Forms of Buisness

The main forms of business available are state-owned enterprise, private enterprise, cooperative enterprise, joint-stock company, limited company and partnerships.

A joint stock company (JSC) must have a minimum of 3 shareholders (no maximum limit). A JSC can raise capital through the issue of shares and may be listed on the stock exchange.

The Investment Law (IL) (Law 67/2014/QH13), which came into effect on 1 July 2015, replaced the 2005 IL (Law 59/2005/QH11). Under the IL, foreign investment enterprises (FIEs) are required to register their corporate form. FIEs with one member can reregister as a one-member limited liability company (LLC), and FIEs with multiple owners can reregister as multi-member LLCs.

A partnership is regarded as a legal entity, and is accorded the status from the date of issuance of the business registration certificate.

A partner may be capital contributing or a professional with the relevant qualifications and certifications. Partnerships may not issue any type of security.

Both limited and unlimited partnerships are recognized in Vietnam.

Limited partners are liable for the debts of the partnership only to the extent of the amount of capital they have contributed. In limited partnerships, only unlimited liability partners are entitled to be legal representatives and are allowed to organize the management of the daily business of the company.

In an unlimited partnership, the partners have unlimited liability for the obligations of the partnership up to the extent of the assets of the unlimited partner.

Not applicable..

Holding company

No specific provisions.

No specific provisions.

Joint ventures are one of the most common forms of foreign investment in Vietnam. The foreign partner generally contributes capital in the form of cash, plant, equipment, technology and know- how, while the Vietnamese partner is generally a local Vietnamese individual or enterprise whose contribution to the investment is usually land use rights. Joint ventures set up prior to 1 July 2006 (unless they choose to reregister), are subject to a minimum foreign contribution of 30%.

From 1 January 2009, under Vietnam’s WTO commitments, several business sectors have been opened to 100% foreign-owned capital (import, distribution, etc.), but joint ventures are still compulsory with various capital ratios in some sectors (logistics, transportation, advertising, etc.).

Joint ventures can be set up as LLCs or JSCs. Capital may be in the form of equity or loan. The IL does not stipulate the capital-to-loan ratio (this was previously provided under the Foreign Investment Law where the capital requirement was at least 30%).

A board of directors is required when the joint venture takes the form of an LLC or JSC. Decisions made by the LLC or JSC should have at least 51% of the approval of the board.

From 15 January 2011, a new structure called a public-private partnership (PPP) was introduced. The PPP is actually a business cooperation contract in which one party is the state that cooperates with a private individual or organization on a contractual basis to provide public services and develop infrastructure.