produced locally.
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Liberalised Investment- To liberalize foreign investment in the nation, the Vietnamese government has continuously adopted investment policies. This makes doing business in Vietnam simple. The government of Vietnam has made it a priority to make doing business simple.
Business Forms for Vietnam Company Registration
The business formats for registering a corporation in Vietnam are as follows-
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Limited Liability Company
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Joint Stock Company
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Branch Office
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Representative Office
Limited Liability Company- These overseas financiers who choose the LLC business form can start a 100% foreign-invested entity. Due to its straightforward organizational structure, which requires just one founder, it is a perfect choice, especially for small and medium-sized businesses. Additionally, since each shareholder's responsibility is restricted to the value of their shares, personal assets are protected. To establish an LLC in Vietnam, the following conditions must be met--
Legal representative and registered business address;
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Notarized copies
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Legalised financial documents;
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Capital necessary (from 10k USD depending on the field of business).
Joint Stock Corporation- A joint stock company must be established, which is a little more difficult and requires more stringent standards. Therefore, for big businesses, a joint stock company business structure is the best choice. Large corporations frequently establish a Vietnam has joint stock companies because they enable owners to issue shares and list them on the local stock exchange. Depending on the industry, this corporate form also permits 100 percent foreign ownership.
Vietnam's joint stock company system permits partnerships between foreign and local investors. The establishment of this type of legal body, however, needs the presence of a minimum of three shareholders and can only be done when the shares are distributed equally. The number of shareholders has no upper bound.
Additionally, a shareholder is only responsible for the debts and other property responsibilities of the Joint Stock Company up to the capital that it has invested in the Joint Stock Company.
Additionally, if the foreign investors do not They can take into account alternative structures like a representative office or branch office to officially register a company in Vietnam.
Representative Office- One might open a representative office to build a presence in the neighbourhood market. Foreign investors might undertake research, analyze local market trends, and support marketing initiatives through a representative office.
Some minimal conditions must be met in order to open a representative office in Vietnam, such as the parent company's abroad operations needing to have been active for at least a year at the time of establishment.
Branch Office- A branch office represents an overseas extension of the parent company. The parent company's branch office is permitted to engage in all commercial activities and make money. Additionally, it is not required to establish a distinct legal person in Vietnam. A branch office can engage into contracts or agreements as needed, issue VAT invoices on its own, and maintain accounting and financial records jointly or separately from its headquarters.Minimum requirements for establishing a business in Vietnam
To establish a business in Vietnam, the following conditions must be met-
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Certified Foreign Investment- A foreign investor needs a foreign investment certificate in order to register a firm in Vietnam. This document attests to the government's permission of foreign investment in Vietnam.
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Regulatory Approval- Forming a corporation in Vietnam would also require approval from the relevant official.
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Requirements for residency- It is not necessary to appoint a shareholder and director who is a resident of Vietnam. To fulfill the requirements in Vietnam, a branch office, representative office, or foreign LLC must select a local representative.
How to Register a Company in Vietnam?
To ensure company registration in Vietnam, the following procedures must be taken into consideration-
Application for a certificate of investment registrationThe applicant (foreign enterprise) must submit an application to the Department of Planning and Investment first. This is the primary organization in Vietnam that issues certificates. This application for registering the investment would need to be submitted by every applicant investing in Vietnam. Compliance with applicable regulatory requirements may also be necessary.
Application for the Certificate of Business Registration (Enterprise Registration Certificate)The applicant would next need to submit an application to the planning and investment department to obtain an Enterprise Registration Certificate. The Enterprise Registration Certificate will provide information about the company, including-
- Name of the firm
- Its legal representative(s),
- Its registered office address,
- Its capital, and
- Its owner's information. .
After completing the aforementioned stages, the applicant would need to declare publicly that the entity has been constituted. The corporate seal would be created, and the sample would need to be posted on the national portal for business registration.
Obtain sublicenses and/or permitsDepending on the business line, the applicant must think about applying for any necessary sub-licenses or licences after securing the company registration.
Documents needed for Vietnamese Company Registration
The following papers are necessary for Vietnamese company registration-
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Investment Certificate
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Organizations Certificate
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Articles of Association
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Memorandum of Association
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Business Licenses
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Visas and passports
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Residence Details
Post Registration Requirements for Vietnamese Companies
- The business can open bank accounts with commercial banks with headquarters in Vietnam once it has received its ERC and finished the initial post-licensing tasks.
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Public limited companies or JSCs must conduct annual shareholder meetings.
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Public limited businesses are required to hold quarterly board meetings.
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Notification to the appropriate authority is required for initial investments, foreign investments, and business registration. If there is a change in the foreign investment, the department of planning and investment must be notified.
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The company's registered office must maintain the minutes of the board meetings and the annual shareholders meetings. All additional records must be on file with the business.
FAQs
- LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
- The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
- Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
LLP form is a form of business model which:
(i) is organized and operates on the basis of an agreement.
(ii) provides flexibility without imposing detailed legal and procedural requirements
(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner
- Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
- Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct
- A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
- The management-ownership divide inherent in a company is not there in a limited liability partnership.
- LLP will have more flexibility as compared to a company.
- LLP will have lesser compliance requirements as compared to a company.
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