Forming a company in Vietnam or any other foreign jurisdiction is never a simple matter. Obligations, procedures, timelines, languages and costs all vary widely from country to country, and sometimes between cities and provinces.
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Limited liability company has legal status recognized by the law (Enterprise Law). The company owner and the company are two separate legal entities. The company has the legal status from the date of being granted the business registration certificate. The company owner is the natural person with the rights and obligations corresponding to the company ownership.
A limited liability company must have no more than 50 members who contribute capital, and the company is only liable for debts and other financial obligations within the scope of its asset obligations. Limited liability companies are not allowed to issue shares to raise capital.
A joint stock company is a type of company whose charter capital is divided into parts called shares that exist independently. A joint-stock company must have a General Meeting of Shareholders, a Board of Directors and a Director (General Director). For a joint-stock company with more than eleven shareholders, it must have the Control Board.
Shareholders are only responsible for debts and other property obligations of the company within the amount of capital contributed to the company, have the right to freely transfer their shares to other people. The minimum number of shareholders in a joint stock company is three and there is no maximum number. A joint stock company has the right to issue shares in accordance with the law on securities.
A partnership is a company in which at least two general partners are the co-owners of the company. In addition to members, partnerships may have capital-contributing members who are only liable for the debts of the company within the amount of capital contributed to the company.
A partnership has legal status, the members have the right to manage the company and conduct business activities on behalf of the company, and are jointly responsible for the company. Capital-contributing members are entitled to share profits in accordance with the provisions of the company’s charter, and general partners have equal rights when deciding on corporate management issues.
A Representative Office is a unit dependent on the enterprise and obliged to represent the enterprise’s interests under authorization and protect such interests. Thus, Representative Office is not a separate legal entity under the laws of Vietnam.
The activities of a Representative Office in Vietnam are limited to business promotion, identification and accelerating trade opportunities, and supervising the implementation of contracts signed between its parent company and local partners.
The Representative Office is a very common form of registered legal presence in Vietnam, particularly those in the first stage of a market entry strategy.
As a foreign investor, you can also select one of the forms below:
- Private enterprise: A private enterprise is an economic organization that is allowed to register its business and conduct business activities. A private enterprise is owned by an individual, has assets, and has a transaction office. The owner of a private enterprise is the legal representative who has full power to make business decisions.
- Business Cooperation Contract: Which is a contractual relationship akin to a partnership that does not create a new legal entity but which is licensed to engage in business activities in respect of a specific project in Vietnam. BCCs are most commonly used in the oil industry, where production sharing contracts have traditionally been structured as BCCs, and in telecommunications and advertising projects. This is changing as LLCs and JSCs are being allowed into these fields.
- Branch Office: A foreign business entity or a foreign trader is entitled to establish a branch in Vietnam to conduct business activities. A branch is a unit dependent on the enterprise and obliged to perform part or all of the enterprise’s functions, including representation under authorization. The business lines of the branch must be consistent with those of the enterprise.
Things you must do before forming a company in Vietnam
- Finance your business
- Choose the company name
- Select a business form
- Identify and secure a location
- Choose a trustworthy legal representative
- List out the business lines.
Our clients are often surprised by the possibilities we present to them; by thinking outside the box:
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