Open a Limited Liability Company in Vietnam
The Vietnam limited liability company can be a one-shareholder or single-member structure or a multi-member structure. Our company formation consultants in Vietnam can offer information on the requirements related to registering a company in this country. We can help foreign investors who want to open limited liability companies in Vietnam in order to operate in the most prolific business sectors here.
Foreign investors opening limited liability companies in Vietnam
The limited liability company (LLC) is by far one of the most employed business forms in the world, as it is recognized by most countries. Vietnam has made various changes in its laws, providing for new investment schemes and foreign investors coming here can set up businesses by using this legal form.
If you want to open a company in Vietnam as a limited liability company, you can choose between the following shareholding structures:
- a fully foreign-owned company;
- a partially foreign-owned company, also known as a joint venture, where only one Vietnamese member is allowed.
The choice should also be made based on the sector of activity in which the business will operate. Also, LLCs are divided into one-member and multi-member companies.
Our company registration advisors in Vietnam are the service of foreign investors who come here and need support in starting businesses under the legal forms covered by the Company Law.
The main characteristics of the Vietnamese LLC
A limited liability company comes with many advantages, which is one of the main reasons it is selected by most of the investors who come to Vietnam from other countries. Among these, we mention the following:
- the members have limited liability;
- the company is allowed to issue bonds;
- it has a simple structure.
If you want to open a company in Vietnam, we recommend using the LLC as it is also one of the fastest business forms to incorporate.
Shareholders’ limited liability responsibility
Just as its name says, the Vietnamese LLC implies for its participants to have limited responsibility to the debts and obligations of the business. This means that they will only be liable for the amount they invested in the company while their personal assets are protected.
This is one of the main advantages when creating a one-member LLC in Vietnam, as the sole shareholder is not responsible in case the company registers debts and goes bankrupt, for example.
Setting up a limited liability company in Vietnam is quite advantageous, so if you need more information on what it implies to be a shareholder in it, our local advisors can provide you with detailed information.
One of the most recent changes that were enabled in 2021 is that such companies are now allowed to issue bonds under specific conditions. We mention this aspect because until now, such entities were not allowed to issue such financial instruments. In Vietnam, only public companies are allowed to issue shares and bonds.
The structure of an LLC in Vietnam
Foreign investors who want to open a company in Vietnam and decide on the limited liability enterprise must know that from a corporate point of view, a multi-member company is based on a 3-tier structure:
- it must have a members’ council who will be headed by a chairperson;
- it must also have a director;
- it must also have a supervisory board.
The members’ council must hold one annual meeting and is the equivalent of the annual general meeting of the shareholders in other countries. With respect to the chairperson of the council, the person can hold this office for no more than 5 years.
These requirements are not imposed on one-member LLCs, as these can follow any of the two corporate structures below:
- they can appoint a president and a director;
- they can appoint a members’ council and a director.
You can obtain more information on these aspects from our Vietnamese company formation officers.
As Vietnam follows the latest trends, it should be noted that the LLC is an excellent choice for a startup in this country.
Requirements to open a limited liability company in Vietnam
When it comes to the single-member limited liability company, it is one of the simplest forms of setting up a business in Vietnam and can be explained by our local specialists. In the case of a private limited liability company, the minimum number of shareholders is one.
With respect to the multi-member limited liability company in Vietnam, which is also the most popular type of structure, the following requirements apply for its incorporation:
- the company must have a Members’ Council, a General Director or a Director;
- the company must have at least two founding members;
- the company’s maximum number of shareholders is limited to 50;
- in the case of limited liability companies with more than 11 shareholders, an Inspection Committee who will supervise the activities of the Members’ Council.
The Vietnam limited liability company can take the following forms:
- fully-foreign owned enterprise;
- a joint venture enterprise, if the foreign company has at least one local partner.
Another requirement related to opening a Vietnam limited liability company refers to the director who can be a foreign citizen, but he or she must have a work permit or a minimum experience of 3 years in a management position.
Our Vietnam company registration agents can offer full information on the requirements related to starting a limited liability company.
The trading name of the Vietnamese LLC
People who want to open a company in Vietnam as an LLC must pay attention to the trading name, as it must be unique, but it must contain công ty trách nhiệm hữu hạn (limited liability company in Vietnamese) or its abbreviation, TNHH.
Limited liability company formation steps in Vietnam
The first steps to set up a limited liability company in Vietnam are to reserve a trading name, have the Articles of Association drafted and the company seal made. This information must be filed with the Business Registration Office.
