Procedures for setting up a company in Laos

Laos, with its strategic geographical location and opening policy and growing economic potential, is increasingly attracting the interest of foreign investors. However, in order for the investment process to be established here smoothly and effectively, it is extremely important to master and comply with legal procedures related to the establishment of the company. This Viet An Law will provide you with an overview of the procedures for establishing a company in Laos through the article below.

Prepare information before setting up a company in Laos

Learn about the minimum charter capital, foreign ownership ratio, and operating license requirements that may apply to your sector. This step is the most important first step in the process of establishing a company in Laos. You need to carefully study at least the following 3 factors:

Minimum charter capital

• Regulations in Laos:
  • For Limited Liability Companies and Joint Stock Companies (PLCs), the minimum charter capital is very low, only 1 USD.
  • For a branch of a foreign company, a separate charter capital is not required.
  • For Representative Offices, the minimum charter capital requirement is 50,000 USD.
• Important note: Although the minimum charter capital is low, you will need to demonstrate financial ability to maintain your business, especially when applying for a business license for industries that require higher legal capital or when applying for a business visa. Too low charter capital can make it difficult to access bank loans or build trust with partners.

Foreign capital ownership ratio

• Restrictions: Lao law has certain restrictions on the ownership rate of foreign investors in certain business sectors. This is to protect national interests and domestic businesses.
• Restricted industries: Commonly restricted sectors include:
  • Exploitation of natural resources (e.g., minerals, forest products)
  • Energy
  • Telecommunication
  • Banking and Finance
  • Journalism and media

Requirements for operating licenses

• Sub-licenses: In addition to the Business Registration Certificate, some business lines also require sub-licenses (operation licenses) from relevant ministries and branches.
• Example:
  • Financial services business needs a license from the State Bank of Laos.
  • Tourism service business needs a license from the Ministry of Information, Culture and Tourism.
  • Educational service business needs a license from the Ministry of Education.

Procedures for setting up a company in Laos

Step 1: Prepare the company establishment dossier to submit to the Ministry of Industry and Trade

The list of documents includes:

• Company Charter: This is the most important document, regulating the organizational structure, activities, rights and obligations of members/shareholders in the company. The company charter needs to be drafted in detail and comply with Lao law. Some of the main contents to be included in the company’s charter include:
  • Company name and head office address.
  • Objectives and scope of business activities.
  • Charter capital and capital contribution structure.
  • Management organizational structure (Board of Members/Board of Directors, Board of Directors).
  • Rights and obligations of members/shareholders.
  • Regulations on profit sharing and loss handling.
  • Regulations on the dissolution of the company.
• Company establishment contract: This is a written agreement between members/shareholders on the establishment of the company, clearly stating the terms of capital contribution, rights and obligations of each party. This contract needs to be signed by all members/shareholders.
• Resumes of directors and legal representatives: It is necessary to provide detailed information about the working experience, education and relevant personal information of the directors and legal representatives of the company. This helps the authorities assess the management and executive capacity of the company.
• Resolution of the board of directors (if any) authorizing the establishment of the company and appointing the executive director and representative of the investor(s): If the company is established by another organization or business, a resolution of the board of directors of that organization/enterprise authorizing the establishment of a new company in Laos is required, and appoint a representative to participate in the process of establishing and managing the new company. This resolution should be made in writing and signed by the members of the board of directors.

Step 2: Submit an application for an Enterprise Registration Certificate

• Form of submission: Currently, Laos applies a combination of online and hard copy submission. You need to submit an online application on the official portal of the Company Registration Office under the Ministry of Industry and Trade, then submit hard copies of the prepared documents to the address of the Company Registration Office. The application will ask you to provide the following information:
  • General information about the business: Company name (need to be double-checked to avoid duplication), address of the expected head office, type of business (limited company, PLC,…), detailed business lines.
  • Information about corporate governance: Expected organizational structure, information about legal representatives, information about the CEO.
  • Information about the representative office (if any): If the company has a representative office, it is necessary to provide the address and information about the head of the office.
  • Principal business location: The specific address where the company plans to conduct business activities.
  • Detailed information about shareholders/members: Full list of shareholders/members, capital contribution rate of each person.
  • Agreement on shares/contributed capital: Detailed terms related to capital contribution, method of transfer of shares/contributed capital (if any).
• Submission location: The place to submit the application is the Company Registration Office of the Ministry of Industry and Trade of Laos.

Step 3: Tax registration

Previously, businesses had to file a separate application with the tax authority to receive a Taxpayer Identification Number (TIN). However, according to recent changes, this procedure has been integrated into the business registration process.

Current Process:

• Automatic issuance of TIN: Instead of having to submit a separate application, businesses will automatically receive a TIN (consisting of 12 digits) as soon as the Business Registration Certificate (ERC) is issued.
• System connection: According to the updated regulations in the Tax Information System (TaxRIS), the one-stop service allows to connect and synchronize business registration information with the tax system. Therefore, when you register for ERC through this service, your information will be automatically transferred to the tax authorities.

Step 4: Apply for an Operation License

Applying for an Operating License is the next step after you have received your Business Registration Certificate (ERC) in Laos. This step ensures your business is legally allowed to operate in the specific business sector.

Licensing Agencies

The agency competent to grant an operation license depends on the business field of the enterprise. Usually, it is related ministries and specialized branches, for example:

• Ministry of Industry and Trade: Licensing trade, production, import and export activities.
• Ministry of Information, Culture and Tourism: Licensing tourism, hotel, and restaurant activities.
• State Bank of Laos: Licensing banking and financial activities.
• Ministry of Health: Licensing for activities related to health and pharmaceuticals.
• Ministry of Education: Licensing educational activities.

Application process for an Operating License

The specific process can vary depending on the industry and licensing authority, but generally includes the following steps:

• Prepare the dossier: The dossier usually includes:
  • Application for an Operation License (according to the prescribed form).
  • Certificate of Business Registration (ERC).
  • The company’s charter.
  • Documents proving business eligibility (e.g., food hygiene and safety eligibility certificate, fire protection certificate, etc.).
  • Other papers as required by each licensing agency.
• Submission of dossiers: Submit dossiers directly at competent agencies.
• Application appraisal: The licensing agency will review and appraise the application.
• Issuance of an Operation License: If the dossier is valid and the enterprise meets all the conditions, the licensing agency will issue an Operation License.