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  • Form of entity

    Vietnamese corporate laws introduce 5 entity types. However, only the first 3 types (ie, JSC, 2M-LLC and 1M-LLC) have their own legal status. 1M-LLC is the most popular and widely used type by foreign investors when they intend to set up a legal entity in Vietnam. The other 2 types (ie, Partnership and Private Enterprise) are more suitable for local investors. If we compare the legal framework of these 2 types with the legal framework of the first 3 types (ie, JSC, 2M-LLC and 1M-LLC), just a few provisions on their incorporation, organization and operations can be found under Vietnamese corporate laws. In addition, the form of Partnership may only be designed and appropriate for a very limited number of specific professional businesses, such as legal, auditing, etc. Therefore, we will only cover the first 3 entity types (ie, JSC, 2M-LLC and 1M-LLC).

    Joint stock company (JSC)

    • At least 3 shareholders and no restriction to the maximum number
    • Generally no personal liability of shareholders as it is limited to their ownership in a JSC
    • Earnings of a company are subject to corporate income tax and shareholders (only individuals) are taxed on any distributed dividends
    • Typical corporate documents generally include charter (or articles of incorporation), organizational resolutions of General Shareholder Meeting (GSM) and Board of Directors (BOD), shareholder registration books and share certificates
    • GSM makes decisions on the most important affairs of the JSC, BOD has overall responsibility to implement GSM's decisions, General Director (or CEO) has day-to-day management responsibilities
    • Shareholders typically purchase shares in the JSC, either common or preferred
    • It is required to file tax returns annually with local tax authorities

    Multi-member limited liability company (2M-LLC)

    • Must be at least 2 members and no more than 50, can be both individuals and legal entities
    • Generally no personal liability of members, as it is limited to their ownership in a 2M-LLC
    • Earnings of a company are subject to corporate income tax and members (only individuals) are taxed on any distributed profits
    • Typical corporate documents generally include:
      • Charter (or articles of incorporation)
      • Organizational resolutions of Members' Council (MC)
      • Member registration books and
      • Capital contribution certificates
    • MC makes decisions on the most important affairs of the 2M-LLC and has overall management responsibility; General Director (or CEO) has day-to-day management responsibilities
    • Members contribute capital to the charter capital of 2M-LLC
    • It is required to file tax returns annually with local tax authorities

    Single-limited liability company (IM-LLC)

    • Only one member is required, either an individual or a legal entity
    • Generally no personal liability of a member, as it is limited to member's ownership in a 1M-LLC
    • Company's earnings are subject to corporate income tax, but the sole member (either a corporate or an individual) is not taxed on any distributed profits
    • Typical corporate documents generally include:
      • Charter (or articles of incorporation) and
      • Decisions of the sole member, which may be made directly by a member or indirectly through either MC or company president
    • Either MC or company president has overall management responsibility; General Director (or CEO) has day-to-day management responsibility
    • Member contributes capital to the charter capital of 1M-LLC
    • It is required to file tax returns annually with local tax authorities

    Partnership

    • At least 2 unlimited liability partners (only individuals) and no restriction to the maximum number; no restriction to the minimum and maximum number of limited liability partners
    • Generally, no personal liability of limited  partners, but unlimited partners can be liable
    • Earnings of a partnership are subject to corporate income tax and partners (only individuals) are taxed on any distributed profits
    • Typical corporate documents generally  include charter (or articles of incorporation), decisions of the Partners' Council and capital contribution certificates
    • Partners' Council has overall management responsibilities; unlimited liability partners have day-to-day management responsibilities
    • Partners contribute capital to the charter capital of a Partnership
    • It is required to file tax returns annually with local tax authorities

    Private enterprise

    • Only a sole individual owner
    • Generally an owner has personal liability
    • Earnings of an enterprise are subject to corporate income tax, but the sole individual owner is not taxed on any distributed profits
    • Typical corporate documents generally include internal rules issued by the owner
    • Owner has overall and day-to-day management responsibilities
    • Owner contributes capital to investment capital of a private enterprise
    • It is required to file tax returns annually with local tax authorities
  • Entity set up

