Business conditions when establishing a business

When setting up a business, in terms of business conditions, most business owners will not need to worry too much. Only when the business line of the business owner is a relatively specific one with business conditions as prescribed by Vietnamese law should the business pay attention to meeting those conditions. So, what are the business conditions when establishing a business?

Business conditions when establishing an business

Businesses may only conduct business in lines of business that have been registered at a competent state agency. In other words, business conditions are requirements that a business must have or must fulfill when doing business in a particular industry or profession.

Currently, the list of conditional business lines (even for foreign investors) has been posted on the National Business Registration Portal, detailing the business conditions of each industry and profession and legal documents governing the respective contents.

Accordingly, to check if the business line belongs to a conditional business line or not, the business can go to the National Business Registration Portal to look it up. Or, more simply, businesses can contact a reputable law firm for support on this issue.

Form of business conditions in Vietnam

Form of business conditions in Vietnam can include many different types, including:

• Business license.

• Certificate of business eligibility.

• Practicing certificate.

• Certified professional liability insurance.

• Confirmation of legal capital.

• Other approvals of competent state agencies.

• Other requirements that a business must fulfill or must obtain to have the right to do business in that industry in any form by a competent state agency.

Penalties for failure to register for conditional business lines

According to the provisions of Clause 7 Article 1 of Decree 185/2013/ND-CP as amended by Clause 7, Article 1 of Decree 124/2015/ND-CP, if a business conducts a business with conditional business lines but fails to register, they will be administratively sanctioned as follows:

• A fine ranging from VND 1,000,000 to VND 2,000,000 shall be imposed for conducting business activities at the wrong location or head office stated in the Business Registration Certificate.

• A fine ranging from VND 2,000,000 to VND 3,000,000 shall be imposed for conducting business in the form of a household business without a business household registration certificate as prescribed.

• A fine ranging from VND 3,000,000 to VND 5,000,000 shall be imposed for conducting business in the form of a business without a business registration certificate as prescribed.

• A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed for continuing to operate a business while being suspended or revoked by a competent state management agency.

• A fine twice the fine level for violations of the above provisions in the case of business lines on the list of conditional business lines.

Prohibited business lines

In addition to conditional business lines, businesses also need to pay attention to business lines that are prohibited under Vietnamese law so as not to accidentally conduct business in these lines.

The prohibition of prohibited business lines is because these business lines are likely to be harmful to national defense, security, social order and safety, historical traditions, culture, ethics, aesthetics, Vietnamese customs, and people’s health, natural resources and environmental destruction.

Article 6 of the Investment Law 2020 has specified prohibited business lines such as Prostitution; Buying and selling people, tissues, and organs; Business activities related to human cloning…