Types of business entitie

Types of business entities

A foreign investor may choose to establish an enterprise in Vietnam in the form of:

  • a limited liability company with one or more members, 
  • joint stock company,
  • partnership, 
  • branch and representative office,
  • business cooperation contract (BCC) or 
  • public and private partnership contract (PPP).

Before establishing a business organization, the foreign investor must have an investment project, apply for a Certificate of investment registration, and satisfy certain conditions under Law on investment.

Foreign investor may own an indefinite amount of charter capital invested in business organizations, except for the case required by legal.

DBVN

Advantage as setting up a business:

  • Establish a separate legal entity and enjoy the limited liability
  • Both individual and corporate founders are allowed
  • Conduct commercial activities and earn turnover. 

Corporate structure of limited liability company with one or more members, Joint-stock company and Partnership

Features

Limited liability company (LLC)

Joint-stock company (JSC)

Partnership

Required the number of members/ shareholders

- Single-member

- Two or more members, not exceed 50

At least 3 shareholders, unrestricted the maximum number of shareholders

- At least 2 general partners (individuals),

- Contributing partners are individuals or organizations

Limitation of liability of members/ shareholders

Responsible for debts and other liabilities up to the value of capital contributed into the enterprise

Responsible for debts and other liabilities up to the value of capital contributed into the enterprise

- General partners: unlimited

- Contributing partner: limited up to the value of capital contributed into the enterprise

Issuing shares

Unallowed

Allowed

Unallowed

Issuing bonds

Allowed

Allowed

Unallowed

Timing

15 days or more from the date of receipt of a complete and valid dossier depends on investment procedures.

Investment under PPP (Public private partnership) contracts

A contract between a regulatory agency and an investor, a project enterprise to carry out, manage and operate an infrastructure and public service project. PPP contract includes:

  • “Build – Operate – Transfer contract” (BOT contract): after completing the construction, the investor shall be entitled to operate it for a specified period of time; eventually, the investor shall transfer it to the regulatory agency.
  • “Build – Transfer – Operate contract” (BTO contract):  after completing the construction, the investor shall transfer it to the regulatory agency, and shall be entitled to operate it for an agreed period of time.
  • “Build – Transfer contract” (BT contract): after completing the construction, the investor shall transfer it to the regulatory agency, and then the investor will be allotted a land parcel used for carrying out another project.
  • “Build – Own – Operate contract” (BOO contract): after completing the construction, the investor shall take ownership of this project and have the right to operate it for a specified period of time.
  • The Build – Transfer – Lease contract (BTL contract): after completing the construction, the investor shall transfer it to the regulatory agency and shall be entitled to provide services on the basis of operation of such project for a specified period of time; the regulatory agency shall have the authority to lease and make payment for the investor’s services.
  • “Build – Lease – Transfer contract” (BLT contract): after completing the construction, the investor shall have the right to provide services on the basis of operation of such projector a specified period of time; the regulatory agency shall have the authority to lease and make payment for the investor’s services; when the lease term expires, such project shall be transferred to the regulatory agency.
  • “Operation & Management contract” (O&M contract): means a type of contract to operate the project between a regulatory agency and an investor for a specified period of time.

Equity capital:

The equity capital of the investor shall account for at least 20% of the total capital (Total investment of over VND 1,500 billion).
With regard to the project funded by total investment of over VND 1,500 billion:

  • For the investment capital that amounts to VND 1,500 billion, the equity capital shall account format least 20% of such financing portion.
  • For the investment capital that exceeds VND 1,500 billion, the equity capital shall account for at least 10% of such financing portion 

Investment under BCC (Business Cooperation Contract) contracts

The investment form based on contract between domestic investors and foreign investors for business cooperation, profit and product distribution without establishing an economic organization. The parties are flexible, quite independent as decide projects’ issues, rights and responsibilities among the parties.

Foreign investors under a business cooperation contract is allowed establishing an operating office in Vietnam to execute the contract.

Establish representative office (RO) and Branch

Representative office

Branch

- A dependent unit of a foreign entity in Vietnam

Each foreign trader shall not establish more than one representative office or a Branch that has the same name within a province or centrally - affiliated city.

- Timing: 7 days or more after receiving complete and valid dossiers.

 - Is not permitted to conduct direct commercial activities in Vietnam.

 - To operate as contact office, promote cooperation projects, research market to push up chances to purchase commodities, supply and consume commercial services of foreign company in Vietnam and conduct other activities under applicable law.

 - May conduct direct profit-making activities in Vietnam consistent with its license for establishment in accordance with the laws of Vietnam and any international treaty to which Vietnam is a member.

Requirements for grant of Licenses for Establishment of RO:

Complying to laws of countries or territories being parties to treaties to which Vietnam is a signatory.

- The foreign trader has come into operation for at least 01 year from the date of establishment or registration

- Other conditions required on Decree 07/2016/NĐ-CP

Requirements for grant of Licenses for Establishment of branches:

Complying to laws of countries or territories being parties to treaties to which Vietnam is a signatory.

- The foreign trader has come into operation for at least 05 years from the date of establishment or registration

- Other conditions required on Decree 07/2016/NĐ-CP