How to Set Up a Foreign-Owned Company in Vietnam: A Step-by-Step Guide

Vietnam is Southeast Asia's most attractive investment destinations, with foreign investors contributing $38.2 billion to the economy in 2024. The country's location, stable political environment, and young workforce of over 70% working-age population continue to draw international businesses. However, establishing a foreign-owned company requires some nuance and knowledge. It isn't hard, but it may differ to what you are used to.

This guide provides a roadmap through Vietnam's foreign investment framework, covering the essential Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) processes, timeline expectations, and practical tips for success.

Investment Registration Certificate (IRC) Process

The IRC serves as the foundation of foreign investment in Vietnam, authorizing foreign capital contribution and defining your business scope. This certificate is required before establishing your company entity.

Pre-Application Requirements

Before initiating the IRC application, foreign investors must determine their investment structure and prepare comprehensive documentation:

1. Choose Your Investment Structure

• Wholly Foreign-Owned Enterprise (WFOE): 100% foreign ownership, suitable for manufacturing, technology, and most service sectors
• Joint Venture: Required for restricted sectors like telecommunications, advertising, and logistics
• Representative Office: Non-revenue generating, suitable for market research (does not require IRC)
• Branch Office: Limited to specific sectors like banking and insurance
• Business Cooperation Contract (BCC): Project-based cooperation without creating a separate entity

2. Determine Investment and Charter Capital

• Investment Capital: Total project funds including loans and working capital
• Charter Capital: Committed paid-up equity capital (must be injected within 90 days of licensing)
• Ensure capital levels align with proposed business activities to avoid rejection

3. Secure Business Location

• Industrial zones simplify location requirements. Get in touch if you are looking for a location of your own!
• Non-industrial locations require confirmation of permitted business activities
• Obtain lease agreements or memorandums of understanding

Required IRC Documentation

The IRC verified documentation, with all foreign documents requiring apostille/consular legalization and certified Vietnamese translation:

Corporate Documents:

• Certificate of incorporation (or equivalent)
• Company charter/articles of association with all amendments
• Board resolution authorizing Vietnam investment
• Financial statements for the past 2 years (audited preferred)
• Bank statements demonstrating financial capacity

Investment Project Documentation:

• Detailed investment project proposal including:
  • Business objectives and activities
  • Investment capital breakdown
  • Implementation timeline
  • Economic and social impact assessment
  • Environmental impact considerations
• Feasibility study for projects over $15 million
• Technology and equipment lists for manufacturing projects

Location Documentation:

• Lease agreement or land allocation decision
• Confirmation of permitted activities at chosen location
• Industrial zone sub-lease agreement (if applicable)

IRC Processing Timeline

The statutory processing time is 15 working days, but practical timelines include:

• Document preparation: 2-4 weeks
• Initial submission and review: 15 working days
• Clarifications and revisions: 1-3 weeks (if required)
• Final approval: 3-5 working days

Special approval from the Prime Minister or National Assembly may be required for projects involving:

• Investment over $5 billion
• Airport, seaport, or casino operations
• Restricted sectors requiring special permissions

Enterprise Registration Certificate (ERC) Requirements

The ERC creates your company's legal entity and can only be obtained after securing the IRC. This certificate serves as your business license and company registration.

ERC Application Components

1. Company Formation Documents:

• Enterprise registration application form
• Company charter (must align with IRC provisions)
• List of members/shareholders
• Capital contribution commitments

2. Management Structure:

• Legal Representative: At least one required, should reside in Vietnam
• General Director/CEO: Manages daily operations
• Board Members: For joint stock companies
• Members' Council: For limited liability companies

3. Governance Requirements by Company Type:

Limited Liability Company (LLC):

• 1-50 members maximum
• Members' Council for multiple members
• Cannot issue shares
• Simpler governance structure

Joint Stock Company (JSC):

• Minimum 3 shareholders, no maximum
• Board of Directors (3-11 members)
• Can issue shares and bonds
• Required for listing on stock exchanges

ERC Processing and Issuance

The ERC process moves quickly once the IRC is secured:

• Submission of complete documentation
• Review period: 3 working days
• Company seal registration
• Tax registration code issuance

Upon ERC issuance, your company gains legal personality and can commence operations, sign contracts, and hire employees.