    Joint stock company (JSC)

    JSC is a separate and distinct legal entity. Generally, it is managed by a GSM that makes decisions on the most important affairs of a JSC. The BOD is responsible for implementation of GSM's decisions and overseeing the general affairs of the JSC. Directors of the BOD are appointed by a GSM which consists of all shareholders with voting rights. General Director (or CEO), who runs the day-to-day operations of the JSC, is appointed by a BOD. When a JSC has 11 or more shareholders, a Board of Supervisors (BOS) appointed by the GSM assists GSM to supervise all operational affairs of a JSC.

    Multi-member limited liability company (2M-LLC)

    2M-LLC is a separate and distinct legal entity. Generally, it is managed by an MC that makes decisions on the most important affairs of the 2M-LLC and oversees general affairs. An MC consists of all company members that collectively contribute their parts to the charter capital of a 2M-LLC. General Director (or CEO), who is appointed by an MC, is responsible for running day-to-day operations of a 2M-LLC. In a 2M-LLC that has 11 or more shareholders, a BOS, whose supervisors are appointed by the MC, assists the MC to supervise operational activities of the 2M-LLC.

    Single-limited liability company (IM-LLC)

    1M-LLC is a separate and distinct legal entity. Company president or Members' Council (MC) (which consists of individuals appointed by the sole member of the 1M-LLC) makes decisions on the most important affairs and oversees the general affairs of the 1M-LLC. General Director (or CEO), who is appointed by MC or The company president is responsible for running day-to-day operations of 1M-LLC. If a sole member of a 1M-LLC is a legal entity, a supervisor appointed by a sole corporate member is required to assist the sole member in overseeing all operational matters of 1M-LLC.

    Note: In general, the term "director" under the foreign laws might be equivalent to the member of BOD (in case of JSC). Additionally, "officer" under foreign laws generally might be equivalent to the director (in JSC, 1M-LLC and 2M-LLC) under Vietnamese laws.
    For the purpose of this summary, we shall use "director" and "officer" with the general meaning implied by the Vietnamese laws as noted above.
  • Minimum capital requirement

    Generally, there are no minimum capital requirements, except for some strictly regulated businesses (eg, banking, insurance, securities, education, real estate development, etc.).

  • Legal liability

    Generally, shareholders (in respect of JSC) and owner(s) (in respect of LLCs) are not personally liable for the debts of the company, aside from their obligation to make full payment for their shares in the charter capital of the company.

  • Tax presence

    Joint stock company (JSC)

    An entity is liable to pay corporate income tax levied on its earnings, and shareholders/members (only individuals) are taxed on any distributed dividends.

    Multi-member limited liability company (2M-LLC)

    An entity is liable to pay corporate income tax levied on its earnings, and shareholders/members (only individuals) are taxed on any distributed dividends.

    Single-limited liability company (IM-LLC)

    A 1M-LLC is liable to pay corporate income tax imposed on its earnings. However, the sole member (either a legal entity or an individual) is not taxed on its distributed profits.

  • Incorporation process

    Generally, the process consists of 3 steps:

    • Applying for an Investment Registration Certificate (IRC) from the authority of investment registration
    • Applying for an Enterprise Registration Certificate (ERC) from the authority of enterprise registration and
    • Conducting some mandatory post-licensing works (such as making a public announcement of the entity establishment, making a corporate seal and publishing its sample to the national enterprise registration portal, and obtaining a specific license (eg, general trading license, multi-level marketing (MLM) license, etc.) if an entity engages in conditional businesses (eg, general trading business, MLM business, etc.)
  • Business recognition

    Joint stock company (JSC)

    JSC is not widely used by foreign investors for investment in Vietnam, unless they intend to offer the JSC's shares to the public and trade their shares on a stock market.

    Multi-member limited liability company (2M-LLC)

    2M-LLC is not widely used by foreign investors, unless they engage in conditional businesses where foreign ownership is restricted. In this case, they have to set up joint ventures with local partners. 2M-LLC may also be chosen if there are more than one foreign investor that intend to do business together.

