WHAT WILL BE THE ACTIVITIES OF YOUR COMPANY?CHOOSE YOUR BUSINESS LINE(S)

Business activities called Business lines in Vietnam are regulated into 4 different groups :

1. The activities that are allowed to be carried out by foreign investment without any constraints in term of ownership or minimum capital. This concern activities such as Management advisory (including marketing, management, strategy, HR, design, F&B, trading, etc.), restaurants or software development.
2. The activities that are allowed to be carried out by foreign investors but under certain conditions such as ownership (Vietnamese ownership required) or minimum capital. For instance, industries such as tour operator, real estate development will typically be subject to certain conditions on either capital, ownership or both.
3. The activities that are not yet listed in the Central Product Classification after the adhesion of Vietnam to the World Trade Organization in 2006 (updated in April 2021) are subject to “sub-licenses”. That basically means that you will need to get your ERC (Enterprise Registration Certificate) first, then apply for the appropriate sublicense. For instance, if you wish to create an e-commerce platform (i.e. providing platform services to sellers), it will be necessary to obtain a e-commerce license once you start operating (not before).
4. The activities that are totally forbidden for foreign ownership. For instance, activities related to art or notarial services.

WHAT WOULD BE THE CONTRIBUTED CAPITAL OF YOUR LLC?HOW MUCH CASH DO YOU NEED TO START AND RUN YOUR BUSINESS.

At PCA, we ask our Founder(s) to consider three factors helping them to decide how much capital they want to contribute.

►        The legal capital is the required by law for your specific business line(s) related to the activities you wish to start in Vietnam. It is the minimum capital that the Founder(s) must contribute that has been decided by decree by the Vietnamese legislator and prescribed by the Investment law. Most business lines (activities) will require no minimum capital i.e. the Founder(s) may decide to register the company with a marginal capital. Common activities such as management consultancy, restaurants, software development are typical activities requiring no minimum capital by law. Others, such as real estate development or tour operator will require a minimum legal capital and other “license(s)” called sub-license(s).

►        The credibility capital is the one that will grant the Founder(s) credibility towards stakeholders. Among these, we distinguish banks, clients, suppliers, landlords, the authorities, etc. The level of credibility of your company will indeed be set by the level of capital you decide to contribute. Depending on your business, you may not require to be “credible”, but one should be vigilant about the governmental agencies. For instance, a low capital may not allow the Founder(s) to sponsor work permits, business visas and temporary resident cards.

►        The working capital of a business is the capital that is available to pay for its day-to-day operations and to fund its future growth before sales can take over. Once the legal and the credibility capitals are sorted out, it is time to consider your business needs. It is necessary to calculate the capital i.e. the working capital in our case to make sure the business will not miss cash before the sales can cover the expenses. Operations such as loan agreement and/or capital raise are expensive to make compliant and we would like to avoid our Clients to go that way. We advise the Founder(s) to careful calculate the need in working capital before deciding an amount.

DID YOU PICK A NAME FOR YOUR COMPANY? GET RECOGNIZED WITH A MEANINGFUL NAME.

It is time to start your business, you have decided a name but what are the rules to register a name correctly? Follow this little guide to know everything about naming a company in Vietnam!

1/ Name check please: start by checking if another company has used the name you chose. Follow this link and insert your name on the top right search field.

2/ Choose a Vietnamese name: this field is mandatory. It is composed of 2 parts. The first is the company type in Vietnamese. In the case of an Limited Liability Company (LLC), it will be “Công Ty Trách Nhiệm Hữu Hạn” + Name of the company. The latter can be in Vietnamese or anything using western alphabet.

For instance:       

* Công Ty Trách Nhiệm Hữu Hạn Peach Cake

* Công Ty Trách Nhiệm Hữu Hạn Bàn Xanh

3/ Choose an English name: this is not mandatory. It you have chosen a name in Vietnamese language for the Vietnamese name of the company, the English name must be a faithful translation of the Vietnamese words. Pursuant to Article 37, Law on Enterprise 2020: Enterprise name shall contain two elements: The type of enterprise and the proper name. In our case, the type of enterprise shall be “limited liability company” or “company limited” as stipulated in clause 2 Article 37 and every enterprise in Vietnam also has this word in their name. There is unfortunately no exception to this rule.

For instance:       

* Peach Cake Company Limited or Peach Cake Limited Liability Company

* Blue Table Company Limited * Blue Table Limited Liability Company

4/ Choose a short form for your company name: you may choose a short form for your company such as Name of the company without any prefix or suffix or even initials if those are still available…

For instance:       

* PC

* Blue Table  

* Blue Table LLC

Still not clear? Contact us!

WHO WILL BE INVESTING WITH YOU? KNOW YOUR SHAREHOLDERS

Yes, your LLC can be incorporated 100% remotely.

Please note that there will be documents exchanges and signatures to be collected.

Remote incorporation will imply additional shipping fees and therefore additional processing time.

WHERE WILL YOUR LLC BE REGISTERED? CHOOSE A PRESTIGIOUS ADDRESS FOR YOUR COMPANY.

