Establishing a business is an important first step for individuals and organizations to implement their business ideas and enter the market. In Vietnam, business establishment is regulated by a strict legal system, including the Law on Enterprises, the Law on Investment, and other related legal documents. To ensure a smooth business establishment process, it is essential to be well-versed in current legal regulations.
1. Types of Enterprises under Vietnamese Law
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According to the 2020 Law on Enterprises, investors can choose to establish one of the following types of businesses:
- Limited Liability Company (LLC): This includes single-member LLCs and multi-member LLCs with two or more members. This type of enterprise has legal status, and members’ liabilities are limited to the amount of capital they have contributed.
- Joint Stock Company (JSC): This type of business has charter capital divided into shares. Shareholders are only liable for debts and other financial obligations up to the amount of capital contributed to the company.
- Partnership: A business where there are at least two general partners who share unlimited liability for the company’s obligations. In addition, a partnership can have capital-contributing members with limited liability.
- Private Enterprise: Owned by an individual, who has unlimited liability for all business activities of the enterprise.
Choosing the appropriate type of business depends on the scale of operations, the number of members, the level of liability, and the capital mobilization capacity of the investor.
2. Business Establishment Process under Vietnamese Law
The process of establishing a business in Vietnam requires the following steps:
Step 1: Prepare the business registration dossier
The business registration dossier should be prepared based on the type of business the investor has chosen. Generally, the business establishment dossier includes:
- Business Registration Application: This application is governed by the Ministry of Planning and Investment, and contains key information such as the business name, address, business sectors, charter capital, list of members/shareholders, and the legal representative.
- Company Charter: A document that outlines the company’s organization and operations, detailing the rights and obligations of members/shareholders, the organizational structure, and other relevant provisions.
- List of Founding Members/Shareholders: Applicable for multi-member LLCs, JSCs, and partnerships. This list details the personal or legal entity information of contributing members or shareholders.
- Copies of Identification Documents: Includes identity cards, citizen identification cards, or passports for individual members/shareholders; or a copy of the enterprise registration certificate for legal entity members.
Step 2: Submit the business registration dossier
The business registration dossier is submitted to the Business Registration Office of the Department of Planning and Investment where the enterprise’s headquarters is located. After reviewing the dossier, the registration authority will issue the Business Registration Certificate within three working days if the dossier is valid.
Step 3: Publicize the business registration content
After receiving the Business Registration Certificate, the company must publish the business registration information on the National Business Registration Portal within 30 days. The publication includes basic details such as the company name, business registration number, address, business sectors, and charter capital.
Step 4: Create a company seal and notify the seal sample
The business must create its company seal, which represents the enterprise in legal transactions. After making the seal, the business must notify the seal sample on the National Business Registration Portal.
Step 5: Complete post-establishment procedures
- Tax Registration: The business must register for a tax code with the tax authority to fulfill tax obligations.
- Open a Bank Account: The business needs to open a payment account at a bank to carry out financial transactions.
- Register Labor and Social Insurance: If the business employs workers, it must register with the labor authority and participate in social insurance as required by law.
- Display a Signboard: The company’s signboard must be displayed at its headquarters, showing the company name, address, and business registration number as per legal requirements.
3. Legal Issues to Note When Establishing a Business
a. Charter Capital
Charter capital is the total amount of capital members or shareholders commit to contribute to the company. Businesses should determine an appropriate level of charter capital based on their business sectors and scale of operations. For certain conditional business sectors, the law requires a minimum legal capital. For example, real estate businesses must have a minimum legal capital of VND 20 billion.
b. Business Sectors
Enterprises must choose their business sectors according to the Vietnam Economic Sector System. For conditional business sectors, the enterprise must meet all legal requirements, such as sub-licenses, professional certificates, capital conditions, etc.
c. Legal Representative
The legal representative of a business has the rights and obligations to execute transactions on behalf of the company. Businesses should clearly define the authority, responsibilities, and choose a suitable legal representative.
d. Tax Obligations
After establishment, businesses must fulfill tax obligations, such as initial tax declarations, license tax, value-added tax (VAT), and corporate income tax (CIT).
4. Conclusion
Establishing a business in Vietnam requires investors to comply with regulations regarding enterprises, investments, taxes, and other related issues. Understanding and properly following these regulations will help businesses operate legally, stably, and develop sustainably.
If you have any questions or need assistance during the business establishment process, contact DNA Invest. With our expertise and understanding of corporate law, we are ready to advise and support you from the preparation of documents and filing to post-establishment procedures, ensuring your business operates legally and efficiently.