    Single-limited liability company (IM-LLC)

    1M-LLC is widely used by foreign investors.

  • Shareholder meeting requirements

    Joint stock company (JSC)

    A GSM meeting is required annually.

    Multi-member limited liability company (2M-LLC)

    An MC meeting is required annually.

    Single-limited liability company (IM-LLC)

    Not applicable for this jurisdiction.

  • Board of director meeting requirements

    Joint stock company (JSC)

    A BOD meeting is required quarterly.

    Multi-member limited liability company (2M-LLC)

    Not applicable for this jurisdiction.

    Single-limited liability company (IM-LLC)

    Not applicable for this jurisdiction.

  • Annual company tax returns

    Tax returns must be filed annually with local tax authorities. 

  • Business registration filing requirements

    With respect to foreign investments, initial investment registration and post-business formation registration are required. Subsequently, any change to any content of the IRC or ERC must be registered with and/or notified to the local authorities.

  • Business expansion

    If business expansion results in changes to any content of the IRC or ERC, relevant registration with and/or notification to the local authorities must be made.

    In the case of the 1M-LLC, if more members are offered to make their contribution to the charter capital, it must then be converted into either a 2M-LLC or a JSC.

  • Exit strategy

    With respect to foreign investment, application for termination of an investment project must first be made with the investment registration authority. Then, the dissolution of the company is conducted with the enterprise registration authority. It is noted that tax finalization is the key for obtaining the final decision of dissolution of any enterprise in Vietnam.

  • Annual corporate maintenance requirements

    With respect to keeping internal records, the company is required to maintain at its head office meeting minutes of the GSM and the BOD (in respect to JSCs) and the MC (in respect to LLCs) and other resolutions/ decisions of the company, accounting books, accounting records, annual financial statements, etc. With respect to filing annual reports, a foreign owned company will be required to submit: an annual report on status of investment project implementation, an annual report of evaluation and supervision of investment project, an audited annual financial statement, among other documents.

  • Director / officer requirements

    Directors (ie, members of BOD) are only relevant and applicable to JSC (and not LLCs). Under Vietnamese law, a director must satisfy the following conditions:

    • Have full capacity for civil acts, and not fall into the category of persons not permitted to manage an enterprise as stipulated by law
    • Have professional expertise and experience in business management of the company and not be a shareholder of the company, unless otherwise stipulated in the charter of the company
    • Additionally, an independent director might be required to satisfy other special conditions relating to theindependence feature

    Regardless of whether a company is JSC, 2M-LLC or 1M-LLC, an officer (ie, general director/director under Vietnamese law) must satisfy the following requirements:

    • Have full capacity for civil acts
    • Do not fall into the category of entities not permitted to manage enterprises in accordance with the Law on Enterprises
    • Have professional qualifications and experience in business administration of the company if the charter of the company does not stipulate otherwise
  • Local corporate secretary requirement

    Not applicable for this jurisdiction.

  • Local legal or admin representative requirement

    Generally, the company is required to have at least one legal representative who is residing in Vietnam.

  • Local office lease requirement

    Generally, the company is required to have its head office in Vietnam.

  • Other physical presence requirements

    Except for what is provided herein, we have found no other physical presence requirements under Vietnamese law.

  • Sufficiency of virtual office

    The use of a virtual office is not officially recognized by Vietnamese laws.

  • Provision of local registered address by law firm or third-party service provider

    Such a service is not officially recognized by Vietnamese laws.

  • Provision of local director or corporate secretary by law firm or third-party service provider

    Such a service is not officially recognized by Vietnamese laws

  • Nationality or residency requirements for shareholders, directors and officers

    In general, the company is required to have at least one legal representative residing in Vietnam.

    Further, if the company is conducting some conditional business lines (for example, aviation), the nationality or residence of shareholders, directors and officers might be required.

  • Restrictions regarding appointment of nominee shareholders or directors

    Nominee shareholders or directors are not officially recognized by Vietnamese laws.

