FORM OF ENTERPRISES IN VIETNAM

Every form of enterprise in Vietnam has the right to: Freely engage in any business line that is not banned by law. Freely run the business and choose a type of business organization; choose business lines, area of operation and type of operation; change the scale of business and business lines. Choose the method of mobilizing, distributing and using capital. Freely find markets, clients and enter into contracts. Export and import. Hire employees in accordance with employment laws.  Have intellectual property rights protected in accordance with intellectual property laws. Acquire, use, dispose of their assets.

The Vietnam government recognizes the long-term existence and development of the types of enterprises; ensures equality of enterprises before the law regardless of their types of business and economic sector; recognizes lawful profitability of business operation. The State recognizes and protects the right to ownership of assets, capital, income, other lawful rights and interests of enterprises and their owners.

THERE ARE 08 TYPICAL FORMS OF ENTERPRISES IN VIETNAM

1. Multi-member limited liability companies: A multiple-member limited liability company is an enterprise that has 02 – 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise. A multiple-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration. Multiple-member limited liability companies must not issue shares except for equitization. Multiple-member limited liability companies may issue bonds in accordance with this Law and relevant laws.
2. Single-member limited liability companies: A single-member limited liability company is an enterprise owned by a single organization or individual or referred to “owner”. The owner’s liability for the company’s debts and other liabilities shall be equal to the company’s charter capital. A single-member limited liability company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued. A single-member limited liability company must not issue shares except for equitization. Single-member limited liability companies may issue bonds in accordance with this Law and relevant laws.
3. Joint stock companies: A joint stock company is an enterprise in which the charter capital is divided into units of equal value called shares;  Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders; A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the shareholder. Shareholders may transfer their shares to other persons. A joint stock company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued. A joint stock company may issue shares, bonds and other kinds of securities.
4. Partnerships:  A partnership is an enterprise in which there are at least 02 partners that are joint owners of the company and do business under the same name or referred to “general partner”. There can be limited partners in addition to general partners. A general partner shall be an individual whose liability for the company’s obligations is equal to all of his/her assets. A limited partner can be an organization or an individual whose liability for the company’s debts is equal to the promised capital contribution. A partnership has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued. A partnership must not issue any kind of securities.
5. Sole proprietorships: A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets. A sole proprietorship must not issue any kind of securities. An individual may only establish one sole proprietorship. The owner of a sole proprietorship must not concurrently own a household business or hold the position of general partner of a partnership. A sole proprietorship must not contribute capital upon establishment  or purchase shares or stakes of partnerships, limited liability companies or joint stock companies.
6. Business groups and corporations: A business group or corporation is a group of companies that are interrelated by ownership of shares/stakes or otherwise associated. A business group or corporation is not an enterprise, is not a juridical person and registration of its establishment. A business group or corporation has a parent company, subsidiary companies and other member companies. They have the same rights and obligations of as those of independent enterprises as prescribed by law.
7. Parent company and subsidiary companies: A company is considered parent company of another company if: It holds more than 50% of charter capital or total ordinary shares of the latter; It has the right to directly or indirectly designate most or all of the members of the Board of Directors and Director/General Director of the latter; or It has the right to decide revisions to the latter’s charter.  A subsidiary company must not contribute capital to or purchase shares of the parent company. Subsidiary companies of the same parent company must not contribute capital to or purchase shares of each other to establish cross ownership. Subsidiary companies of the same parent company with at least 65% state capital must not contribute capital to or purchase shares of other enterprises or to establish new enterprises.
8. State-owned enterprises: State-owned enterprises shall be limited liability companies or joint stock companies, including: a) Wholly state-owned enterprises have 100% of charter capital of which are held by the State. Partially state-owned enterprises over 50% of charter capital or voting shares are held by the State.

BRANCHES, REPRESENTATIVE OFFICES AND BUSINESS LOCATIONS  

Every form of enterprise in Vietnam has the right to register one or more dependent units in form of:

1. A branch of an enterprise is its dependent unit which has some or all functions of the enterprise, including authorized representatives. The business lines of a branch shall match those of the enterprise.
2. A representative office of an enterprise is its dependent unit which acts as the enterprise’s authorized representative, representing and protecting the enterprise’s interests. A representative office shall not do business.
3. A business location of an enterprise is the place at which specific business operations are carried out.

Each form of enterprise has its own advantages and disadvantages. The investors shall base on actual business industries, business plans to find the right form of enterprise, create more business advantages and prevent risks in advance.

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