Embarking on company formation requires founders to have thorough legal preparation. Based on the basic classification structure, the first key step is to understand and choose the types of businesses in Vietnam.
According to the The Law on Enterprises of Vietnam 2020, there are 5 types of businesses, including: Single-member Limited Liability Company, Multi-member Limited Liability Company, Partnership Company, Joint Stock Company, and Private Enterprise. Below is detailed information on the characteristics and procedures for each type, along with an overview comparison table.
1. Current Types of Businesses in Vietnam
1.1. Single-member Limited Liability Company
A Single-member Limited Liability Company is a type of business suitable for individuals or organizations who wish to be sole owners, hold full decision-making power in business, while still limiting asset risks.
– Owner: Owned by an individual or an organization.
– Asset Liability: The owner is responsible for the company’s debts and other asset obligations within the scope of the company’s charter capital (limited liability).
– Capital Mobilization: Not allowed to issue shares. However, a single-member limited liability company is allowed to issue bonds.
– Legal Entity Status: Has legal entity status from the date of issuance of the Enterprise Registration Certificate.
See more: Dossier, procedures for registering the establishment of a single-member limited liability company
1.2. Multi-member Limited Liability Company
A Multi-member Limited Liability Company is an optimal choice when wanting to collaborate in business with a small group of acquaintances, trusted partners, and wishing to tightly control member changes.
– Members: Has from 02 to a maximum of 50 members (can be organizations or individuals).
– Asset Liability: Members are responsible for the enterprise’s debts and other asset obligations within the scope of the capital committed to contribute.
– Capital Mobilization: Not allowed to issue shares. The transfer of capital to outsiders must prioritize offering it to existing members first.
– Legal Entity Status: Has legal entity status.
See more: Dossier, procedures for registering the establishment of a multi-member limited liability company
1.3. Joint Stock Company
A Joint Stock Company is most suitable for the goal of building a large-scale enterprise, easily raising capital from the public, and aiming to list the company on the stock exchange (IPO).
– Shareholders: Charter capital is divided into many equal parts called shares. The minimum number of shareholders is 03 and there is no maximum limit.
– Asset Liability: Shareholders are only responsible within the scope of the capital contributed to purchase shares.
– Capital Mobilization: Very flexible. Has the right to issue various types of shares and bonds to raise capital.
– Legal Entity Status: Has legal entity status.
See more: Dossier, procedures for registering the establishment of a joint stock company
1.4. Private Enterprise
A Private Enterprise is a type of business owned by an individual, offering the highest level of self-determination but accompanied by the greatest legal risk to personal assets.
– Owner: Owned by 01 individual (each individual is only allowed to establish 01 private enterprise).
– Asset Liability: The enterprise owner is responsible with all their assets for all activities of the enterprise (unlimited liability).
– Capital Mobilization: Not allowed to issue any type of securities.
– Legal Entity Status: Does not have legal entity status.
See more: Dossier, procedures for registering the establishment of a Private Enterprise
1.5. Partnership Company
A Partnership Company is a type often used in fields requiring a high degree of trust in the expertise and personal background of the practitioners (such as law firms, clinics, auditing firms).
– Members: Must have at least 02 members who are co-owners of the company (general partners) and must be individuals. Additionally, there may be contributing members (individuals or organizations).
– Asset Liability:
+ General Partners: Are responsible with all their assets (unlimited and joint liability).
+ Contributing Members: Are only responsible within the scope of the capital committed to contribute (limited liability).
– Capital Mobilization: Not allowed to issue any type of securities.
– Legal Entity Status: Has legal entity status.
See more: Dossier, procedures for registering the establishment of a Partnership Company
Comparison Table of Business Types:
| Criteria | Private Enterprise | Single-member LLC | Multi-member LLC | Joint Stock Company | Partnership Company |
| Number of Members/Shareholders | 01 individual | 01 individual or organization | 02 – 50 individuals/organizations | Minimum 03, no maximum limit | At least 02 general partners (individuals) |
| Legal Entity Status | No | Yes | Yes | Yes | Yes |
| Asset Liability | Unlimited (with all personal assets) | Limited (within charter capital) | Limited (within committed capital contribution) | Limited (within capital contributed to purchase shares) | General Partners: Unlimited Contributing Members: Limited |
| Capital Mobilization Capability | Very low (not allowed to issue securities) | Medium (only allowed to issue bonds) | Medium (only allowed to issue bonds) | Very high (issues shares, various types of bonds) | Low (not allowed to issue securities) |
| Organizational Structure & Decision-making | Simple, private enterprise owner has full decision-making power | Simple, owner decides all matters | Strict, decisions made through the Members’ Council | Most complex, decisions made through the General Meeting of Shareholders, Board of Directors | Based on close ties and trust among general partners |
2. Detailed Enterprise Establishment Procedures
For the business startup process to proceed smoothly and in accordance with legal regulations, founders need to clearly understand the following 3 main stages. If you wish to optimize time, minimize document errors, and avoid multiple trips, using VN Law Firm’s comprehensive company establishment service will help you complete the entire process quickly and accurately.
Step 1: Prepare Information and Draft Establishment Dossier
In the first step, the enterprise needs to prepare all fundamental legal information:
– Finalize basic information: Name the company (no duplication, no confusion), determine the head office address, choose business lines, register appropriate charter capital, and determine the capital contribution ratio of members/shareholders.
– Prepare certified documents: Notarized copy of valid Citizen ID/ID card or Passport of individuals participating in capital contribution, legal representative; or Enterprise Registration Certificate for members/shareholders who are organizations.
– Draft a complete dossier: Depending on the chosen type of enterprise (LLC, Joint Stock, Partnership…), the dossier will include: Enterprise Registration Application, Company Charter, List of founding members/shareholders; List of beneficial owners…
Step 2: Submit Dossier and Receive Enterprise Registration Certificate
– Submission method: Proceed with online submission via the National Business Registration Portal (using a VNeID Account).
– Processing time: Within 03 working days from the date of receiving a complete and valid dossier, the Business Registration Office – Department of Finance will issue the Enterprise Registration Certificate.
Note: Inaccurate dossier drafting may lead to rejection or requests for multiple revisions and additions. To ensure the dossier is approved on the first submission, clients can register for VN Law Firm’s reputable enterprise establishment service to have our team of lawyers directly appraise and represent in carrying out the procedures.
Step 3: Complete Mandatory Post-Establishment Legal Procedures
After receiving the Enterprise Registration Certificate, the company needs to promptly carry out the following tasks to officially commence legal operations:
– Engrave legal seal: Order the company seal and manage, use the seal according to the provisions of the Charter.
– Display company signboard: Place and display the signboard at the registered head office address.
– Open bank account & Register digital signature (Token): Open a payment account for the enterprise and purchase an electronic digital signature for tax declaration and payment.
– Issue e-invoices & Initial tax declaration: Register to use e-invoices with the direct tax authority and submit declarations on time.
Post-establishment procedures are extremely important; if overlooked or delayed, they can lead to risks such as tax code suspension or administrative penalties. To focus on business development with peace of mind, the optimal solution is to use VN Law Firm’s company establishment service – we will accompany and provide comprehensive legal support for businesses from A–Z.
