Luat Viet

In addition to the investment laws, there are also other numerous legislations enacted, the (amended) Civil Code (2005), the (amended) Law on Commerce (2005), the Law on Insurance, the Law on Credit Institutions, the Law on State-Owned Enterprises, the Law on Securities, etc.

Judicial and administrative changes have also been implemented as the result of the recent legislations. The legal system though not yet perfect is continuously improved offering protection for investors in Vietnam.

• Establishing economic organizations in the form of (100) per cent capital of domestic investors or foreign investors (also called wholly foreign owned enterprises - WFOE);

• Establishing joint venture economic organizations between domestic and foreign investors (“JV”);

• Investing in the contractual forms of BCC, BOT, BTO, and BT;

• Investing in business development;

• Purchasing shares or contributing capital of the companies, branches in order to participate in management of investment activities;

• Investing in the carrying out of a merger and acquisition.

• Purchasing shares, stock, bonds and other valuable papers;

• Investing via securities investment funds;

• Investing via the other intermediary financial institutions.

Management structure: The ultimate power managing a limited liability company resides in the Member’s Council (similar to the board of directors). If there are more than 11 members in a limited liability company, a board of supervisors must also be established. Members of the Member’s Council will elect a chairman. A general director is appointed by the chairman/Member’s Council and runs the day-to-day operations of the company.

Advantages: Limited liability for members of the company With few members, the management and control of enterprise are relatively simple; Close control of capital transferring regime makes investors easily manage change of members.

Disadvantages: Capital transfer shall be restricted and controlled by other members. Restricted ability of capital mobilization due to inability to issue stocks or participate in stock exchange listing. One member limited liability company The one member limited liability company has all of the features of limited liability company with two members or more. The only difference is that it has only one owner which can be either an organization or an individual. 100% foreign invested enterprises in Vietnam generally take up this form of investment. Based on sizes and business lines, managing and organizing structure of one member limited liability company consists of Member’s council, Director or the company Chairman and controller.

Management structure: The highest power of a joint stock company is vested in the General Meeting of Shareholders which is entitled to select the board of management. A Director (or General Director) who carries out the day-to-day operations of the company is employed or appointed by the Board. Where a joint stock company has either more than ten individual shareholders or an organization shareholder holding over 50% of the total shares, a Board of Supervision is a must.

Advantages: Liability of the shareholders limited to the extent of the subscribed capital; Flexible capital structure of joint-stock company allowing the contribution from a variety of investors; Effective capital mobilization method, such as issuance of stocks as well as participation into stock exchange; Relatively easy capital transfer to various beneficiaries.

Disadvantages: Complexity in managing and operating the joint-stock company; Establishment and management of the joint-stock company are more complex than other forms such as financial regime and accounting;

Management structure: The partnership may be divided into two types: the partnership that all members are general partners or the partnership including both general partners and limited liability partners. The general partners have equal rights in deciding management issues of the partnership.

Advantages: Combined effect of partners’ personal prestige. Jointly liable regime of general partners will easily build up the confidentiality in customers, business partners. The operation and management is not too complicated thanks to the small number of members as well as mutually trust and prestigious relationships.

Disadvantages: Unlimited liability for the business by the general partners Unfamiliarity with the partnership as it is a relatively new form of business firstly introduced in the 1999 Law on Enterprises.

Management structure: The private enterprise owner may manage and administer the business operations or employ other persons to do so. In case of employing another person to manage the enterprise, the owner of private enterprise shall remain responsible for its all business activities.

Management structure: The congress of cooperative members shall be the highest decision-making body of a cooperative. A cooperative's Managing Board is the cooperative-managing body, elected directly by the congress of cooperative members, consisting of the head and other members. The number of the Managing Board's members shall be prescribed by the cooperative's charter. The Control Board is the body which supervises and examines all activities of the cooperative strictly according to law and the cooperative's charter, directly elected by the congress of cooperative members

Place of registration: The place for conducting business registration is carried out at the Provincial Department of Planning and Investment of provinces or centrally-run cities (“DPI”), except in some particular cases such as securities, banking and insurance, the registration is done at the SSC, MOF, etc.

Required documentations: Application form of business registration; Draft of company charter; Joint venture contract in case of foreign investors; List of members or list of founding shareholders; Attested documents of capital contributed member or founding shareholders or representatives at law; Document of an authorized body or organization certifying the legal capital in respect of enterprises conducting lines of business for which legal capital is required by law; Practicing certificates of individuals in respect of enterprise conducting lines of business for which a practicing certificate is required by law and their identity card, of passport or other lawful personal identification; Declaration for tax registration.

Time of issuance 15 - 45 working days from the date of receiving lawful documentations.

Fee: VND 200,000 After business registration, enterprises will carry out other procedures for official operation such as registering and obtaining a seal from the Public Security, opening a bank account, announcing for establishment in a daily newspaper, registering a tax code at the Taxation Department, etc.