There are two most common types of company in Vietnam, Limited Liability Company and Joint Stock Company. Each type of company has the following natures:
- Possess legal person status.
- Liability of each member/shareholder limited to capital contribution.
A Joint Stock Company is usually chosen by the foreign investors with medium size to large scale.
The advantages and disadvantages are summarized as below.
- Joint Stock Company normally can raise capital easily by issuing shares to the public, which is a unique feature of a joint stock company.
- Liability of the shareholders for the company’s debts is limited to the amount of their respective shareholding.
- The management and operations of a joint stock company are complicated because the number of shareholders can be very large, there are many people who do not know each other. So the Board of management and Board of Directors of Joint Stock company need to ensure the benefits of the company, benefit of shareholders and benefit of employees.
- Business and financial security capabilities are limited because the company must be public and report to shareholders; listed company must be widely publicized.
Procedures for Setting up a Joint Stock Company
- Investors should first select a Vietnamese name for the company that they will be setting up in Vietnam. The investors need to submit an application for pre-review of the company name and business scope as well as to retain the company name during the prereview period with the DPI.
- An investor is required to submit the Investment Application Form and relevant documents to the Board of Management Industrial Park (or Board of Management Economic Zone, depends on their location).
- For investors making inward remittances of foreign currencies, investment funds may be remitted from abroad after the investment is approved. When the remittance is settled in Foreign currency, the original approval documents should be submitted to the domestic bank handling the transaction, and approval of the investment amount must be authorized by the authority which approved the investment according to the paragraph above.
- The operator of an export/import business must apply first to the Department of Industry and Trade, DPI for an advance check of its English name, and then apply to that Bureau for registration as an export/import business.
A company that is engaged in the manufacturing or processing of goods must apply for a factory registration with the local county or city government where it is situated. If the factory is located in an export processing zone, science park, or agricultural biotechnology park, the company should apply for registration with the administrative agency in charge of that zone or park.