Change a Sole Trader into LLC in Vietnam

Updated on Wednesday 31st October 2018

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The Company Law provides for several types of companies which can be established in Vietnam. Among these, sole proprietorships and limited liability companies are the most employed ones. If the sole trader is available for small one-man businesses, the limited liability company (LLC) can accommodate small, medium and large businesses in Vietnam.

There is also the possibility of opening a sole proprietorship and then changing it into a limited liability company, provided that a few steps are completed. Below, our company formation agents in Vietnam explain how to change a sole trader into a limited liability company.

Differences between sole traders and LLCs in Vietnam

In order to understand how a sole proprietorship can be converted into an LLC in Vietnam, the following aspects about both types of structures must be understood:
  •           foreign individuals seeking to open any of these two types of business forms must have a work permit;
  •           both types of structures must have at least one shareholder and one director, however in the case of a sole trader the director must be a Vietnam resident;
  •           the LLC will need a specific share capital, while the sole proprietorship does not;
  •           the liability of the shareholder in the LLC is limited to the amount of money invested, while the sole trader is fully liable for the business’ debts.

Our Vietnam company formation consultants can offer more information on these two types of companies. They can also help you register any of them.

Steps for changing a sole trader into an LLC in Vietnam

Another important difference between the sole trader and the LLC is that the sole proprietorship is not considered a separate legal entity from the owner, while the LLC is. This is why changing a Vietnam sole trader into an LLC will imply de-registering the first structure and registering the LLC.

Turning the sole trader into a Vietnam LLC will imply de-registering it with the Trade Register by filing a petition and then registering the LLC by completing the usual company registration phases of a company. The LLC can keep the trade name and address of the sole proprietorship.

Our company registration advisors in Vietnam can help you change a sole trader into an LLC, so please contact us.