Procedures setting up a company in VietNam

Starting a company is not easy for some people. 6 conditions for company establishment, enterprises must pay for joint stock companies, limited liability companies with 1 member, 2 members or more, partnerships, and private enterprises. The specific conditions on charter capital, business lines, company name, head office address, etc. will be mentioned in detail and most fully by the Law VN in this article.

The question that Law VN often receives when customers are about to set up a company is always: “What conditions are needed to establish a business? Are these conditions different for limited liability companies and joint stock companies? According to the law, how much capital is required to do business? How to setting up a company in Vietnam?”.

General conditions for company and enterprise establishment

Conditions for charter capital and legal capital when establishing a company

Charter capital is the amount of capital contributed or committed to contribute capital by members and shareholders and recorded in the company’s charter. Legal capital is the minimum capital required to establish a company as prescribed by law for each industry or profession.
Example: To establish a securities investment consulting company, the minimum capital is 10 billion VND.
The Law on Enterprises does not stipulate a minimum capital level when establishing a business (except for industries requiring legal capital). However, charter capital is the commitment of the enterprise’s assets to customers and partners. Therefore, if it is too low, it will reduce trust with customers and business partners. If the charter capital is high, the commitment of liability with the assets of the enterprise and the risk of risks is also high, but it will be easier to create trust with customers and partners, especially in business activities. Bidding. Therefore, depending on financial capacity and business size, business owners decide and register a charter capital level in accordance with their ability.
Enterprises must contribute in full the registered charter capital within 90 days from the date of issuance of the Certificate of Business Registration. Past the prescribed time limit and still fail to fully contribute the charter capital, within 30 days from the last day on which the full capital contribution must be made, the enterprise must register to change the charter capital.
Charter capital determines the annual license tax payable by the enterprise:
  • Charter capital over 10 billion VND: Pay 3,000,000 VND/year
  • Charter capital from 10 billion VND or less: Deposit 2,000,000 VND/year.

Conditions on the subject setting up a company in VietNam

All organizations and individuals have the right to establish, contribute capital to establish and manage enterprises in Vietnam, except for the following cases:
  • Organization has no legal status;
  • Persons under 18 years old; not have full capacity for civil acts;
  • State agencies and units of the Vietnamese people’s armed forces use state assets to establish profit-making businesses for their agencies or units;
  • Cadres, civil servants and public employees in accordance with the 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 Public Security;
  • Professional leaders and managers in enterprises with 100% state-owned capital, except those who are appointed as authorized representatives to manage the State’s capital contribution in other enterprises;
  • Persons serving a prison sentence or being banned by a court from doing business;
  • Other cases as prescribed by law on bankruptcy.

Procedures setting up a company in VietNam

Conditions for legal representatives

  • The legal representative of an enterprise must be an individual, be at least 18 years old, have full civil act capacity, and not be prohibited from managing and establishing an enterprise (as stated in Section 2. Article). case on the subject of enterprise establishment); The legal representative is not necessarily a capital contributor in the company.
  • The legal representative of the enterprise can be a Vietnamese or a foreigner. The company’s charter specifies the number and management titles and rights and obligations of the legal representative of the enterprise.
  • The legal representative of the company or enterprise can hold the following titles: Director/General Director, President of the company or Chairman of the Board of Directors, depending on the type of registered enterprise.
  • If the enterprise hires a legal representative, it must have a labor contract and appointment decision.
  • A limited liability company or a joint stock company may have 1 or more legal representatives.

Conditions on company name

The company name must include 2 elements in the following order:
  • The type of enterprise is written as: Limited liability company (Limited Company), joint stock company (JSC), partnership company (HD Company), private enterprise (DNTN);
  • Proper names are written with the letters of the Vietnamese alphabet, the letters F, J, Z, W, numbers and symbols.
  • The enterprise’s name must be affixed at the head office, branch, representative office, business location and must be printed or written on transaction papers, documents and publications issued by the enterprise. If the business name is not attached according to regulations, it will be fined from 5 million to 10 million dong according to the provisions of article 34 of Decree 50/2016 or may have the MST closed.
When naming a business, 3 nos must be followed:
  • Not to be named the same or confusingly with the name of a previously registered enterprise nationwide;
  • Do not use words and signs that violate the historical, cultural, ethical and fine traditions of the nation;
  • Do not use phrases in state agencies and organizations to name your company.

Conditions for the company’s head office

According to article 42 of the Enterprise Law 2020 and article 6 of the 2014 Housing Law, the head office of an enterprise must satisfy the following conditions:
  • The enterprise’s head office must be located in the Vietnamese territory, be the contact address of the enterprise and be determined according to the geographical boundaries of the administrative unit; have phone number, fax number and email (if any);
  • The address must clearly identify the house number, niche, alley, alley, street or village, hamlet, hamlet, commune, ward, township, district, district, town, provincial city, province or city directly under the province. center;
  • Do not locate the company’s headquarters at the address of an apartment building or a group house.
  • In addition, depending on the specific industry such as production, processing, farming, etc., the law also has other regulations. You can contact Law VN for detailed support.

Conditions on business lines

  • Enterprises are entitled to register their business in industries and trades that are not prohibited by law, but such industries must be included in the Vietnamese economic sector code system or specified in specialized legal documents.
  • As for the conditional industries and trades, the enterprises must ensure that they meet the conditions of each line of business as prescribed by law. You can look up the list of conditional business lines in Appendix IV of the Investment Law 2020.
  • Note that you are only allowed to do business and issue invoices for business lines that have been registered with the competent state agency. In case there is a change or addition of a business, it is necessary to carry out procedures to notify the Department of Planning and Investment within 10 days from the date of change, otherwise, it will be administratively sanctioned according to the provisions of law.

