Vietnam — Business: Limited Company

Why This Matters

A single-member LLC gives a foreign parent company full, unshared control of the Vietnamese subsidiary — a meaningful advantage over jurisdictions that mandate a local co-owner, though certain conditional sectors still require a Vietnamese joint-venture partner regardless of entity type chosen.

Key Facts

• Single-member LLC: one owner (individual or corporate), full control, limited liability to the extent of charter capital — the most common structure for wholly foreign-owned subsidiaries.
• Multi-member LLC: 2-50 members, each liable only up to their capital contribution, suited to joint ventures or multiple foreign investors.
• Charter capital (declared, not always independently verified against actual bank deposits by the registrar) should be realistic relative to the business plan — grossly undercapitalizing can raise scrutiny in specific licensed sectors or during future financing/due diligence.
• The legal representative (a required role for every Vietnamese company) can be a foreigner residing in Vietnam or, in some cases, someone based abroad with appropriate arrangements, though having a Vietnam-based representative significantly eases day-to-day compliance and bank/tax dealings.
• LLCs cannot issue shares publicly and are simpler to govern than a JSC (fewer mandatory corporate governance structures like a board of supervisors, though this depends on member count and structure).
• Converting an LLC to a JSC (or vice versa) is possible later if capital-raising or structural needs change, though it involves a formal conversion process with the registrar.

Steps

1. Decide between single-member and multi-member LLC — A single foreign parent company or individual investor typically chooses single-member for full control; multiple investors or a joint-venture arrangement uses multi-member.
2. Set a realistic charter capital amount — Declare charter capital that reasonably reflects your business plan and industry norms — some conditional sectors have statutory minimums that must be met.
3. Appoint a legal representative — Designate a legal representative (ideally Vietnam-based for practical day-to-day operations) who will be named on the Enterprise Registration Certificate and interact with authorities/banks.
4. Draft the company charter — Prepare the company's charter (điều lệ) governing internal management, profit distribution, and member/shareholder rights, particularly important for multi-member LLCs with more than one investor.
5. Register and inject charter capital — Once the ERC is issued, inject the declared charter capital through the Direct Investment Capital Account within the legally required timeframe (commonly within 90 days of ERC issuance).

Costs

• Legal/setup fees for LLC formation: USD 1,500-5,000+ depending on complexity

Timelines

• Charter capital injection deadline: Typically within 90 days of ERC issuance

Required Documents

• Company charter (điều lệ)
• Investment Registration Certificate and Enterprise Registration Certificate
• Legal representative's ID/passport and appointment documentation
• Charter capital injection proof (DICA bank statement)

Common Mistakes

• Declaring charter capital far below what the business plan requires, raising red flags in later financing rounds or license renewals.
• Missing the statutory deadline (commonly 90 days) to inject the declared charter capital after ERC issuance, which can trigger penalties or capital reduction requirements.
• Appointing a legal representative based outside Vietnam without adequate power-of-attorney arrangements, complicating routine bank and tax office interactions.
• Not tailoring the company charter to reflect actual governance intentions among multi-member LLC investors, leading to disputes later.

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