Vietnam company Law

In recent years, Vietnam’s corporation law has expanded significantly. Limited liability corporations (LLCs) can now be formed easily by foreign investors.

What are the types of companies in Vietnam?

A corporation in Vietnam is the same as one in many other nations. It is incorporated as a company with its own name, property, a head office, and is legally registered in order to conduct business. Companies whose shareholders’ liability is restricted to their contribution are typically preferred by foreign investors. The majority of sectors do not have a required minimum capital investment. This means you may tailor your initial investment to your specific needs. The majority of business classes allow for 100 percent foreign investment and ownership and do not require any additional approvals or licenses.
Vietnam company Law
Business law controls what happens in business affairs and is divided into two categories: regulation of commercial entities and regulation of commercial transactions. Overages, laws have developed and have to adjust to changes in technology and culture. In this article below, there are three types of business law in Vietnam:

Private limited liability company (LLC)

A limited liability corporation (LLC) is a corporate structure in which the owners are not individually responsible for the company’s debts or obligations. Limited liability corporations (LLCs) are hybrid entities that combine the features of a corporation with those of a partnership or sole proprietorship.
While the limited liability aspect is comparable to that of a corporation, the provision of flow-through taxes to LLC members is a partnership characteristic (and not an LLC)

  • Number of partners: A multi-member limited liability corporation can have as few as two and as many as 50 partners. Even if there is only one member in this type of business, it will be a one-man limited liability corporation.
  • Capital: The company’s capital is not split into shares, but rather contributions from members that are releasable for a maximum of three months from the date of the company’s ERC issue. The partners have a 30-day right of first refusal on capital disposal, which they can exercise within 30 days of the offer to sell.
  • Quorum: A quorum of 65 percent is required to call the first meeting of the members’ council.
  • Votes: The voting threshold for passing resolutions by written views is 65 percent.
  • Company management: For firms with more than 11 members, the LLC is comprised of the members’ council/board of directors, a chairman, a general manager, and an inspection committee.

Shareholding Company

A shareholder, sometimes known as a stockholder, is a person, corporation, or institution that holds at least one share of equity in a firm. Because shareholders are basically proprietors of a firm, they profit from its success. These benefits take the shape of higher stock values or financial earnings delivered as dividends. When a firm loses money, the share price inevitably falls, causing shareholders to lose money or see the value of their portfolios fall.
While shareholders have the right to receive any remaining proceeds after a business liquidates its assets, creditors, bondholders, and preferred stockholders take precedence over regular stockholders, who may be left with nothing.

  • Number of shareholders: The number of stockholders is at least 3 shareholders are required for the firm.
  • Capital: The capital of the business is divided into shares desiring to be listed, which should be released within three months of the date of the company’s ERC issue. Except as otherwise permitted by law or the rules of the organization, every shareholder may sell its shares at any time.
  • Company management: General Meeting of Shareholders, Board of Management, General Director, and Inspection Committee comprise the SC’s management structure. First, the quorum for a GMS is 51 percent, and for the second, 33 percent of the total number of voting slips is required to convene a GMS.
  • Votes: GMS must receive 51 percent of the vote in order to adopt a resolution on a general issue, and 65 percent for some particular issues.

General partnership

A general partnership is a commercial arrangement in which two or more people agree to share all of the assets, earnings, financial and legal obligations of a jointly held firm. Partners in a general partnership commit to unlimited responsibility, which means that obligations are not restricted and can be paid by the seizure of an owner’s assets. Furthermore, any partner may be sued for the debts of the firm.
Because taxes do not flow via the general partnership, each is personally liable for their own tax responsibilities, including partnership earnings, on their income tax returns.
General partnership in Vietnamese law is a type of business when the following things happen:

  • Associates: According to Vietnam’s business legislation, at least two general partners and potentially associates are required to contribute capital. It is a natural person, the general partner, who is obligated to pay all social obligations in perpetuity with his own property. Contributors are held liable for the company’s obligations in proportion to what they have contributed.
  • Company management: The general partnership’s manager must be a natural person. Any change in management necessitates the permission of the relevant authority as well as the revision of the company’s formation certificate.
  • Issuance of shares: The general partnership is not permitted to issue any shares.

How to form a company in Vietnam?

Because of the vitality of the Vietnamese economy, establishing a business in Vietnam has become a compelling choice for many international corporations. Entrepreneurs should be prepared, however, for inconsistencies in rules, bureaucratic difficulties, and license delays.
The Investment Law of 2014 and the Enterprise Law of 2014 consolidated the registration procedure for local and international firms. All businesses will now be subject to the same procedure for things pertaining to company law and will be required to get an ERC, or “Enterprise registration certificate,” in order to be registered.
Foreign investors who want to create a firm in Vietnam, on the other hand, must first get an investment certificate or IRC, also known as an “investment registration certificate.”
GVLAWYERS can assist you on how to invest and create a business in Vietnam from start to finish.

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