A Limited Liability Company (LLC) according Enterprise Law Vietnam can be set up with only one shareholder who can be of any nationality other than Vietnam. Normally, setting up LLC is believed to be simpler compared to large corporations thanks to smaller scale (up to 50 members), so that investors usually consider this as a worthy choice. Therefore, in this following article we will provide you with a checklist to establish a LLC according Enterprise Law Vietnam in this article.
Overview of Limited Liability Company in Vietnam
- Is one of the four types of enterprises in which domestic and foreign investors are allowed to do business in Vietnam under Vietnam’s Enterprise Law.
- Can be totally or partially foreign-invested.
- Is simpler to set up as compared to a large corporation in Vietnam.
- Is a legal entity formed from the capital contribution of each member to the company. The number of members must not be over 50.
- Especially, an LLC member’s liability for the company’s financial obligations will depend on his/ her share of the equity, not their personal property.
- Investors must do their due diligence to work out the acceptable market entry option suitable to their appropriate business lines and specific requirements.
So, a Limited Liability Company in Vietnam is formed based on the capital contributions of its members. Capital contribution refers to the entire assets contributed to constituting the charter capital of the corporate .
Therefore, a Limited Liability Company’s shareholder can take part in the whole growth of the corporation while their liability and financial obligations are restricted to the quantity of investment they contributed to the company’s charter. (Related article: Limited Liability)
Similarly, just in case of a one-member or single-member indebtedness company, this structure has just one member who is additionally the corporate owner. For this reason, this person must be responsible for all relevant debts and obligations of the corporate to the extent of his/her capital contribution to the corporate .
READ MORE: The Global Company Registration to find out how Viettonkin can help globalize your business.
How to set up a Limited Liability Company?
In 2021, Enterprise Law Vietnam has a lot of preferential investment policies in various economic sectors in Vietnam for foreign investors.
Accordingly, Enterprise Law Vietnam, when conducting investment to establish a company in Vietnam, foreign investors need to learn and grasp the provisions of the current law to ensure the most optimal conditions when investing and doing business in Vietnam.
With the desire to best support legal procedures, tax for foreign investors to set up foreign invested companies in Vietnam, Viettonkin Consultant provide the process details to establish a foreign-invested LLC as follows:
- Member’s council: This is often the body with the very best position for creating decisions of the corporate. It is mandatory that the Member’s council must hold a minimum of one meeting per annum .
- The chairman of the Member’s council: An LLC has the duty to select a member to become the council’s chairperson who can be the director or general direct of the company. Note that the applicable tenure of the chairperson is within a period of 5 years.
- Director/Director General: Main responsibilities of director/director general is to manage daily business operations of the indebtedness company, also as hold the liability for his/her exercise of rights to the Members’ Council.
- Supervisory Board: If your multi-member LLC in Vietnam is a state enterprise or a subsidiary of a state enterprise in Vietnam, then you must establish a Supervisory Board as stipulated by Article 54, Law on Enterprise 2020. Other circumstances on whether this Board should be formed or not is at the discretion of the LLC itself.
In general, you are required to go through the following procedures to set up your Limited Liability Company:
Investment Registration Certificate (IRC) application
IRC application check-list:
- Investment project number.
- Name and address of the investor.
- Name of the investment project.
- Objective and scale of the investment project.
- Location of the investment project; area of land used.
- Investment capital of the project (including investor’s contributed capital and raised capital), capital contribution and mobilization schedule.
- Duration of the project.
- Investment project execution schedule: capital construction progress and work put into operation (if any); The progress of implementing the main objectives and main items of the project, if the project is implemented in phases, must specify the objectives, duration and contents of each stage.
- Investment incentives and supports and bases and conditions for application (if any).
- Regulations for investors implementing projects.
- Conditions for investors to implement the project (if any).
Business sectors that need sub-licenses are travel (international/domestic business license), printing (printing operation license) and security (certificate of social security), among others.
Enterprise Registration Certificate (ERC) application
ERC application check-list:
- An application for enterprise registration;
- Enterprise’s regulations;
- List of company members, for limited liability companies with 2 or more members;
- ID card or passport of a limited liability company member;
- Certificate of Business Registration / Business Registration Certificate for members who are organizations and accompanied by personal identification papers, the authorization decision of the authorized representative organization’s.
- Capital contribution decisions.
- List of authorized representatives (for members who are organizations);
- An investment registration certificate for the investor has been issued.
- Other documents in special cases;
After a business is legally registered, an ERC is going to be issued by a business registration agency. An ERC may be a document, often softcopy or hardcopy, that contains information on enterprise registration.
Documents and payments submission for post license requirements
- Opening a checking account , paying for business taxes, contributing to charter capital, ordering e-invoice, providing e-signature and company stamp, etc.
Arring staff, tax, and annual reporting . You need to register hired employees with the social insurance department.
Foreign employees also will get to have the specified work permits to figure in Vietnam. This may take longer as Vietnam’s borders remain closed, however, this is still possible and we Viettonkin can assist you in acquiring the needed documents and entry permits.
You have to pay the business license tax. They are also subject to corporate tax (CIT), VAT (VAT), and private tax (PIT). Depending on the line the corporate could also be eligible for CIT reductions within the first years of operation.
Limited liability companies are required to undertake tax audits that checks all revenues and expenses during the tax term to determine payable taxes.
How long does it take?
The whole registration process can take 2 – 3 months in total. However, the time may slightly vary depending on the business activities or sectors and completeness of documents. We recommend finding support from a consulting agency to assist you in the whole process.
To sum up, setting up a foreign-owned limited liability company in Vietnam requires some procedure a bit more complicated than a company with local capital and takes some time to prepare. However, everything will become easier if you understand the whole process of establishing a new business in this promising country. Viettonkin hopes that this information will assist you in any cases. Do not hesitate to contact us if there are any difficulties, Viettonkin is here to help!