Minimum Capital Requirement In Vietnam For Foreign Companies.
Setting up a company in Vietnam
Foreign investors in Vietnam commonly choose between two business entity types
TEither
the Limited Liability Company (LLC) or the Joint-Stock Company (JSC). The company then categorizes either as a wholly foreign-owned entity (WFOE) or a joint venture together with a local partner. The category depends on the industry. Based on your upcoming activities, setting up a company in Vietnam is as follows:
.
Limited Liability Company (LLC)
Best suited to small to medium sized businesses. The corporate structure is simple and instead of shareholders LLC has members (that can own different percentages of the company). Here you’ll see in detail about the corporate structure of a Limited Liability Company in Vietnam.
Joint-Stock Company (JSC)
Most suitable for medium to large sized businesses, it has a more complex corporate structure. A Joint-Stock Company (JSC) is a business entity referred to in Vietnamese legislation as a shareholding company in which shares are owned by three or more original shareholders. Read more about how to establish a Joint-Stock Company in Vietnam.
Branch
A branch is suitable for foreign investors who want to carry out commercial activities and earn their revenue in Vietnam without establishing a separate legal entity. However it should be kept in mind that activities in the branch are limited to the activities of the parent company.
Representative Office
Representative office is represents parent company in Vietnam without conducting any business activities. It is the easiest option if the foreign company does not plan to earn any revenue in Vietnam.
Paid-up capital and minimum capital requirement in Vietnam
Currently the there is no set minimum capital requirement for most businesses entering the market. This alone creates wide range of possibilities for new entrepreneurs in Vietnam. Based
on the Enterprise Law, charter capital must be paid in full amount ninety days after receiving the business registration certificate.
Minimum capital requirement differences per industry
The capital amount differs depending on the industry. In Vietnam, there are conditional business lines that set a minimum amount for the capital.
For example, a fully foreign-owned real estate business needs to have at least a VND 20 billion (approx. US$ 878,499) capital. Legal capital for mutual insurance organisations cannot be less than VND 10 billion (approx. US$ 439,000).
Department of Planning and Investment decides on the minimum capital requirement depending on how capital-intensive is the field of business. For factories and industries, which operate at a larger scale, the capital amount also needs to be higher.
However when starting a business in Vietnam that doesn’t require much investments the capital can be quite small, especially when compared to countries like Indonesia.
How much is the paid up capital in Vietnam?
While working with the Vietnamese market, the paid up capital for foreign company as a standard is US$ 10,000. However it can also be less or more. Where does the difference come from? The main factor for the amount of capital in Vietnam is your line of business.
Some business lines have conditional capital requirement, but the average minimum capital accepted by the licensing authority is US$ 10,000.
Our current practice has shown that this amount is generally well accepted, however when it comes to confirming businesses with lower capitals during the incorporation process it mainly depends on the Department of Planning and Investment. It is wise to plan to pay up at least US$10,000.
Using paid up capital for business activities
Once you have paid up the capital you are free to use it for your business activities. Legal entity typeMinimum capitalShareholder liabilityRestrictionsLimited liability
company
US$ 10,000, depending on the area of activity
Limited to the capital contributed to the company–Joint-stock companyMinimum 10 billion VND (approx. US$ 439,356), if trading on stock marketLimited to the capital contributed to the company–BranchNo minimum capital requirement *UnlimitedActivities in the branch are limited to the activities of the parent company.
Parent company is fully liable
Representative officeNo minimum capital requirement *UnlimitedNo commercial
activities allowed
* Neither Branch nor Representative office need to necessarily pay in any capital, however both need to ensure their capital is plentiful to run a particular office.
Starting a small business in Vietnam
Starting a company with less than US$ 10,000 capital
In Vietnam it is possible to get an approval for an investment lower than US$ 10,000. Main criteria is that your business field cannot be capital-intensive.
Examples of business lines that could work with an investment lower than US$ 10,000: Web design
Management consulting
Market research
We do hope that the above information may help to understand more about foreign capital contribution factor.
I hope this is useful and informative to you.
Should you have any question, please let me know via
my email: [email protected].