Who has the right to set up a company in Vietnam?

Many clients, when wishing to establish a company/enterprise, hesitate and ask our lawyer: Am I eligible to establish a company ? This article of Viet An Law Firm aims to answer basically related questions: who has the right to set up a company in Vietnam.

Legal basis

• Enterprise Law 2020;
• Investment Law 2020;
• Decree 01/2021/ND-CP on business registration;
• Decree 122/2021/ND-CP stipulating penalties for administrative violations in the field of planning and investment.

Set up a company in Vietnam

Set up a company in Vietnam is simply the creation of a new business in the economy. Enterprise establishment activities shall be carried out by investors on the basis of law provisions on the legal form of the company, industry, method of capital contribution, organization and management of the company, rights and obligations of the company. Legally, the establishment of a company is an administrative procedure carried out by the founding members of the company or the legal representative of the company in the name of the company registered for business in order to be legally establishment of a new company.

Who has the right to set up a company in Vietnam?

The object of establishment of an enterprise is one of the conditions for establishing an enterprise. Entities allowed to establish businesses in Vietnam include organizations and individuals.

The subject setting up a company is an organization

If the entity having the right to establish an enterprise is an organization, this organization must have legal status, because an organization can only invest capital in establishing an enterprise when it has independent assets and is capable of taking independent responsibility with that property for itself.

The subject setting up a company is an individual

If the entity having the right to establish an enterprise is an individual, that individual must have full civil act capacity to ensure responsibility for the enterprise established by themselves.

If an individual establishing a company in Vietnam is a foreigner, he/she must carry out investment registration procedures according to legal documents in order to be granted an Investment Registration Certificate.

Entities has the right to set up a company in Vietnam

Pursuant to Article 17 of the Enterprise Law 2020, organizations and individuals have the right to establish and manage enterprises in Vietnam, except for the following cases:

• State agencies and units of the people’s armed forces use state assets to establish profit-making enterprises for their own agencies or units;
• Cadres, civil servants and public employees according to the provisions of the Law on Cadres and Civil servants and the Law on Public Employees;
• Officers, non-commissioned officers, professional soldiers, defense workers and officers in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, public security workers in agencies and units of the Vietnam People’s Public Security, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises. or management at a state-owned enterprise;
• Professional leaders and managers in state enterprises, except for persons appointed as authorized representatives to manage the State’s capital contribution in other enterprises;
• Minors; persons with limited civil act capacity; persons who have lost their civil act capacity; people with difficulties in cognition and behavior control; organizations without legal status;
• Persons who are being examined for penal liability, detained, are serving prison sentences, are serving administrative handling measures at compulsory detoxification establishments, compulsory education establishments or are banned by the Court hold certain posts, are prohibited from practicing certain professions or doing certain jobs; other cases as prescribed by the Law on Bankruptcy and the Law on Anti-corruption.
• Organizations that are commercial legal entities are prohibited from doing business or operating in certain fields according to the provisions of the Penal Code.

Thus, all organizations and individuals that do not fall into one of the above cases have the right to establish an enterprise.

Cases where the right to establish a company in Vietnam is restricted

In addition to those who are not allowed to establish businesses, the law also clearly stipulates cases where the right to establish an enterprise is restricted. As follows:

Pursuant to Article 180 of the Enterprise Law 2020 stipulates:

• General partners may not become business owners.
• A general partner without the consent of the remaining general partners may not become a general partner of another company.

According to the provisions of Article 188 of the Enterprise Law 2020 :

• Each individual may only establish one private enterprise. At the same time, the owner of a private business cannot be the owner of a business household or a general partner of a partnership.

Conditions for setting up a business in Vietnam

In addition to the conditions on the subject and object of the business establishment analyzed above, in order to establish an enterprise in Vietnam, the following conditions must be satisfy:

Conditions on business lines and professions for business registration

According to Clause 1, Article 27 of the Enterprise Law 2020, one of the conditions for a company to be granted an Enterprise Registration Certificate is that the registered business is not prohibited from doing business. Enterprises may only operate in industries and trades that have been registered with competent state agencies.

• Prohibited business occupations are occupations that pose a risk of harm to national defense, security, order, cultural and social safety, etc.
• In addition, Article 6 of the Investment Law 2020 also stipulates other prohibited business lines such as: Prohibition of prostitution; Buying and selling people, tissues and organs; Business activities related to human cloning…
• The business line belongs to the group of conditional business lines, the company must ensure to meet the conditions as prescribed by law.

Conditions for enterprise establishment capital

Charter capital

According to Clause 34, Article 4 of the Enterprise Law 2020, charter capital is the total value of assets contributed or committed by the company’s members or owners when establishing a limited liability company, is the total par value of shares sold or registered for purchase upon the establishment of a joint stock company.

Legal capital

The amount of capital required to be able to carry out activities in one or more conditional industries or trades. If a company registers a conditional business line, it must comply with the conditions of that industry such as: facilities, practice certificates, legal capital, etc. Enterprises must meet different capital requirements.

Conditions on business name

According to the Enterprise Law 2020, an enterprise name must meet the name requirements specified in Articles 38 to 42 of the Enterprise Law 2020 and not fall into the following prohibited cases:

• Naming the same name or causing confusion with the name of a registered enterprise.
• Use names of state agencies, names of people’s armed forces units, names of political organizations, socio-political organizations, socio-political-professional organizations, social organizations, and social organizations – occupation to do all or part of the proper name of the enterprise, unless approved by that agency, unit or organization.
• Using words and symbols that violate the historical, cultural, ethical and fine traditions of the nation.

Conditions for enterprise headquarters

Corporate headquarters is where the executive office of the company is located. The registered office of the company is not necessarily the place where the company conducts production and business activities or the place where the permanent residence of the company owner is registered. The headquarters must not be a group house or an apartment building.

A company can have many businesses in many different locations, but the head office is only one. The address of the company headquarters must be officially registered with the business registry. In case it is necessary to change the address of the company’s head office, it must be registered with the company registry before making the change.

Note: According to Decree 122/2021/ND-CP on sanctioning of administrative violations in the field of planning and investment, violations of enterprise establishment such as capital, registration, head office, office … may be fined from 10,000,000 VND to 100,000,000 VND . At the same time, enterprises must also take remedial measures depending on each specific case detailed in this Decree.

If you have any problems or need to set up a company in Vietnam, please contact Viet An Law Firm for the best support.