Forms of investments in Vietnam

A foreign business entity may establish its presence in Viet Nam as follow:

• 100% foreign owed company (i.e., in form of a limited-liability company with one or more members, a joint-stock company, a partnership); or
• Establishment of a branch or a representative office; or
• Concluding a business cooperation contract (no creating a legal entity).

Alternatively, foreign investors may also choose to invest in Vietnam by acquiring all or part of an existing enterprise (i.e., via either share acquisition or assets acquisition). Regulatory approvals will be required if foreign investors acquire 50 percent or more of shares or equity in a Vietnamese company.

Please see our analyses on the structure and relevant legal requirements of each investment form as below.

• Limited liability companies (LLCs) and joint-stock companies (JSCs): these are two common forms of company establishment.Investors' liability is limited to the amount of capital they have contributed. An LLC is established by “member(s)” who contribute capital to the company. The JSC structure allows for issuing shares and dividing charter capital into shares. Share acquisition in an existing company is a common approach of foreign investors. Both LLCs and JSCs can either be 100% foreign-owned or joint-venture company, except for certain conditional business lines.

• Representative office and branch: Both forms of Representative Office (“RO”) or branch are types of presence of a foreign business entity overseas. RO acts as a liaison office, market research, promote its head office’s business and investment opportunities without capital/funding injection and profit generation.  Branch can conduct commercial activities in Vietnam, but it is not a common form of foreign direct investment as it is only permitted in a few sectors (e.g. banking and foreign law firms). The operational duration of the RO and branch is 5 years and can be extended thereafter.

• A business cooperation contract (“BCC“): this is a contractual partnership between the investors (including foreign and domestics investors) to conduct certain business activities without creating a separate legal entity. BCC provides a flexible partnership framework without formal equity interests or corporate formation. The investors in a BCC generally share the revenues and/or products arising from a BCC and have unlimited liability for the debts of the BCC.

Therefore, the choice of investment form will depend on factors such as the number of investors, the industry, scope of investment in Vietnam, and the scale of the project.