An A-to-Z guide on Vietnam business registration [Updated 2024]

Vietnam business registration is an essential step for businesses looking to enter and operate legally in this market. Registering a business enables companies to operate legally and be recognized by the government and regulatory agencies. However, this process can also pose challenges, especially for new businesses or those unfamiliar with the legal procedures in Vietnam. Therefore, companies that support businesses, such as Aniday, play a crucial role in addressing these issues!

Vietnam business registration is very important for businesses

Types of company structures in Vietnam

Based on the 2020 Law on Enterprises of Vietnam, there are 7 types of business entities:

• Single-member Limited Liability Company: A single-member LLC is a business entity with one individual or organization owning the entire capital and being responsible for the company's debts and obligations within the capital contribution.

• Multi-member Limited Liability Company: A multi-member LLC is a business entity with two to fifty members, individuals, organizations, or a combination thereof, owning the entire capital and being responsible for the company's debts and obligations within the contributed capital.

Both LLCs offer a flexible organizational structure suitable for diverse industries, with shareholder liability limited to their shares. Drawbacks include restrictions on ownership transfer, limited capital raising without share issuance, complex Vietnam business registration, and moderate to high operational costs.

• Joint Stock Company (JSC): A joint stock company is a business entity with its capital divided into equal shares owned by shareholders, who can be individuals or organizations, and the company can issue shares to attract capital. Establishing a JSC provides benefits like expanded capital through share sales and clear ownership transfer processes. Yet, it entails challenges such as complex legal requirements, intricate organization structures, lengthy Vietnam business registrations, and high operational expenses.

• Partnership: A partnership is a business entity with at least two members as co-owners conducting business under a common name. The co-owners, known as general partners, share responsibility for all company liabilities, while additional members contribute capital and have limited liability.

• Sole proprietorship: A sole proprietorship is a business owned and operated by a single individual who is fully responsible for the business's operations and liabilities.

• Branch Office (BO): In Vietnam, a Branch Office serves as an adjunct to its parent company, engaging in commercial operations on behalf of the parent entity within the country. Setting up a BO in Vietnam provides direct control, profit remittance abroad, and brand leverage. Yet, challenges include complex Vietnam business registration, extended liability to the parent company, sector limitations, and high operational costs.

• Representative Office (RO): A Representative Office (RO) functions as the liaison or representative branch of a foreign corporation in Vietnam. It mandates the presence of a resident representative accountable for overseeing the office's operations within the country. This setup allows for market presence without revenue activities at a low cost. Despite offering diverse business opportunities, challenges include complex Vietnam business registration, revenue restrictions, and parent company liability.

These entities vary in structure, ownership, and liability responsibilities, providing options for entrepreneurs and businesses in Vietnam. Before proceeding with Vietnam business registration, you should determine the type of business entity you intend to establish.

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There are 7 types of company structures in Vietnam

Requirements for setting up a company in Vietnam

Setting up a company in Vietnam involves several requirements and procedures for Vietnam business registration. Here are the detailed requirements:

• Legal form of the company: Decide on the legal form of the company, such as a Limited Liability Company (LLC), Joint Stock Company (JSC), Partnership,... Each legal form has its own set of requirements and procedures for Vietnam business registration.

• Business lines and activities: Determine the business lines and activities your company will engage in. Certain business sectors may have specific requirements or restrictions imposed by Vietnamese laws and regulations.

• Registered business address: This address will serve as the official location for Vietnam business registration and correspondence with government authorities.

• Minimum capital requirements: Depending on the type of company, there may be minimum capital requirements. For example, a JSC typically has higher minimum capital requirements compared to an LLC. The capital contribution must also be deposited in a Vietnamese bank account.

• Company name: Choose a unique name for the company that complies with Vietnamese naming regulations. The name should not be identical or similar to existing company names and must be in Vietnamese or include Vietnamese characters.

• Articles of Association (AOA): Prepare the Articles of Association (for JSCs) or Company Charter (for LLCs), which outline the internal governance structure, rights, and obligations of shareholders or members, management structure, decision-making process, etc.

• Shareholders/Directors: Identify and appoint shareholders (for JSCs) or members (for LLCs) who will own and manage the company. For JSCs, there must be at least three shareholders, while an LLC can have one or more members. At least one legal representative or director is required.

• Legal representative: Appoint a legal representative who will act on behalf of the company in legal matters and represent the company in dealing with government authorities and third parties.

• Business Registration Certificate (BRC): Prepare and submit the required documents to the local Department of Planning and Investment (DPI) or the relevant authorities to apply for a Business Registration Certificate (BRC). The BRC is the official document certifying the establishment of the company.

• Tax Registration: Obtain a tax Vietnam business registration certificate from the local tax authorities. This certificate is necessary for fulfilling tax obligations and conducting business activities legally in Vietnam.

• Other permits and licenses: Depending on the nature of the business, additional permits or licenses may be required from sector-specific authorities. For example, businesses in certain industries like finance, healthcare, education, or import/export may require specific licenses or approvals.

• Labor regulations: Comply with Vietnamese labor regulations when hiring employees, including obtaining work permits for foreign employees (if applicable), signing labor contracts, registering with social insurance, and ensuring compliance with labor rights and obligations.

• Environmental compliance: Ensure compliance with environmental regulations and obtain any necessary permits or approvals related to environmental protection if your business activities have an environmental impact.

• Intellectual property protection: Consider protecting intellectual property rights by registering trademarks, patents, or copyrights with the relevant authorities to safeguard your company's assets and proprietary information.

• Annual compliance requirements: After the company is established, ensure ongoing compliance with annual reporting, tax filing, and other regulatory requirements to maintain the company's legal status and good standing.