Following that, the business owner must open the bank account and pay the business license tax. The last steps for forming a Vietnam limited liability company are registering for taxation, social security and employment purposes.
Below, you can watch a video regarding the registration of a limited liability company in Vietnam:
The uses of a limited liability company in Vietnam
The limited liability company is the most employed business form in Vietnam as it can be employed for many purposes. It is also useful to know that the limited liability company can take the form of a private or public company with full or limited foreign ownership in Vietnam.
Among the most common uses of a Vietnamese limited liability company, we mention the following:
- it can be used as a subsidiary by foreign companies interested in having a presence in Vietnam;
- it can also be used as a holding company with the purpose of owning shares in one or more subsidiaries;
- it can be employed for creating free zone companies in Vietnam and thus obtain various tax benefits;
- it can also be used for setting up investment funds, but also fintech companies which are very popular in Southeast Asia;
- it can be used as a public company for trading shares of the Vietnam Stock Exchange or other international financial markets;
- shelf companies which are ready to use are also registered as limited liability companies most of the times.
The Vietnamese LLC is one of the most versatile business forms in this country. If you decide to set up a company in Vietnam, we can help you register it under the form of an LLC.
We are also at your service if you are interested in opening a bank account in Vietnam.
Documents required for setting up an LLC in Vietnam
The following documents need to be prepared upon the registration of a Vietnamese limited liability company with the Trade Register:
- in the case of foreign investors, a certificate which attests their investments is required;
- the company’s Articles of Association and trade name reservation certificate must also be provided;
- the proof of the registered address is also necessary (this is a mandatory condition for opening a company in Vietnam);
- information about the shareholders (passports or legalized certificate of registration, depending on the founder);
- the business plan which must contain information about the project to be developed, the amount of money to be invested, the benefits to the community;
- information about the directors of the company (valid passports) and a power of attorney.
The list of documents to be filed upon the registration of a limited liability company in Vietnam can vary depending on the project to be invested in and whether the business will be fully or partially owned by the foreign entrepreneur. Also, the list can be more extensive if the founder is a foreign company.
With respect to the share capital requirements for setting up an LLC in Vietnam, the investor must decide on the amount of money necessary for the project.
Our Vietnam company registration consultants can help you prepare the documents required to set up an LLC here. You can also grant us the power of attorney if you want to register a business here in the fastest manner possible. We are also at your service with trademark registration services in Vietnam.
Taxation of limited liability companies in Vietnam
All local companies, no matter if incorporated by national or foreign investors, will be taxed on their worldwide income in Vietnam. The corporate tax rate in Vietnam has a standard rate is 20%. Vietnamese LLC set up as joint ventures or deemed as startup companies can obtain a break from the corporate tax for the first few years of operations.
The other taxes which need to be considered when operating an LLC in Vietnam is the business license tax which must be paid on annual basis and the VAT which is one of the lowest in the region when it comes to the standard rate (10%).
When set up by foreign investors, the LLC can benefit from Vietnam’s double tax treaties when it comes to the taxation of the overseas shareholders.
We can also help with accounting services in order to have your company in Vietnam up to date with the tax and accounting requirements imposed by the authorities here.
Why open a company in Vietnam as an LLC
The limited liability company in Vietnam has many advantages, among which the fast incorporation procedure and the low maintenance costs. Special attention must be paid to obtaining the investment license when it comes to having foreign ownership, however, with the help of our agents the procedure can be completed in about one month.
Just like other companies, the LLC must also register for taxation with the General Department of Taxation in Vietnam.
Foreign shareholders can also appoint legal representatives to act on their behalf in Vietnam. These can also be foreign citizens who can obtain work and residence permits.
The LLC is also suitable for those interested in expanding their operations in other neighboring markets.
Timeline for opening an LLC in Vietnam
The registration of a company in Vietnam, including that of a limited liability company, implies respecting a timeline. Here is an approximation of how long it takes to incorporate a business in Vietnam:
- the registration of the company with the Business Register takes between 3 and 6 working days;
- the approval of an investment project which must respect an investment policy takes between 5 and 10 days;
- the approval of an investment project which is not subject to any investment policy takes between 15 and 20 working days;
- the entire business registration procedure usually takes around one month to complete.
For assistance in opening a limited liability company, please contact our company formation advisors in Vietnam.