Vietnam company law: simplifying the creation of foreign companies
Vietnam company law has eased considerably in recent years. Foreign investors can now quickly create limited liability companies.
What are the different types of companies in Vietnam?
A company in Vietnam is the same as in many other countries. It’s registered as a corporation that has its own name, which has property, which has a head office and is registered in accordance with the law, in order to carry out business activities. Foreign investors generally favour companies whose shareholders’ liability is limited to their contribution. Vietnam company law has mainly three social forms:
Private limited liability company (LLC)
- Number of partners: The multi-member limited liability company has a minimum of 2 partners and a maximum of 50 partners. This form of company may include only one member, but it will then be a one-man limited liability.
- Capital: The capital of the company is not divided into shares, but contributions of members, releasable for a maximum of 3 months from the date of issuance of the ERC of the company. The partners have a right of first refusal on disposal of capital which can be exercised within 30 days following the offer to sell.
- Company management: The LLC is formed of the members’ council/board of directors, a chairman, a general manager and an inspection committee for companies with more than 11 members.
- Quorum: The quorum for convening the first members’ council’s meeting is 65%.
- Votes: The voting threshold with respect to passing resolutions by way of written opinions is 65%.
Shareholding Company (SC)
- Number of shareholders: The company must have at least 3 shareholders
- Capital: The capital of the company is divided into shares, aspiring to be listed, which should be released a maximum of three months from the date of issuance of ERC of the company. In principle, any shareholder is free to sell its shares except as provided by law or in the articles of association.
- Company management: The SC has a general meeting of shareholders (GMS), board of management, chairman of board of management, general director and inspection committee. The quorum for a convening GMS for the first is 51% and the second is 33% of the total number of the voting slips.
- Votes: The voting threshold for GMS to pass resolutions is 51% for general matter and 65% for certain specific matters.
The General partnership under Vietnamese law is a business where:
- Associates: Vietnam company law states that there are at least two general partners and possibly associates who provide the funds. The general partner is a natural person who meets any social debts indefinitely with his personal property. The associated donors are responsible for the debts of the company in proportion to their contributions.
- Issuance of shares: The general partnership cannot issue any shares.
- Company management: The Manager of the general partnership must be a natural person. Any change of manager requires the approval of the competent authority and the amendment of the establishment of the company certificate.
How to form a company in Vietnam?
The law of 2014 on investment and 2014 Law on Enterprises unified the registration procedure for domestic companies and foreign companies. Now, all companies will be subject to the same procedure for matters relating to company law itself and must obtain an ERC or “Enterprise registration certificate” in order to be registered.
However, foreign investors who choose to start a business in Vietnam must first obtain an investment certificate or IRC, called an “investment registration certificate.”
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