Navigating through these requirements may seem daunting, but seeking assistance from legal advisors or professional service providers familiar with Vietnam's business regulations can help streamline the process and ensure compliance.

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Through preparation is needed before proceeding with Vietnam business registration

Process for Vietnam company registration

Establishing a company in Vietnam is a multi-step process that requires careful navigation of various procedures and documentation for Vietnam company registration before operations can begin.

Step 1: Engage a reputable law firm

To initiate the Vietnam business registration process, the first crucial step is to engage the services of reputable law firms. These local legal experts specialize in navigating the complexities of Vietnam business registration procedures, thereby saving valuable time and resources for foreign investors.

Step 2: Provide essential information

Investors need to provide crucial information like investor details, company name preferences, intended business activities, investment capital, and labor requirements. This data is necessary for preparing comprehensive application dossiers.

Step 3: Prepare the required documentation

Under the guidance of your lawyer, compile all necessary documents for the company's establishment. Your lawyer will assist in preparing application forms and ensuring compliance with legal requirements.

Step 4 : Register for an Investment Registration Certificate (IRC)

The subsequent steps involve obtaining the requisite certificates for company registration. Firstly, investors must register for an Investment Registration Certificate (IRC), a critical requirement for foreign-owned companies operating in Vietnam. Following approval, which typically takes around 15 working days, the IRC is issued by the Vietnam business registration, marking an essential milestone in the registration process.

Step 5: Register for an Enterprise Registration Certificate (ERC)

Utilizing the information obtained from the Vietnam corporate registry through the Investment Registration Certificate (IRC), investors proceed to register for an Enterprise Registration Certificate (ERC) with the Business Registration Office (BRO). This step, which usually takes about 5 working days, results in obtaining the ERC, company seal, and tax code, officially establishing the company for business in Vietnam.

Step 6: Open company bank accounts

A foreign-owned company needs at least two bank accounts: a Direct Investment Capital Account for investment-related transactions and a Current Account in VND for daily business activities.

Step 7: Complete post-registration formalities

Beyond Vietnam business registration, additional formalities include purchasing a USB token for a digital signature, displaying a company signboard, registering initial tax, submitting periodic reports, optional customs codes, and trademark registration, and contributing the full registered charter capital within 90 days from ERC issuance.

>> After completing the Vietnam business registration, the company can recruit workers with the support of headhunting services at Aniday!

The support of legal consulting firms helps businesses with Vietnam business registration more easily.

The attractiveness of the Vietnamese market for foreign investors

The increasing demand for Vietnam business registration is due to Vietnam being an attractive market for both domestic and foreign investors. The key attractions of Vietnam, which offer abundant business opportunities in Vietnam, include:

• Impressive GDP growth rate: According to PwC's "World in 2050" study, Vietnam is projected to achieve the highest annual GDP growth rate worldwide, with GDP growing by an average of 5.3% per year over a 36 years from 2014 to 2050. The government's stability and economic recovery efforts are highly regarded.

• Green development direction and advanced technology: The Vietnamese government has strongly committed to implementing the provisions of COP 26 and has issued policies to encourage foreign investors to invest in projects using advanced, clean, and environmentally friendly technology.

• Deep integration into the international community: Vietnam has signed and implemented numerous free trade agreements with over 60 global partners, while also relaxing regulations on foreign ownership in listed companies and allowing unlimited foreign investment in government bonds.

• Favorable geographical location: With its favorable geographical location, Vietnam serves as a gateway for international trade by sea. Additionally, the increasingly synchronized infrastructure and technology provide favorable conditions for foreign investors.

• Growing consumer market: With a large population and stable economic growth, Vietnam's consumer market is thriving. The increase in income and improvement in living standards has driven demand for a wide range of products and services, from daily necessities to luxury goods and high-end services.

• Young and educated workforce: Vietnam boasts a young, diverse, and increasingly specialized workforce across various fields. This provides favorable conditions for businesses looking to implement projects requiring high-skilled or advanced technology.

• Competitive labor costs: Wages in Vietnam are still relatively low compared to many countries in the region and globally, yet the quality of labor remains high. This allows businesses to save on labor costs while still ensuring productivity and the quality of products/services.

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Vietnam is an attractive market that consistently draws investors both domestically and internationally

Differences between domestic and foreign investors

Before commencing the Vietnam business registration process, it is essential to understand the distinctions between domestic and foreign investors. The following table compares these two types of investors, aiding in a comprehensive grasp of these vital variances.

Domestic investors:

• Domestic investors usually acquire a Vietnam business registration certificate within approximately five working days.
• Domestic investors commonly require an ERC as their principal license.
• Domestic investors encounter few limitations regarding industries, except for sectors like education, healthcare, and conservation.
• Additionally, certain documents, such as financial statements and rental contracts, may not be mandatory for domestic investors.

Foreign investors:

• The process of obtaining a Vietnam business registration certificate for foreign investors in Vietnam tends to be more time-intensive, typically lasting between 30 to 60 working days.
• Foreign investors often require multiple licenses, such as the ERC, IRC, and BRC.
• Documentation such as rental contracts and financial statements is usually mandatory for foreign investors.
• Establishing accounts for foreign direct investment in Vietnam is a requirement to facilitate financial transactions.
• Moreover, overseas documents utilized in the Vietnam business registration process may need to undergo a legalization procedure.
• Foreign investors commonly encounter sector-specific restrictions within certain industries.

Finding suitable investors for the Vietnamese business model

Aniday serves not only as a recruitment platform but also provides support and useful information for the Vietnam business registration process. Aniday connects businesses with experienced recruitment and legal professionals to provide specialized assistance with registration procedures and legal requirements. Additionally, Aniday offers insights into the labor market and business environment in Vietnam, helping businesses understand business conditions and attract talented personnel. Contact us for more detailed information!

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