Here’s some good news for investors and foreign companies looking to start a business in Vietnam but aren’t sure what sort of corporation is ideal for them. WARREN B is only a fingertip away! We can confidently serve foreign investors due to our experience in business incorporation, among other services.
WARREN B recognizes that starting a business in Vietnam requires a lot of work, such as developing a marketing strategy, employing employees, raising funds, and selecting the best company type. As a result, we describe the possibilities available to international investors for establishing a business in Vietnam.
Foreigners’ Types of Business in Vietnam
Indeed, investors must choose a company that best suits their needs, resolves tax concerns, and provides a liability shield for owners. Vietnam’s 2020 Enterprise Law grouped businesses into five major categories. However, international investors in Vietnam have only three business kinds to choose from, in addition to four other legal organizations.
1. LLC or Limited Liability Company
In Vietnam, a minimum of one individual can establish this corporation by putting up capital. In Vietnam, there are two sectors for this company type, namely totally and partially foreign-owned.
Partly foreign-owned LLC
If it includes one or more foreign members, this sector can be considered a joint venture. One significant advantage of forming joint ventures in Vietnam is that international stakeholders might profit from hiring a local specialist or conducting business in certain industries.
Wholly foreign-owned LLC
A Vietnamese LLC must have at least one owner who is of any nationality. This business sector enjoys the same legal rights as domestic enterprises, including the freedom to conduct business. Furthermore, the government permits foreign-owned enterprises to operate solely in most industries, including manufacturing, trading, education, and information technology. Furthermore, this sort of corporation in Vietnam can begin production operations, provide services, and trade with both Vietnamese and foreign clients.Contact Us for Vietnam Incorporation Service!
2. Joint-Stock Company
This company type, like the LLC, can be controlled in part or entirely by people of any nationality. It requires a minimum of three stockholders, with no legal maximum. The primary distinction between this company type and an LLC is its legal right to be listed on stock exchanges and issue shares to investors.
Furthermore, stockholders of this sort of organization can lawfully sign over their shares. This business type is similar to a shareholding corporation in Vietnam, where owners are granted company stock as proof of ownership. Although not necessary at its first stage, a stock exchange public listing becomes mandatory when its capital exceeds US$ 475,000, it has more than 100 stockholders, no overdue liabilities, and has earned money in the previous fiscal year.
This firm requires two or more general partners or co-owners to administer the business under a common name. The company must have contributing partners in addition to the general partners. This company form is unable to issue stock.
In Vietnam, there are two types of partnerships: limited and general partnerships. General partners are individuals who agree not to be a general partner in another company, operate a private corporation, or run a business from home, except when permitted by the remaining general partners. Partners in limited partnerships have financial responsibilities, such as debts, but only to the extent of their capital investment.
A branch or representative office, as well as a Business Cooperation or Public and Private Partnership Contract, are other legal structures available to foreign investors. Firms that are at least 51% foreign-owned are categorized as “foreign investors” under LOI 2014.
Strengths and Weaknesses of Company Types Available to Foreign Investors
1. Limited Liability Company
- The company owner is only legally liable for the amount of capital provided to the business. As a result, the owner has less risk than the owner of a single proprietorship.
- One owner is required, granting the sole authority over the firm’s operation and running; and,
- Structure that is simple and easy to handle.
- Company cannot issue shares to raise capital; and,
- Little expectation from partners wanting to cooperate as a group because the owner’s risk is limited only to the contributed capital.
2. Joint-Stock Company
- Because of its flexibility and speed in raising cash, it can conduct business in almost any industry.
- Because of the unlimited number of investors who are awarded shares of stock, the corporation has a very high ability to raise funds.
- Low risk for shareholders since their liability is limited to the amount of capital invested in the company; therefore,
- The technique for assigning shares is rather easy. As a result, many capital funders find it appealing.
- Management authority decentralized;
- Because of their limited liability, it is difficult to create confidence among partners. Furthermore, many shareholders may not know one another personally.
- More complicated organizational structure than an LLC or partnership; and,
- Due to the infinite number of stakeholders, the operation and management are extremely complicated. Furthermore, there may be factions within firm shareholders who are hostile, particularly when it comes to benefits obtained from the company.
- Because general partners are personally liable for the company’s activities, they can swiftly create trust among partners and customers; thus,
- Because of its few well-known, trustworthy, and trusted members, its operation and management are quite straightforward.
- Cannot issue equity shares to raise funds; and
- General partners have a high level of risk because they are personally liable for the company’s commitments.
How Warren B helps in Registering companies in Vietnam
WARREN B recognizes how difficult it is for international investors to select which company type to choose in Vietnam. As a result, even at this early stage, we give our assistance by giving information and all necessary assistance in registering a business in Vietnam.
Benefits of working with us:
Operate your new company in Vietnam in max 30 days
Legit and Professional
Quick processes and fixed rates
Quick and no hidden costs
We take satisfaction in guiding investors through regulatory requirements, removing client misunderstanding, and making the entire business formation process clear. Foreign investors can begin their businesses in a very short amount of time with our professional guidance. As a result, investors can concentrate their valuable time to important decisions that will ensure the business’s growth in Vietnam.Contact Us for Vietnam Incorporation Service!