Notes when establishing a company in Laos

In order for the process of establishing a company in Laos to go smoothly, investors and entrepreneurs need to pay special attention to some conditions and information to prepare to establish a company. First of all, choosing the type of business is the first and important step, in which Limited Liability Company (Limited) and Joint Stock Company are two common types, each type has its own requirements and advantages in terms of organizational structure, legal responsibility and ability to raise capital. After selecting the type, the enterprise needs to register with the Lao Business Registration Agency to be granted an Enterprise Registration Certificate, which is a legal operating license. In addition, investors need to master the regulations on minimum charter capital for each industry, as well as the capital ownership rate of foreign investors according to the law. However, there are some other notes when establishing a company in Laos, Viet An Law would like to review some notes through the article below.

Notes on visa issues when setting up a company in Laos

To start a business in Laos legally, it is first important that you make sure to comply with visa regulations. Specifically, you need to clearly determine whether you are eligible to apply for a working visa or a business visa in Laos. This is extremely important because using a tourist visa for business or working purposes is against the law and can lead to serious consequences such as fines, deportation, and even a ban on entry into Laos.

So, what types of visas are suitable for business purposes in Laos? There are two common types:

• Business Visa: This type of visa is for individuals who want to invest, establish or run a business in Laos. Usually, business visas have a short duration, such as 3 months or 6 months, but can be extended if the eligibility is met.
• Working Visa: For people who are employed by a company that is legally registered to operate in Laos. To apply for a working visa, you need an official job offer letter from that company.

List of documents to apply for a visa to establish a company in Laos:

• Passport: Your passport must be valid for at least 6 months from the expected date of entry into Laos.
• Visa application: You need to fill out the visa application form completely and accurately according to the form prescribed by the Embassy or Consulate of Laos.
• Portrait
• Proof of Purpose of Entry: These are important documents to prove your purpose of entry.
  • For business visas: You need to provide documents such as a business registration certificate (if you already have one), a detailed business plan, documents proving financial ability to maintain business operations in Laos, etc.
  • For working visas: A job offer letter from a company in Laos, accompanied by the company’s operating license is required to prove its legality.
• Other documents: In addition to the above documents, there may be additional requirements depending on the specific case.

Notes on the appointment of Directors/Executives when establishing a company in Laos

Key roles of Directors/Executives

They are responsible for managing and operating all business activities, from strategic planning, financial and human resource management to ensuring legal compliance. These people play a central role in the direction and development of the business.

Number of Directors/Executives by type of enterprise

• Limited Liability Company (Limited): A minimum of one Director is required.
• Branch: Requires a minimum of one head, commonly referred to as the Branch Director or the branch’s legal representative.
• Representative Office: A minimum of one head is also required, known as the Head of the Representative Office.
• Joint Stock Company (PLC): Requires at least three Directors, usually members of the Board of Directors.

Appointment Process

The process of appointing Directors/Executive Officers is stipulated in the Law on Enterprises of Laos and the Charter of each company. Normally, the appointment is made through a decision of the Board of Members (for limited liability companies) or the General Meeting of Shareholders (for PLCs).

Notes on the number of shareholders when establishing a company in Laos

Shareholders are individuals or organizations that own shares in the company, act as capital contributors, share profits (in the form of dividends) and have limited liability within the scope of their capital contribution. In Laos, the minimum number of shareholders is regulated differently depending on the type of enterprise:

• For Limited Liability Companies (LLCs): Only a minimum of one shareholder is required. This allows a single individual or entity to be able to establish and own the entire business.
• For Joint Stock Companies (PLCs): A minimum of seven shareholders is required. This regulation aims to promote diversity in ownership and governance structures, in line with the often larger and more complex scale of operations of joint-stock companies.

Rights and obligations of shareholders include

• Right to receive dividends: Shareholders enjoy profits from the company’s business activities through dividends, the ratio depends on the number of shares owned.
• Voting Rights: Shareholders have the right to vote at the General Meeting of Shareholders on important matters of the company, including the election of the Board of Directors, the approval of financial statements, and major investment decisions. The number of votes corresponds to the number of shares owned.
• Right to information: Shareholders have the right to access and receive information about the company’s business and financial activities in a transparent manner.
• Limited Liability: The liability of shareholders for the company’s debts is limited to the amount of capital contributed to the company.