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A common question for foreign investors and companies is what is the minimum capital requirement for setting up a foreign company in Vietnam? Also, how much of it should be paid up?
The article explains the capital requirements for each of the legal entity types relevant for foreign investors.
Foreign investors in Vietnam commonly choose between two business entity types. Either 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:
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).
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.
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 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.
Currently 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.
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.
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$10,000.
Once you have paid up the capital you are free to use it for your business activities.
|Legal entity type||Minimum capital||Shareholder liability||Restrictions|
|Limited liability company||US$ 10,000, depending on the area of activity||Limited to the capital contributed to the company|
|Joint-stock company||Minimum 10 billion VND (approx. US$ 439,356), if trading on stock market||Limited to the capital contributed to the company|
|Branch||No minimum capital requirement *||Unlimited||Activities in the branch are limited to the activities of the parent company. Parent company is fullyliable|
|Representative office||No minimum capital requirement *||Unlimited||No 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.
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