[Vietnam] A Guide to Setting Up a Foreign-Owned Business in Vietnam

Vietnam has emerged as one of the most attractive destinations for foreign investors due to its dynamic economy, strategic location, and investor-friendly policies. However, before establishing a company, foreign investors must carefully consider the company structure, ownership regulations, and business lines to ensure compliance with Vietnamese laws. Notably, businesses in Vietnam can only operate within the registered business lines, and while most sectors are open to foreign investment, some restrictions remain.

Business Structures Available for Foreign Investors

Foreign investors can choose from six different types of business entities: Representative Office,

Limited Liability Company, Joint-Stock Company, Branch Office, Joint Venture, and Public-Private Partnership when entering the Vietnamese market. Among these, the three most common structures chosen by foreign investors are:

1. Limited Liability Company (LLC)

o The most common business structure in Vietnam.

o Operates as a separate legal entity with liability limited to capital contribution.

o Can have one or more members, with a maximum of 50.

o Two types:

 Single-member LLC: Owned by a single individual or corporate entity.

 Multiple-member LLC: Owned by two or more stakeholders.

o Cannot issue shares.

o Setup timeline: 8 to 16 weeks.

2. Branch Office (BO)

o Suitable for service businesses such as finance and banking.

o Can engage in commercial activities within the scope of its parent company.

o Permitted to hire staff and remit profits abroad.

o Setup timeline: Approximately 12 weeks.

3. Representative Office (RO)

o Representative Offices are an ideal option for foreign companies looking to

explore the Vietnamese market with a lower initial investment.

o Primarily for market research and business coordination, cannot engage in profit-

generating activities.

o 100% foreign ownership is permitted in most sectors.

o The RO license is valid for 5 years and can be extended for another 5 years.

o Setup timeline: 6 to 8 weeks.

Capital Requirements

For most sectors, Vietnam does not impose minimum capital requirements. However, the Department of Planning and Investment (DPI) assesses the registered capital to ensure it is sufficient to cover business expenses until the company becomes self-sustaining, usually within the first year or two.

Key Legal and Operational Considerations

Company Registered Address

A business must have a legal address in Vietnam to register a company. In most cases, this must

be a physical location such as an office or commercial building that is leased or owned.

Legal Representative

Vietnamese law requires at least one legal representative who resides in Vietnam. The legal

representative can be of any nationality. If all legal representatives leave Vietnam for more than 30 days, they must appoint another individual to assume this role.

Final Thoughts

Vietnam presents attractive opportunities for foreign investors due to its dynamic market and

supportive regulatory environment. Although establishing a business requires navigating various

legal and administrative steps, careful planning and professional guidance can help streamline

the process. TWLS Law Group is ready to assist at every stage of the company formation

process, helping businesses navigate the complexities of the Vietnamese market with confidence.