Content Outline
Even though Vietnam is now one of the most favored destinations for foreign investors, it still has a prolonged legal framework to register a company. In this article, we will highlight the processes that companies have to go through to establish their operations within the country’s territory. We suggest companies seek expert support in these procedures.
It often takes approximately 3 to 4 months to register and set up a 100% FIE (Foreign Invested Enterprise) in Vietnam. However, a representative office can be established in half of that period and it is restricted in the kind of activities it can engage.
The following is a general outline of the 4 most critical processes of LLC / FIE establishment.
- On a few occasions if the investor is planning to have their LLC/FIE engage in a particular line of business, Step 1 ‘Pre-Investment Approval’ may be needed.
- Most investors can easily skip to Step 2, which mandates that the investor apply for an Investment Registration Certificate (IRC).
- Once an organization receives the IRC, it can go to the subsequent step 3 to apply for an Enterprise Registration Certificate (ERC) and other related actions including obtaining a business office address, and so on.
- The regulation implies that the Enterprise will have to register the company seals and open bank accounts after receiving the license.
Here is the illustration of a step-by-step process:
Step 1 – Pre-investment approval stage
For mega investment projects for establishing a company, an investor is required to go through Vietnamese competent authorities before proceeding with establishment processes. Consequently, it is crucial to determine whether an investment will need approval and if so, you will need to prepare the necessary documents and work against the application timeline.
Some of the project types that may need special approvals are as follows:
- Construction of residential building projects
- Airports, aerodromes, airlines, cargo businesses and ports
- Petroleum processing
- Casinos, and all the businesses that are linked with gambling
- Industrial zone and export-processing zone infrastructures
- Nuclear power plants
- Golf Courses
- Special Land Use Rights
- Projects based on or close to the islands, the border, the coastal regions, and other sensitive security zones
- The implementation of projects in potential historical areas
- Projects that involve the relocation of the local people and,
- Projects that include or re-purposing some of the types of forests, and rice crops.
Step 2 – Application For Investment registration certificate
The first procedure of any Vietnamese company formation process is the submission of an Investment Registration Certificate (IRC). This has to be agreed upon by all foreign investment, and the establishment of the right of the foreign enterprise to invest within Vietnam.
To qualify for this program an investor must prepare :
- Application for investment license for project implementation in Vietnam (this should specify the details of the project).
- Proposal for investment project (followed by any other detail of the Investment Project including Lease Agreements/Land Use Needs).
- Financial statements (the company should provide the company’s balance and income sheets for the last two years of the company’s operation; additional information might be required for the evidence of the company’s financial capacity).
- Legal documents from the investors as well as from its legal attorney (if the investor is an organization).
- Lease agreement or Memorandum of Understanding (MOU)
- Other relevant documents about the investment project; requirements that show the investor of the project meets the eligibility and capacity by regulations of law (if any).
Timeframe
It can take about 15 days after the documents’ submission date. This process could take longer in exceptional circumstances if the sector of the targeted operation is not under WTO regulations.
Step 3 – Application For Enterprise Registration Certificate
The Enterprise Registration Certificate or ERC is needed for all projects that involve establishing new companies in Vietnam. This comes with a number that will double as the tax registration number of the legal entity.
The following information should be prepared when applying:
- Application for enterprise registration
- Company charter
- The list of all the members of the board of directors
- List of legal representatives, and
- Letters of appointment and authentication
Timeframe
They are expected to get it within three days after the submission of the documents.
Step 4 – Post licensing procedures
However, after obtaining IRC and ERC, certain other steps must be followed to finalize the procedure of company formation and to commence business activities. The steps include :
- Seal carving
- Bank account opening
- Labor registration
- Business license tax payment
- Charter capital contribution and
- Public announcement of company establishment
The Requirements Needed To Open A Business In Vietnam
Minimum Capital Requirements
Most sectors and business lines do not have any minimum capital requirement in Vietnam. However, the registered capital will be reviewed by The Department of Planning and Investment as to whether it is enough to fund the expenditures of the business until it can produce enough revenues to meet its costs. It is possible to set up a simple business services company for less than $10,000 in some circumstances but it will be at least $10,000 and above usually depending on the type of business.
It is advisable to check if your business will need minimum capital investment because some business lines do have requirements. Some of the examples are :
- Finance, Banking, Insurance and Fin-tech
- Language centers or vocational schools and,
- Medical clinics
It should be noted that the amount of registered capital that is chosen and ultimately approved is to be declared on your Business Registration Certificate, which could be seen by other companies or clients with which you do business. Thus, a higher amount of registered capital may sometimes have a positive impact on a particular company when looking at how a business is perceived by other firms it interacts with. Increasing or decreasing the registered capital after registering business requires the corporation to follow some procedure to change some of the corporation documents.
Charter Capital And Total Investment Capital
Charter Capital can be defined as the overall amount of capital and other assets that owners are willing to bring at the time of incorporation of a company. The total investment capital of the company can be comprised of charter capital and loan capital together. Charter capital and the total investment capital, including parts that are shareholders’ loans or third-party finance, and the company charter have to be registered with the licensing authority of Vietnam.
The charter capital amount can be increased or reduced with the prior permission of the local licensing authority once it is approved.
Capital contribution schedules
According to the laws of Vietnam, the investors have to bring in the registered capital within 90 days of the incorporation of FIE unless there is permission from the licensing authorities in Vietnam.
Investing in FIEs through capital transfer
Subsequently, to transfer capital into Vietnam, the FIE will need to open a capital bank account in a legally licensed bank. A capital bank account is a type of foreign currency bank account that is used to monitor the flow of capital in or out of the country. Additionally, money can be moved from the account to current accounts for other current transactions such as in-country payments.
Registered Office And Resident Director
Company registered address
A company needs a legal office address in Vietnam to register a business entity in the country. Many companies need to have their own physical location, such as an office space or building that is obtained through lease or operating warehouses and trading, sales, restaurants, entertainment facilities, and so on.
However, some service-oriented businesses, such as personal or corporate consulting firms or other virtual service providers, may use a virtual office address.
When registering a company, a company provides documents that show their proof of address which will be used as the place where the business will run once it is incorporated. This address may be reviewed during registration with The Department of Planning and Investment.
Company legal representative
Currently, a company must have at least one legal representative who can be a Company President, Director, or General Director under the organizational structure of the company.
For an individual to qualify as a legal representative, he or she should reside in Vietnam. It is still preferable for the LR to be a resident of that country, but this should not rule out any company during incorporation; their residency status can be another issue.
Moreover, foreigners who are associated with the company will need a work permit for Vietnam which could be applied at the time of incorporation or afterwards.
How FastLane Group Can Help?
Want to start a business in Vietnam? Let FastLane Group guide you through the entire process with expert support and local insights. Contact us today to streamline your company formation and ensure a smooth setup in one of the most dynamic markets in Southeast Asia. Reach out now and take the first step towards your successful business venture in Vietnam!