  • Summary of director's, officer's and shareholder's authority and limitations thereof

    Please see Entity set up.

  • Public disclosure of identity of directors, officers and shareholders

    Generally, the identity of directors (ie, members of BOD in case of JSC or members of MC in case of 1M-LLC), officers (ie, general director/director under Vietnamese law) and shareholders are not required to be public. During the establishment of the entity and in regard to certain changes, the information of the members, founding shareholders, officers and legal representatives might be required to be public on the National Business Registration Portal.

  • Minimum and maximum number of directors and shareholders

    With respect to the number of shareholders of a JSC, please refer to Form of entity.

    With respect to the directors (ie, members of BOD) in a JSC, the number of members ranges from 3 to11.

    With respect to the number of officers (ie, general director/director under Vietnamese laws) of a company regardless of whether it is a JSC, 2M-LLC or 1M-LLC, the number is at least 1.

  • Minimum number of shareholders required

    Please refer to Form of entity.

  • Removal of directors or officers

    Generally, directors in the case of JSC and 1M-LLC shall be removed by the body having the right to appoint the director.

    The officer shall be removed by the body having the right to appoint the officer. Additionally, the removal of directors and officers might require notification to the relevant authority.

  • Required and optional officers

    Generally, the company is required to have at least one general director/director. Any other optional officer such as the deputy general director/deputy director is allowed.

  • Board meeting requirements

    Please refer to Shareholder meeting requirements and Board of directors meeting requirements.

  • Quorum requirements for shareholder and board meetings

    Joint stock company (JSC)

    Quorum for a meeting of GSM to be conducted

    1. Where the number of attending shareholders represents at least 51% of the total number of shares entitled to vote (the charter might stipulate a higher percentage)
    2. Where a meeting is not able to be conducted for the first time because the condition stipulated above is not satisfied, the meeting may be convened for a second time within 30 days from the date of the intended opening of the first meeting, unless otherwise stipulated in the charter of the company. A meeting of the GSM which is convened for a second time shall be conducted where the number of attending shareholders represents at least 33% of the total number of shares entitled to vote
    3. Where a meeting convened for a second time is not able to be conducted because the condition stipulated above is not satisfied, it may be convened for a third time within 20 days from the date of the intended opening of the second meeting, unless otherwise stipulated in the charter of the company. In this case, a meeting of the GSM shall be convened irrespective of the total number of shares entitled to vote of shareholders attending the meeting

    Quorum for passing a resolution of GSM

    1. A resolution is approved by a number of shareholders representing at least 51% of the total number of shares entitled to vote of all attending shareholders, except for the cases as further in points 2 and 3 below (the charter might stipulate a higher percentage)
    2. A resolution on some important matters shall be passed if it is agreed by a number of shareholders representing at least 65% of the total number of voting slips of all attending shareholders; the specific percentage shall be stipulated in the charter of the company
    3. A resolution of the GSM will be passed by way of collection of written opinions if it is approved by members representing at least 51% of the total number of shares entitled to vote; the specific percentage will be stipulated in the charter of the JSC 

    Quorum for the meeting of BOD

    A meeting of the BOD shall be conducted where 3/4 or more of the total members are in attendance. If this condition is not satisfied, it shall be convened for a second time within 7 days from the intended date of the first meeting, except where the charter stipulates some other shorter time-limit. In this case, the meeting shall be conducted if more than half of the number of members of the BOD attends the meeting.

    Quorum for passing a resolution of BOD

    Except where the charter of the company provides for any other higher percentage, a resolution of the BOD shall be passed when it is agreed by the majority of the members in attendance; in the case of a tied vote, the final decision shall be made in favor of the vote of the chairman of the BOD.