Timeline and Practical Tips

Realistic Timeline Expectations

While statutory timelines suggest 3-4 weeks total, practical experience shows:

Standard Timeline (8-12 weeks):

• Week 1-3: Document preparation and legalization
• Week 4-6: IRC application and processing
• Week 7-8: IRC clarifications and approval
• Week 9-10: ERC application and approval
• Week 11-12: Post-licensing procedures

Extended Timeline Factors (12-20 weeks):

• Restricted sectors requiring additional approvals
• Complex ownership structures
• Documentation issues or translation errors
• Provincial authority backlogs
• Holiday periods (especially Tet)

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Critical Success Factors

1. Document Preparation Excellence

• Use certified legal translators familiar with Vietnamese legal terminology
• Ensure all foreign documents are properly legalized before submission
• Prepare legalized Vietnamese translations of all materials and apostilles
• Maintain consistency across all documents. No point in submitting varying information like funding sources, company names and legal representative. As this will just delay things.

2. Capital Planning

• Declare realistic capital levels that support your business plan
• Remember charter capital must be injected within 90 days
• Consider future expansion when setting initial capital
• Account for working capital needs beyond equipment costs

3. Professional Support

• Engage local legal counsel familiar with provincial procedures
• Work with licensed investment consultants
• Establish banking relationships early
• Connect with recruitment firms for key positions

4. Post-Licensing Requirements

• Open Direct Investment Capital Account (DICA) immediately
• Complete capital injection within 90 days
• Obtain work permits for foreign employees (15-20 days)
• Register for monthly tax declarations
• Implement Vietnamese Accounting Standards

Common Pitfalls to Avoid

1. Insufficient Capital Declaration

• Authorities assess capital adequacy against proposed activities
• Under-capitalization leads to rejection or restrictions
• Capital increases post-licensing require complex procedures

2. Vague Business Scope

• Generic descriptions like "consulting" or "trading" trigger clarifications
• Overly broad scopes suggest insufficient planning
• Be specific but comprehensive in activity descriptions

3. Nominee Arrangements

• Vietnamese law provides no protection for beneficial ownership
• Legal ownership equals true ownership in all disputes
• Use proper joint venture structures instead

4. Translation and Legalization Errors

• Poor translations cause clarification cycles
• Incorrect legalization remains a leading rejection cause
• Each country has specific authentication requirements

Industry-Specific Considerations

Manufacturing:

• Environmental Impact Assessment required
• Industrial zone locations simplify approvals
• Technology transfer documentation for high-tech projects
• Clear equipment import plans

Services:

• Lower capital requirements than manufacturing
• Focus on demonstrating expertise and experience
• Service-specific licenses may be required post-ERC

Trading/Distribution:

• Retail requires Economic Needs Test for multiple outlets
• Import/export rights must be explicitly requested
• Product-specific restrictions apply

Last Thoughts

Establishing a foreign-owned company in Vietnam requires the right documentation, and patience with the dual licensing system. While the 8-12 week timeline may seem lengthy, companies that invest in proper setup processes gain access to a dynamic market of 100 million consumers and a strategic gateway to ASEAN markets.

The key to success lies in understanding requirements thoroughly, preparing documentation, and working with experienced local advisors who understand provincial variations in requirements. With Vietnam's continued economic growth and regional integration, the investment in proper company setup yields long-term benefits for foreign investors.

For official government resources and forms, visit the Vietnam National Foreign Investment Agency or consult with established law firms like Allens, Baker McKenzie, or Tilleke & Gibbins who have extensive experience guiding foreign investors through Vietnam's regulatory landscape.

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