You will need an address! Not necessarily to run your business but to receive mails, notifications from the government and other notices. There are 4 commonly accepted types of locations allowed to register a business.

1. Town house / villa

2. Office building

3. Ground floor of a real estate development (i.e. shop houses)

4. Office-tel in a condominium

TIPS: Please note that apartments in condos are not allowed (unless specified otherwise by a written notice from the building management) to host a company or any kind of commercial activities. According to  , a company that is not properly registered will receive a fine ranging from VND5.000.000 to VND10.000.000 with a company suspension. You do not have a suitable address for the moment? Don’t worry! If you do not have an address PCA will be happy to provide our office address for you. Contact us for a quote! 

FREQUENTLY ASKED QUESTIONS

CAN THE INCORPORATION BE DONE REMOTELY?

Yes, your LLC can be incorporated 100% remotely.

Please note that there will be documents exchanges and signatures to be collected.

Remote incorporation will imply additional shipping fees and therefore additional processing time.

WILL PCA HELP OPEN THE BANK ACCOUNTS FOR THE NEWLY INCORPORATED LLC?

Yes, PCA will assist the Founder(s) with bank accounts opening from A to Z. 

HOW LONG DOES THE INCORPORATION PROCESS TAKE?

Before Covid, it took 26 days from the start to delivery of the company.

Since Covid, please safely count between 1 and 3 months depending on how fast we receive the documents to be collected (passports, signatures, etc.).

ARE THERE ANY HIDDEN FEES?

No, there is no hidden fee.

Our Incorporation proposal is clear and precise. It includes everything you need to start your business from bank accounts creation to initial tax registration. We also include token subscription with the Government. 

Once the company is incorporated you will need:

1/ an accountant

2/ pay the Registration tax starting year 2

3/ an audit firm to audit your accounts yearly

PCA can help, please contact us. We have preferential rates for companies incorporated by us.

IS IT EASY TO SEND MONEY ABROAD?

Yes, it definitely is. 

The law in Vietnam is the same as in any other countries.

For corporations:

Once a company has settled all its obligations in terms of salaries, taxes, social insurances, debts, etc. and has prepared the right compliance document(s) to support the transaction, the remaining cash can be wired back to the shareholders under the form of dividend (0% dividend tax) when there is profit and under the form of liquidation surplus when a company is dissolved. These are usual transactions.

For individuals:

A foreigner has all the rights to wire back his or her cash to any accounts in Vietnam or abroad as long as he or she can justify where the money is from. The confusion here comes from the fact that Vietnamese citizens are allowed to wire cash out of Vietnam under very restrictive conditions. These do not apply to foreigners. For instance, a foreign shareholder of a Vietnamese LLC receives dividends at the end of the year. Those dividends, taxed at either 0% or 5%, will be paid to his Vietnamese bank account. From there, the shareholder may wire that cash anywhere.

IS THE CONTRIBUTED CAPITAL FROZEN?

No, the contributed capital is not frozen.

Unlike in other countries, the capital that has been contributed can be used to run the company i.e. to settle daily operations and expenses such as salaries, rents, office furniture, etc. 

The capital shareholders contribute is therefore not blocked nor frozen. 

MAY THE CAPITAL BE WITHDRAWN AFTER INJECTION?

Yes, you may but under certains circumstances.

Once the capital is contributed, the cash has entered the books of the company.

If you wish you withdraw them physically from the bank, it will be possible.

But if you wish to remove them from the accounting books, you will need to provide supporting elements such as company expenses, goods, salaries, etc.

Contributed capital is company cash and all expenses must be justified and supported by accounting and compliance documents. 

CAN ATTRIBUTES OF COMPANIES BE AMENDED AFTER INCORPORATION?

Yes, all attributes (shareholders, name, address, legal representatives, business lines, contributed capital, etc.) may be amended except the tax number that will always remain the unique identifier of a company. Please contact us for more information.

IS A SHAREHOLDERS’ AGREEMENT USEFUL?

Yes, it is indeed a necessity. 

Drafting a proper shareholder’s agreement is the root of any sane business relationship. 

It is preferable to handle tough matters such as exit, incapacity, entry, roles and responsibilities of all shareholders at the beginning in order to ensure its viability and its success. 

PCA is definitely able to help, please contact us. 

HOW DO I TERMINATE THE COMPANY?

Yes, it is indeed a necessity. 

Drafting a proper shareholder’s agreement is the root of any sane business relationship. 

It is preferable to handle tough matters such as exit, incapacity, entry, roles and responsibilities of all shareholders at the beginning in order to ensure its viability and its success. 

PCA is definitely able to help, please contact us. 

WHAT IS A DORMANT COMPANY?

A company is considered ‘dormant’ if it has ceased trading and does not receive any form of income. It will still be registered at Company Registry and you will be required to file annual accounts and a confirmation statement. Reasons why a company may be dormant include:

• • reservation of company name prior to launching a business

• • restructuring of a formerly active business

• • if the owner needs to take an extended period of leave

• • it is acting as a holding company for intellectual property or other assets

Contact PCA Company Services today. We will help you info@pcacompanyservices.com