    Multi-member limited liability company (2M-LLC)

    Quorum for a meeting of MC to be conducted

    1. Where the attending members represent at least 65% of the charter capital; the specific percentage will be stipulated in the charter of the 2M-LLC
    2. Where a meeting does not take place because the condition stipulated above is not satisfied, the meeting may be convened for a second time within 15 days from the date on which the first meeting was intended to be opened. A meeting of the MC which is convened for a second time will be conducted where the attending members represent at least 50% of the charter capital
    3. Where a meeting which has been convened for a second time does not take place because the condition stipulated above is not satisfied, it may be convened for a third time within 10 working days from the date on which the second meeting was intended to be opened. In this case, the meeting of the MC will be conducted irrespective of the number of attending members and of the amount of charter capital represented by attending members

    Quorum for passing a resolution of MC

    Unless otherwise stipulated in the charter of the 2M-LLC, a resolution of the MC will be passed in a meeting in the following cases:

    1. It is approved by the number of votes representing at least 65% of the aggregate capital of the attending members
    2. In respect of some important decisions, the approval by the number of votes representing at least 75% of the capital of the attending members will be required
    3. A resolution of the MC will be passed by way of collection of written opinions if it is approved by members representing at least 65% of the charter capital; the specific percentage will be stipulated in the charter of the 2M-LLC

    Single-limited liability company (IM-LLC)

    Quorum for a meeting of MC (if any) to be conducted

    A meeting of the MC will be conducted where at least two thirds of the total number of members attend.

    Quorum for passing a resolution of MC

    A resolution of the MC will be passed when it is agreed by more than half of the attending members. However, important decisions must be agreed to by at least three quarters of the attending members.

  • Must a bank account be opened prior to incorporation, and must the bank account be local?

    It is not a requirement to open a bank account prior to incorporation. However, after incorporation, the company must open at least a bank account at a local bank, especially for the purpose of the registered capital contribution.

  • Auditing of local financials. If so, must the auditor be located in local jurisdiction, and must the company's books be kept locally?

    Annual financial statements of a foreign owned company must be audited by an independent licensed auditor in Vietnam within 90 days from the end of the annual accounting period.

    The company must keep its book locally at its head office or other places stipulated by the charter.

  • Requirement regarding par value of stock

    Generally no requirement, except when listing a joint stock company where the par value of the stock offered for first-time sale to the public is VND 10,000.

  • Increasing of capitalization if needed

    In order to increase the charter capital of a foreign owned company, the company is required to register the amending of its IRC and ERC to record the new amount of charter capital, together with the internal amending of the Charter of the company.

  • Summary of how funds can be repatriated from your jurisdiction (ie dividends or redemption)

    Funds can be repatriated abroad via dividends or redemption.

  • Restrictions on transferability of shares

    Joint stock company (JSC)

    Shares are freely transferable except for

    1. Transferring shares of founding shareholders within the first 3 years of existence and
    2. Restrictions stipulated by the charter 

    Multi-member limited liability company (2M-LLC)

    Generally, capital contribution is freely transferable between the members. However, the contributed capital can only be transferred to a non-member party if the other members do not purchase such amount of contributed capital.

    Single-limited liability company (IM-LLC)

    Generally, contributed capital is freely transferable.

  • Obtaining a name and naming requirements

    The company will register a name upon applying for incorporation. The company's name may not be the same as another company's name (which has been registered) or so similar to another company's name (which has been registered) as to cause confusion.

  • Summary of "know your client" requirements

    Generally no, except for some special business activities such as those taken up by banks.

  • Approval requirements for amending charter document

    Amendment of charter requires approval of GSM (in the case of JSC), or MC (in the case of 2M-LLC), or MC or owner (in the case of 1M-LLC).

  • Licenses required to conduct business in jurisdiction

    Specific licenses or registrations may be required to conduct business in particular business sectors. The types of business license or required registration will depend on the nature and actual features of the intended businesses.

  • Process of purchasing and utilizing a shelf company

    A shelf company is not common in Vietnam.

