Types of Legal Entities in Vietnam for Company Setup

Choosing the right legal entity is one of the most important first steps when setting up your business in Vietnam. It affects everything from ownership rights to taxes and daily operations. 

In this article, we’ll explore the most popular company types in Vietnam, alternative structures for foreign businesses, and key factors to consider when choosing the right legal entity for your expansion goals.

Most Popular Company Types in Vietnam

1. Limited Liability Company (LLC)

Establishing an LLC is one of the most common options for foreign investors in Vietnam because of its simple structure, operational flexibility, and liability protection. This structure can be set up as a:

• Single-member LLC: Owned by one foreign investor (individual or company)
• Multi-member LLC: 2 to 50 members, can be fully foreign-owned or a joint venture

In most sectors, you can own up to 100% of the company as a foreigner. However, some industries are regulated and may require a local partner or impose ownership limits.

Ownership is based on capital contributions rather than shares, which means the company cannot issue stock. Unlike a Joint Stock Company, there’s no requirement for a board of directors or shareholder meetings. Management is typically handled by an appointed director or a members’ council.

Choose an LLC if you’re starting a small to medium-sized business and want a lean setup without the complexity of shareholding structures. It’s also a smart choice if you’re not looking to raise capital from multiple investors or go public in the future.

2. Joint Stock Company (JSC)

A Joint Stock Company is the preferred choice for building large businesses or planning to raise funds from investors. This structure allows you to issue shares and other securities, making it easier to attract capital and scale over time.

• Minimum of three shareholders (individuals or organisations, local or foreign)
• No cap on shareholder count
• Eligible for up to 100% foreign ownership in most sectors (unless restricted by local laws or Vietnam’s WTO commitments)

Capital is divided into shares that can be freely transferred, and the company can raise funds by issuing shares or bonds. A JSC is also the only structure that allows public listing on the stock exchange in Vietnam.

Experts generally recommend this structure if you’re launching a high-growth business, planning to attract multiple investors, or aiming to list on the stock exchange in the future. While it’s more complex to manage than an LLC, it supports scale and investment.

Note that a Joint Stock Company is not the same as a Joint Venture setup. A joint venture typically involves partnering with a local company or individual and serves as a common approach in sectors that restrict foreign ownership.

If you are unsure which structure is the right fit for your business activities, it is advisable to consult our local experts. Emerhub’s business experts will advise you on the most suitable legal entity based on your planned activities and long-term goals.

Alternative Company Structures for Foreign Companies in Vietnam

Representative Office

If your goal is to explore the Vietnamese market, build your brand locally, or maintain a presence to support partners or clients without jumping straight into full operations, then setting up a Representative Office (RO) is a smart first step. 

This setup is suitable if you want to:

• Conduct market research
• Oversee or support local partners or distributors
• Handle marketing and promotional activities in Vietnam
• Provide customer support services under your parent company’s name
• Maintain a physical presence through office space and local staff

An RO gives you the legal right to lease office space, employ local and foreign staff, and engage in non-commercial operations. It’s especially useful for foreign companies that want to gradually expand into Vietnam with lower risk and fewer compliance requirements.

However, there are limits. A Representative Office cannot generate revenue, cannot sell or deliver services, and cannot issue VAT invoices. Your activities must be strictly non-commercial and supportive of your parent company’s operations abroad.

Branch Office

For companies looking to expand their presence in Vietnam under the current parent company, a Branch Office might be the right fit. 

It allows your foreign company to carry out revenue‑generating activities in Vietnam while remaining a direct extension of the overseas entity rather than a separate legal entity. That means any liabilities or obligations of the branch office will be the responsibility of the parent company.

You can sign contracts, generate revenue, and conduct commercial activities, as long as your business falls within the sectors that allow branch operations such as banking, legal services, and certain consulting or professional services.

To set up a branch office in Vietnam, you will need the following:

• A parent company that has been operating for at least five years.
• A Branch License from the Ministry of Industry and Trade.
• A registered business address in Vietnam.
• A chief of the branch who lives in Vietnam.

Public-Private Partnership

A Public-Private Partnership is specifically for those interested in investing in Vietnam’s infrastructure or public services. It allows you to team up with a Vietnamese government agency to develop major projects in sectors like transportation, energy, healthcare, or education.

Your return on investment may come from user fees, government payments, or a mix of both, depending on the project.

The Law on Public-Private Partnership Investment (2020) regulates these partnerships, outlining the rules, risk-sharing terms, and government guarantees. To begin, investors usually enter a formal bidding or negotiation process with state authorities.

To be a part of a Public-Private Partnership in Vietnam, you’ll have to:

• Go through pre-qualification and be selected via a public tender or direct appointment.
• Have your project contract approved by the relevant government body.
• Be ready for complex agreements like BOT (Build-Operate-Transfer), BOO (Build-Own-Operate), or BT (Build-Transfer).

Key Factors to Consider When Choosing A Legal Entity in Vietnam

Choosing the wrong legal entity in Vietnam can lead to delays, compliance issues, or unexpected costs. This is why it is crucial to understand what each structure entails and how it fits your business model.

Hence, before you make a decision, consider the following factors:

• Business Activity and Industry: Some sectors are fully open to foreign investment, while others have restrictions or require local partnerships, so it’s essential to verify sector-specific regulations before choosing a structure.
• Ownership Goals: Depending on whether you want full control or are open to a local partner, different entity types allow for 100% foreign ownership or require joint ventures, usually influenced by sector restrictions under Vietnamese law and WTO commitments.
• Capital Requirements: While Vietnam generally does not impose a fixed minimum capital, the required charter capital can vary significantly by industry and business activity, affecting licensing and approval processes.
• Tax Impact: Tax obligations can vary depending on the legal form you choose. Some entities may benefit from certain incentives, while others might face higher compliance costs.

How Emerhub Can Help With Company Setup in Vietnam

Emerhub simplifies the process for entrepreneurs and investors looking to establish their presence in the Vietnamese market. Our local experts handle the company registration on your behalf and provide end-to-end services post-incorporation, from licensing and permits to tax compliance and importer of record.

You can request a free consultation by filling out the form below and discussing your needs with our experts.