PROCEDURES AND CONDITIONS FOR ESTABLISHMENT OF THE LATEST COMPANIES AND ENTERPRISES UNDER THE LAW ON ENTERPRISES 2020
The size of Vietnam’s economy is expanding, followed by the needs of large and small enterprises across the country. However, the procedures for establishing a business are complicated and cumbersome, if you do not understand the procedures, papers and conditions involved, it will be difficult to complete the business registration activities. The content of the reading below will help you answer questions about procedures, records as well as how to establish a legitimate company or business in accordance with the laws of Vietnam.
- Process Steps to Establish a Company, Business
- Establishing a Company, What Conditions Do You Need?
- Conditions on business sectors
- Conditions on types of companies and enterprises
- Conditions on the location of the head office for the company or enterprise
- Naming conditions for companies and enterprises
- Conditions on legal representatives
- Conditions on charter capital upon establishment of a company or enterprise
- Conditions for establishment of a 1-member limited liability company
- Conditions for establishment of a limited liability company with 2 or more members
- Predict how much it costs to establish a company or a business?
Process Steps to Establish a Company, Business
Step 1: Prepare a dossier to make a company/business profile.
Step 2: Submit the application to the Business Registration Office under the Department of Planning and Investment, where the company address is located and waiting for the license.
Step 3: Establish the Company.
Step 4: Perform the Procedure for Making a Legal Seal.
Step 5: Proceed to buy an electronic digital signature and register a bank account for the company.
Step 6: Proceed to make company signs and notices of VAT invoices.
Step 7: Carry out the initial tax declaration procedures at the tax office.
Step 8: Contribute capital to the company in accordance with the agreed capital and commitments between members and shareholders of the company.
Establishing a Company, What Conditions Do You Need?
Conditions on business sectors
According to regulations, companies and enterprises have the right to trade in industries other than those banned under the Law on Enterprises. It is necessary to register the profession with the management agency before operating.
If trading in conditional business sectors, enterprises must ensure that they meet the conditions prescribed by law. Business must not be done without sufficient business conditions as prescribed by the Law on Enterprises, the Law on Investment or the provisions of the Law on Investment or the maintenance of business conditions in the course of operation.
Conditions on types of companies and enterprises
It is quite possible to change the type of business more in accordance with the orientation and development situation of the company and the business later. There are 4 most popular types of companies and businesses today.
− Private companies/enterprises: Only 1 individual is the owner.
− One-member limited liability company: 1 individual or 1 organization as owner.
− Limited liability company with two or more members: At least 2 individuals / organization and a maximum of 50 individuals / groups.
− Joint stock company: It is mandatory to have 3 or more individuals or organizations.
Conditions on the location of the head office for the company or enterprise
According to the provisions of Article 42 of the Law on Enterprises 2020: “The head office of the enterprise is located in the territory of Vietnam, is the contact address of the enterprise and is determined according to the geographical borders of the administrative unit; have a phone number, fax number and email (if any).”
The headquarters of the company or enterprise must not be condominiums or collective houses.
Naming conditions for companies and enterprises
The Vietnamese name of the enterprise must be written in the following order:
The first is the type name of the enterprise, then the first name written in the letters in the Vietnamese alphabet, the letters F, J, Z, W, digits and notes.
In addition, the enterprise name must be attached at the head office, branch, representative office, business location of the enterprise. Business names must be printed or written on transaction papers, documents and publications issued by the enterprise.
Attention should be paid to avoid duplicate naming, which is easily confusing with the names of companies and businesses registered for operation. The names of state agencies, people’s armed forces units, names of political organizations or socio-political organizations must not be used,… to do all or part of the enterprise’s own name, unless approved by such agency, unit or organization. Do not use words and notation that violate the historical, cultural, moral and fine traditions of the nation.
Conditions on legal representatives
The legal representative of the enterprise (Director / General Director / Chairman …) is the individual representing the enterprise to perform the rights and obligations that arise from the transaction of the enterprise, who is responsible for the activities of the enterprise. And the representative can be Vietnamese or foreigner depending on each company or business.
Conditions on charter capital upon establishment of a company or enterprise
Clause 34 Article 4 of the Law on Enterprises 2020 stipulates: “Charter capital is the total value of assets contributed or committed by company members or company owners when establishing a limited liability company or partnership; is the total value of shares sold or registered for purchase upon establishment of a joint-stock company.”
According to the Law on Enterprises 2014, there is no specific provision on the minimum or maximum capital amount. However, businesses should consider to register capital in accordance with the size of their company/ business.
Establishment of Limited Liability Company (LIMITED)
Two-member limited liability company or more: As a type of limited liability company in which the company’s members have two or more people, the number of members must not exceed fifty.
One-member limited liability company: Means a type of limited liability company owned by an organization or an individual; the company owner is responsible for debts and other property liability of the company within the scope of the company’s charter capital.
Conditions for establishment of a 1-member limited liability company
According to the provisions of Article 74 of the Law on Enterprises 2020, the participants in the establishment of a one-member limited liability company may be an organization or an individual as the owner (here below referred to as the company owner). In addition, organizations and individuals participating in the establishment of a one-member limited liability company must meet the conditions specified in Article 17 of the Law on Enterprises.
Those who do not meet the conditions for establishment of a 1-member limited liability company: Cadres, civil servants, state officials, individuals working in the army, people being prosecuted for criminal liability, minors, people who are restricted or have lost their civil act capacity …
Conditions for establishment of a limited liability company with 2 or more members
Members of a limited liability company with two or more members have at least 02 members and must not exceed 50 members. The owner established a 2-member limited liability company can be an individual or organization. In case the owner is an individual, he/she must satisfy the conditions prescribed in Clause 1 Article 17 of the Law on Enterprises 2020 and not be banned from establishing an enterprise as prescribed in Clause 2 Article 17. If the owner is an organization, he/she must have the legal character who fully meets the following conditions: Must be legally established; Having a strict organizational structure, having assets independent of other individuals and organizations and being solely responsible for such independent assets; In my name, I participate in legal relations independently.
Predict how much it costs to establish a company or a business?
Cost is probably the biggest question when a business starts a company/business. The cost of establishment will depend on the business sector, the form and size of the company, the enterprise. Here are a few reference costs when setting up a company or business.
|Types of costs||Minimum cost|
|The cost of buying a digital signature||1,000,000 VND – 3,000,000 VND (From 1-3 years)|
|Cost of registration of business license + seal||700,000 VND|
|Cost of opening a bank account||About 500,000 VND – 1,000,000 VND (Depending on the bank)|
|Approximately the cost of printing invoices||350,000 VND/1 book|
|Cost of making signs||200,000 VND|
|Expenses for paying card taxes||VND 2,000,000/ VND 3,000,000 (Subject to charter capital)|
|Expenses for making tax returns||1,000,000 VND – 2,000,000 VND (Depending on the service)|