Setting up a business in Vietnam

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Setting up a business in Vietnam

Setting up a business in Vietnam is a must if you want to start your career, expand your relationships, earn more business opportunities and, accordingly, more income. However, not all young entrepreneurs know the necessary procedures when setting up a business in Vietnam. So, if you want to set up a business in Vietnam, what are the required documents? What are the procedures and what are the notes to set up a business in Vietnam?

Required documents of business establishment in Vietnam

According to the provisions of the Enterprise Law 2020, Chapter IV of Decree No. 01/20121 on the order and procedures for business registration for different types of businesses, the application file for establishing an enterprise in Vietnam will include the following documents:

• Business registration application form.

• Draft corporate charter;

• Valid ID card or passport (for individuals);

• Certificate of business registration for the organization and enclosed with personal identification papers, authorization decision of the authorized representative of the organization (for organizations);

• A list of members for a two-member limited liability company or a list of founding shareholders for a joint stock company;

• Authorization letter;

• Other required documents.

Type of business in Vietnam

When registering to set up a business in Vietnam, it should be noted that business owners have a lot of choices about the type of business.

Thereby, the business owner should choose which type of business is suitable for them, based on operational purposes, charter capital, expansion aspirations, etc.

Sole proprietorship

According to the provisions of Clause 1, Article 188 of the Enterprise Law 2020, a sole proprietorship is an enterprise owned by an individual and is solely responsible with all his assets for all activities of the enterprise. In which:

• A sole proprietorship may not issue securities of any kind.

• An individual can only set up one Sole Proprietorship. The owner of a sole proprietorship cannot concurrently be the owner of a business household or a general partner of a partnership.

• A sole proprietorship is not entitled to contribute capital to establish or purchase shares or capital contribution in a partnership, limited liability company or joint-stock company.

Limited liability company

Limited liability company with two or more members

According to the provisions of Clause 1, Article 46 of the Enterprise Law 2020, a limited liability company with two or more members is an enterprise with between 02 and 50 members who are organizations or individuals. Members are liable for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise. In which:

• The member’s capital contribution can only be transferred in accordance with the provisions of the Enterprise Law 2020;

• A limited liability company with two or more members has legal status from the date of issuance of the Business Registration Certificate;

• A limited liability company with two or more members may not issue shares, except in the case of conversion into a joint stock company.

• A limited liability company with two or more members may issue bonds in accordance with the provisions of the Enterprise Law 2020 and other relevant provisions of the law.

One member limited liability company

According to the provisions of Clause 1, Article 74 of the Enterprise Law 2020, a one-member limited liability company is an enterprise owned by an organization or individual. The owner’s liability for the company’s debts and other property obligations is to the extent of the company’s charter capital. In which:

• A one-member limited liability company with legal status from the date of issuance of the Certificate of Business Registration;

• A one-member limited liability company may not issue shares, except for conversion into a joint stock company;

• A one-member limited liability company may issue bonds in accordance with the Enterprise Law 2020 and other relevant laws.

Joint Stock Company

According to the provisions of Clause 1, Article 111 of the Law on Enterprises 2020, a joint-stock company is a company that:

• Charter capital is divided into equal parts called shares;

• Shareholders can be organizations or individuals; the minimum number of shareholders is 03 and there is no limit to the maximum number;

• Shareholders are only responsible for the debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise;

• Shareholders have the right to freely transfer their shares to others, except for the case specified in the Enterprise Law 2020.

A joint stock company has legal status from the date of issuance of the business registration certificate.

In addition, a joint-stock company has the right to issue shares, bonds and other securities of the company to raise capital.

Partnerships

According to the provisions of Clause 1, Article 177 of the Enterprise Law 2020, a partnership is an enterprise in which:

• There must be at least 02 members who are common owners of the company, doing business together under a common name. In addition to general partners, the company may have additional capital contributors;

• General partners must be individuals, responsible with all their assets for company’s obligations;

• Capital contributors are organizations and individuals and are only responsible for the company’s debts within the amount of capital they have committed to contribute to the company.

A partnership company has legal status from the date of issuance of the Certificate of Business Registration.

In addition, the partnership may not issue any securities.

Procedures for registration of business establishment in Vietnam

When establishing a business in Vietnam, the business owner needs to prepare a complete application for registration of business establishment in Vietnam and submit or ask a representative to submit the application for the Certificate of Business Registration through the national electronic enterprise registration Portal.

At the same time, business owners also need to pay a fee for information disclosure for business registration in parallel with the procedure for submitting an application for registration of business establishment in Vietnam.

The business registration fee can be paid directly at the Business Registration Office or into the account of the Business Registration Office.

If the fee has been paid in full at the same time as the application, the enterprise will be granted an enterprise registration certificate and have its business information published on the National Business Registration Portal.

Normally, it will take 3-5 working days to complete this stage.

After obtaining the Certificate of Business Registration, the enterprise needs to engrave its legal entity seal.

A legal entity seal includes a seal made at a seal engraving establishment or a seal in the form of a digital signature in accordance with the law on electronic transactions.

The enterprise has the full right to decide on the type, quantity, form and content of the seal of the enterprise, branch, representative office and other units.

According to the provisions of the Enterprise Law 2020, effective from January 1, 2021, enterprises engrave their own seals and manage their own seals and are responsible for their own seals.

Procedures after establishing a business in Vietnam

After completing all the procedures for setting up a business in Vietnam, businesses need to pay attention to perform the following necessary tasks:

• Post the founding statement.

• Hang the business sign at the registered office address.

• Register for the initial tax return with the tax authority within the prescribed time limit.

• Register for tax declaration online via digital signature service.

• Submit the license tax return and pay the license fee.

• Submit notice of application of VAT calculation method.

• Make purchase procedures, order printing, self-print invoices.

• Prepare enough business conditions for conditional business lines.

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