How Foreigners Could Work in Vietnam Legally

Foreigners working in business set-up in Vietnam are expatriates which are normally required work permit in Vietnam.

As the Vietnam law’s restrictions to encourage employment of local employee over foreign employee, normally, the employment of an expatriate is limited to a managerial position or to a position which Vietnamese employee are not yet qualified.

There are exemption of work permit in Vietnam as following cases:

A capital contributing member or owner of a limited liability company which is registered to operate in Vietnam;

A member of the Board of Management of a shareholding company which is registered to operate in Vietnam;

A chief of a representative office or of a project of an international organization or a non-governmental organization in Vietnam;

The foreigner enters Vietnam for less than three months to offer services;

The foreigner enters Vietnam to work for less than three months or to handle an emergency case and that cannot adequately be addressed within Vietnam;

A lawyer who has received a Certificate for the practice of law in Vietnam granted by the Ministry of Justice;

The foreigner is a student studying and working in Vietnam;

An intra-corporate transferee working in Vietnam;

The foreigner provides expert and technical consultancy services or undertakes other tasks with respect to research, formulation, evaluation, monitoring and assessment, management and implementation of a program or project using official development aid (“ODA”);

The foreigner has a media license issued by the MOFA;

The foreigner is appointed by a competent authority of a foreign country to teach at an international school which is managed by a foreign diplomatic office or an international organization in Vietnam;

The foreigner a volunteer;

The foreigner has a master’s degree or higher or similar qualifications and provides consultancy, teaching, or conducts scientific research at a university or vocational college for a period not exceeding thirty (30) days; or

The foreigner implements an international agreement signed by a Vietnamese government authority, a provincial body or a central socio-political organization.

In order for an expatriate to be exempted from a work permit, the employer must file an application with the provincial labor authority. Chairman of the provincial People’s Committee will be consulted and if approval, he/she will issue a written consent to each employer regarding the employment of expatriate.
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Differences Between Limited Liability Company and Joint Stock Company

Vietnam Law allows the establishment of a company in Vietnam in various forms. It is an important step in investment process.

Investors could choose different forms depending on the needs and capacity on the ability to raise capital and sharing the risk in business as well as the management and operating costs. Each form will have its own organizational structure, operating mechanism, rights and obligations specified under Law on Enterprise 2014.

Currently, Limited Liability Company (“LTD”) and Joint Stock Company (“JSC”) are two popular enterprise forms operating in Vietnam.

What is the difference between these two forms of companies?

I. Organizational Structure

Number of members/shareholders:

LTD

-Single member LTD: Having only one member (member can be an organization or an individual);

-Multi members LTD: Having at least 2 members and not exceed 50 members (member can be an organization or an individual).

JSC

Joint Stock Company has at least 3 shareholders and not limit the maximum number.

Management structure

LTD

-Single member LTD

Single member LTD owner by an organization shall be organized under two models: Company president, Director/General director and Supervisor; (OR) Members Council, Director/General director and Supervisor.

Single member LTD owner by an individual shall be organized as follows: Company president, Director/General director.

-Multi members LTD

Multi members shall be organized by: LTD Council members, Chairman of the Members Council and Director/General director;

Multi members LTD having 11 members or more shall establish the Board of Supervisors.

JSC

JSC can be organized under two models: General Meeting of Shareholders, Board of Directors, Board of Supervisors and Director/General director; (OR) General Meeting of Shareholders, Board of Directors (Board of Internal Supervisors under Board of Directors) and Director/General director.

II. Capital Contribution

Raising capital

LTD

-Single member LTD: Owner increases charter capital

-Multi members LTD: Members increase their charter capital, or increasing the number of capital contributors

JSC

Different from LTD, JSC can raise its capital by various methods as follows: Selling shares to existing shareholders; Selling shares individually to non-shareholders; Issuing shres on the stock market.

Transfer of contributed capital

LTD

-Single member LTD: Owner transfers a part of contributed capital to other persons and this could lead to changes of the type of business or other procedures if all capital is transferred (for instance in a M&A deal).

-Multi members LTD: Offer the stakes to other members in proportion to their stakes in the company under the same conditions; The stakes could only be transferred to other persons if the members do not buy or do not buy completely within 30 days from the offering date.

JSC

The shareholders of JSC are free for transfer their contributed capital after 03 years from the establishment.

Having said that, LTD is a type of enterprise that the capital contribution is not the only link between the members of the company but they are also linked together by relationship. They may be acquaintances and trust each other to jointly contribute capital to establish an enterprise. Therefore, the management of the LTD is as complicated as JSC. With the larger the number of shareholders, the level of capital mobilization, voting power to decide on issues of the company based on the ratio of capital contribution of each shareholder, the management and operation of the JSC is more complex.

The ability to raise capital of a JSC is higher than a LTD. