The necessary conditions for establishing a business in Vietnam

Article overview

Establishing a business in Vietnam brings many opportunities and practical benefits to customers. This is an important step for you to realize your business ideas, build your career and actively contribute to the development of Vietnam’s economy. Please follow Long Phan’s following article to understand the current conditions for establishing a business.

Requirements that must be met when establishing a business in Vietnam
Requirements that must be met when establishing a business in Vietnam

Types of businesses in Vietnam

According to the provisions of the Law on Enterprise 2020, Vietnam currently has 5 main types of businesses:

  • Private enterprise;
  • One-member limited liability company;
  • Limited liability company with two or more members;
  • Joint stock company;
  • Partnership company.

The latest conditions for establishing a business

Conditions on charter capital and legal capital

  • Charter capital is the total value of assets contributed or committed to be contributed by company members and owners when establishing a limited liability company or partnership; is the total par value of shares sold or registered to buy when establishing a joint stock company (Clause 34, Article 4 of the Law on Enterprises 2020).
  • Legal capital Only applies to certain occupations with minimum capital requirements.
  • Capital contribution period: Enterprises must fully contribute charter capital within 90 days from receiving the Business Registration Certificate. If not fully contributed, within the next 30 days, the enterprise must register to change its charter capital.

Conditions on the entity establishing a business

According to Clauses 1 and 2, Article 17 of the Law on Enterprise 2020, all organizations and individuals have the right to establish and manage enterprises, except in the following cases:

  • The organization does not have legal status;
  • People under 18 years old and without full civil act capacity;
  • State agencies and units of the Vietnam People’s Armed Forces using state assets for establishing a business to generate private profits for their own agencies or units;
  • Cadres, civil servants and public employees according to the provisions of law on cadres, civil servants and public employees;
  • Officers, non-commissioned officers, professional soldiers, defense workers in agencies and units of the Vietnam People’s Army; professional officers and non-commissioned officers in agencies and units of the Vietnam People’s Police;
  • Leading and professional managers in 100% state-owned enterprises, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;
  • People who are serving a prison sentence or are banned from doing business by a court;
  • Other cases according to the provisions of bankruptcy law.

Business conditions

  • Enterprises have the right to register professions that are not prohibited and must have Vietnamese economic industry codes or regulations in specialized legal documents.
  • For conditional industries, businesses must ensure that they meet all conditions according to the law (Appendix IV of the Law on Investment 2020).

Conditions for business names

According to Article 37 of the Law on Enterprise 2020, the business name must meet the following requirements:

  1. The Vietnamese name of the enterprise includes two elements in the following order:
  • Type of business;
  • Personal name.
  1. The type of business is written as “limited liability company” or “limited liability company” for limited liability companies; written as “joint stock company” or “joint stock company” for joint stock companies; written as “partnership company” or “HD company” for a partnership company; is written as “private enterprise”, “DNTN” or “TN enterprise” for private enterprises.
  2. Personal names are written with letters in the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols.
  3. The business name must be attached to the head office, branches, representative offices, and business locations of the business. The business name must be printed or written on transaction papers, documents and publications issued by the business.

Note:

  • The business name must not be identical or easily confused with other business names.
  • Do not use the names of state agencies, units of the people’s armed forces, or socio-political organizations to name your business.

Conditions for business headquarters

Pursuant to Article 42 of the Law on Enterprise 2020 and Article 3 of the Law on Housing 2023, the enterprise’s headquarters must meet the following conditions:

  • Located in Vietnam, with phone number, fax, email (if any) and clear administrative boundaries;
  • The address must clearly identify the house number, alley, lane, street or village, hamlet, commune, ward, town, district, county, city under the province, province, city directly under the central government;
  • Not located in apartments or group houses.

Conditions on the legal representative of the enterprise

According to Article 12 of the Law on Enterprise 2020, the legal representative of the enterprise must meet the following requirements:

  1. Be an individual at least 18 years old: The representative must be an individual at least 18 years old and have full civil capacity. At the same time, this individual is not prohibited from managing or establishing a business. This means that the representative does not necessarily have to be a shareholder or capital contributor in the company.
  2. Nationality: The legal representative can be a Vietnamese or a foreigner. The company can stipulate the number, powers and obligations of this representative in the company charter.
  3. Title: Representatives can hold management positions such as Director, General Director, Company President or Chairman of the Board of Directors, depending on the type of business.
  4. Hire an agent: If the business hires a legal representative, a labor contract with the appointment decision is required to legalize this position.
  5. Number of representatives: For limited liability companies and joint stock companies, there may be one or more legal representatives, creating flexible conditions in operating and managing the business.
General conditions to keep in mind when establishing a business
General conditions to keep in mind when establishing a business

Specific conditions for each type of business

In addition to the general conditions applicable to all businesses, each type of business has separate requirements that need to be met, specifically:

  1. Joint stock company
  • A joint stock company needs to have at least 3 founding shareholders to be able to register its establishment, there is no maximum limit on the number of shareholders.
  1. One member LLC
  • This type of company has only one owner, who can be an individual or an organization.
  • This owner is responsible for all operations of the company and can also act as a legal representative if so stipulated in the company charter.
  1. LLC with two or more members
  • A limited liability company with two or more members must have at least 2 members contributing capital and must not exceed 50 members.
  • These members can be individuals or organizations.
  1. Partnership company
  • A partnership requires at least 2 partners to be individuals and participate in operating the company under a common name. In addition, the company may have additional capital contributing members.
  • Note: partners cannot simultaneously be owners of another private enterprise or partners in another partnership, unless with the consent of the remaining partners.
  1. Private enterprise
  • A private enterprise has only one owner, an individual, who has unlimited liability for all of his or her assets for the business activities of the enterprise.
  • Each individual is only allowed to establish one private enterprise and cannot simultaneously be the owner of a business or a partner in a partnership.
  • Private enterprises do not have the right to contribute capital to establish or purchase shares in a joint stock company, partnership, or other limited company.
Note the specific conditions for each type of business
Note the specific conditions for each type of business

Reputable establishing a business consulting services at Long Phan

With many years of experience in the field of business consulting, Long Phan’s team will support you throughout the process of establishing and developing your business. We are proud to bring optimal solutions, helping you save time, costs and ensure compliance with regulations. Comprehensive consulting and support services for businesses at Long Phan include:

  • Consulting on choosing the appropriate type of business.
  • Consulting on business names.
  • Prepare the registration documents for establishing a business.
  • Business representatives submit applications and monitor processing progress.
  • Register tax code and seal for businesses.
  • Consulting on registration of conditional business lines.
  • Support procedures for applying for sub licenses for businesses.
  • Support social insurance registration procedures for businesses.
  • Consulting on corporate issues after establishment.
  • Support changing business registration when necessary.

Establishing a business in Vietnam is an important first step that requires careful preparation in terms of capital, human resources and a clear understanding of regulations. If you need detailed advice and support. Please contact Long Phan immediately via hotline 0906735386 to receive the most professional and dedicated support from our team and help the process of establishing your business become the most convenient and effective.