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Special conditions for each type setting up a company in VietNam

In addition to complying with and meeting the above general conditions, for each type of enterprise, the following conditions must also be satisfied:
  • Conditions for establishing a joint stock company: It is required to have a minimum of 3 founding shareholders, there is no limit to the maximum number of shareholders.
  • Conditions to establish a one-member limited liability company: Only 1 individual/organization is required to be the owner (who established the company). The owner can also be the legal representative of the company.
  • Conditions to establish a limited liability company with 2 or more members: There must be from 2 to 50 members who are individuals or organizations contributing capital to establish the business.
  • Conditions for establishing a partnership:
    • There must be at least 2 members who are common owners of the company, doing business together under a common name (hereinafter referred to as general partners); In addition to general partners, there may be capital contributors;
    • A general partner must be an individual and must not be the owner of another private enterprise; may not be a general partner of another partnership unless otherwise agreed by the remaining general partners.
  • Conditions for setting up a private enterprise:
    • The owner of a private business is an individual who is solely responsible with all his assets for the operation of the business;
    • Each individual is only entitled to establish a private enterprise. The owner of a private enterprise cannot concurrently be the owner of a business household or a general partner of a partnership;
    • A private enterprise is not entitled to contribute capital to the establishment or purchase shares or contributed capital in a partnership, limited liability company or joint-stock company.

Process – Procedures setting up a company in VietNam 2021

One process for setting up a company/enterprise for most types of companies/enterprises under the current corporate law/2021 (Enterprise Law 2020) (private enterprise, limited company, public company, joint-stock company, one-member limited liability company) includes 4 stages:

Stage 1: Prepare all necessary information to setting up a company in VietNam documents

Step 1

Choose a business type to start a business. Business owners need to understand the characteristics of each type of business to be able to identify and choose the type of business that best suits the company’s development orientation. The main factors that business owners need to consider to choose the right type of organization: tax, liability, transferability, addition, replacement, business size to attract investors is different. Common types of businesses in Vietnam include: Private enterprise, Partnership company, 1-member limited liability company, limited liability company (2 members or more), Joint-stock company.

Step 2

Prepare copies of ID cards/Citizen IDs or Passports of all capital contributors/founding shareholders. The selection of who will be the members (shareholders) of the company will be decided by the business owner, but the number of members and shareholders will be determined by the type of business.
Note: the validity of the ID card is not more than 15 years.

Step 3

Choose a company name, it’s best to keep your company name short, easy to remember, easy to pronounce and not identical or confusing with the names of previously established companies (applicable throughout the country). country). To determine if the name of your company is identical with other companies, you can visit the “National Business Registration Portal” to look it up.

Step 4

Determine the address of the head office under the legal use right of the company. The head office of the enterprise is the contact point of the enterprise in the territory of Vietnam, whose address is determined including the house number, niche, alley, alley, street, street or hamlet, hamlet, commune, ward. , township, district, district, township, centrally run city, phone number, fax number and email address (if any).

Step 5

Determine the charter capital for business registration. Charter capital is the amount of capital contributed or fully committed by members and shareholders within a certain period (not exceeding 90 days from the date of operation license) and recorded in the company’s charter.

Step 6

Determine the title of the legal representative of the company. Regarding the title of the legal representative of the company, the title of the representative should be the director (General Director).

Step 7

Identify business lines that are standardized in accordance with the law on business registration.

Stage 2: Drafting and submitting the application for company establishment

Step 1

Prepare company profile, prepare all documents specified in Decree 01/2021 on business registration.

Step 2

Submit the application to the Business Registration Office of the province/city where the enterprise is headquartered.
Note: It is not necessary for the company’s legal representative to submit the application. The legal representative of the company can authorize another person to file on behalf of the company. In case of authorization, the authorized person needs a valid power of attorney (Article 12 – Decree 01/2021 on Business Registration).
After 03 working days from the date of receiving the application, if your application is valid, you will be granted a Certificate of Business Registration.
Procedures setting up a company in VietNam

Stage 3: Making a seal of a legal entity

Step 1

Bring a copy of the Certificate of Business Registration to the establishment that has the function of stamping to make a legal entity seal for the company.

Step 2

Receive the seal of the legal entity – When coming to receive the seal, the representative of the enterprise brings the Certificate of Business Registration (original). In addition, if the legal representative of the enterprise cannot directly receive the seal, it can authorize (notarized authorization) for another person to receive the seal.

Stage 4: Procedures after company establishment

After obtaining the Certificate of Business Registration and the seal, an enterprise doing business in the line of business without conditions can conduct its business activities as prescribed in Article 8 of the Law on Enterprises. However, according to the law, after obtaining a business registration license, an enterprise needs to perform the following tasks:
  • Step 1: Post the founding statement
  • Step 2: Hang the company sign at the registered office address
  • Step 3: Register for the initial tax return with the tax authority within the prescribed time limit.
  • Step 4: Register for online tax declaration through digital signature service, “From July 1, 2013 all businesses in the country must declare and submit tax declarations online, the This content is prescribed in Law No. 21/2012/QH13 on amending and supplementing a number of articles of the Law on Tax Administration.
  • Step 5: Submit the license tax return and pay the license fee (Form No. 01/MBAI according to Decree 139/2016/ND-CP).
  • Step 6: Submit the notice of application of the VAT calculation method (under Form No. 06/GTGT ​​issued together with Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance).
  • Step 7: Carry out the procedures for purchasing, ordering and printing invoices according to Circular 39/2014/TT-BTC, effective from June 1, 2014. From September 1, 2014, newly established businesses will be able to register the VAT calculation method according to the deduction method and order to print used VAT invoices.
  • Step 8: Prepare full business conditions for conditional business lines.

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