  • Key contacts
    Nguyen Thi Thanh Xuan
    Nguyen Thi Thanh Xuan
    Partner, Legal Practice Vision & Associates [email protected] T (84-24) 3934 0629 View bio

Form of entity

Vietnam

Vietnamese corporate laws introduce 5 entity types. However, only the first 3 types (ie, JSC, 2M-LLC and 1M-LLC) have their own legal status. 1M-LLC is the most popular and widely used type by foreign investors when they intend to set up a legal entity in Vietnam. The other 2 types (ie, Partnership and Private Enterprise) are more suitable for local investors. If we compare the legal framework of these 2 types with the legal framework of the first 3 types (ie, JSC, 2M-LLC and 1M-LLC), just a few provisions on their incorporation, organization and operations can be found under Vietnamese corporate laws. In addition, the form of Partnership may only be designed and appropriate for a very limited number of specific professional businesses, such as legal, auditing, etc. Therefore, we will only cover the first 3 entity types (ie, JSC, 2M-LLC and 1M-LLC).

Joint stock company (JSC)

  • At least 3 shareholders and no restriction to the maximum number
  • Generally no personal liability of shareholders as it is limited to their ownership in a JSC
  • Earnings of a company are subject to corporate income tax and shareholders (only individuals) are taxed on any distributed dividends
  • Typical corporate documents generally include charter (or articles of incorporation), organizational resolutions of General Shareholder Meeting (GSM) and Board of Directors (BOD), shareholder registration books and share certificates
  • GSM makes decisions on the most important affairs of the JSC, BOD has overall responsibility to implement GSM's decisions, General Director (or CEO) has day-to-day management responsibilities
  • Shareholders typically purchase shares in the JSC, either common or preferred
  • It is required to file tax returns annually with local tax authorities

Multi-member limited liability company (2M-LLC)

  • Must be at least 2 members and no more than 50, can be both individuals and legal entities
  • Generally no personal liability of members, as it is limited to their ownership in a 2M-LLC
  • Earnings of a company are subject to corporate income tax and members (only individuals) are taxed on any distributed profits
  • Typical corporate documents generally include:
    • Charter (or articles of incorporation)
    • Organizational resolutions of Members' Council (MC)
    • Member registration books and
    • Capital contribution certificates
  • MC makes decisions on the most important affairs of the 2M-LLC and has overall management responsibility; General Director (or CEO) has day-to-day management responsibilities
  • Members contribute capital to the charter capital of 2M-LLC
  • It is required to file tax returns annually with local tax authorities

Single-limited liability company (IM-LLC)

  • Only one member is required, either an individual or a legal entity
  • Generally no personal liability of a member, as it is limited to member's ownership in a 1M-LLC
  • Company's earnings are subject to corporate income tax, but the sole member (either a corporate or an individual) is not taxed on any distributed profits
  • Typical corporate documents generally include:
    • Charter (or articles of incorporation) and
    • Decisions of the sole member, which may be made directly by a member or indirectly through either MC or company president
  • Either MC or company president has overall management responsibility; General Director (or CEO) has day-to-day management responsibility
  • Member contributes capital to the charter capital of 1M-LLC
  • It is required to file tax returns annually with local tax authorities

Partnership

  • At least 2 unlimited liability partners (only individuals) and no restriction to the maximum number; no restriction to the minimum and maximum number of limited liability partners
  • Generally, no personal liability of limited  partners, but unlimited partners can be liable
  • Earnings of a partnership are subject to corporate income tax and partners (only individuals) are taxed on any distributed profits
  • Typical corporate documents generally  include charter (or articles of incorporation), decisions of the Partners' Council and capital contribution certificates
  • Partners' Council has overall management responsibilities; unlimited liability partners have day-to-day management responsibilities
  • Partners contribute capital to the charter capital of a Partnership
  • It is required to file tax returns annually with local tax authorities

Private enterprise

  • Only a sole individual owner
  • Generally an owner has personal liability
  • Earnings of an enterprise are subject to corporate income tax, but the sole individual owner is not taxed on any distributed profits
  • Typical corporate documents generally include internal rules issued by the owner
  • Owner has overall and day-to-day management responsibilities
  • Owner contributes capital to investment capital of a private enterprise
  • It is required to file tax returns annually with local tax authorities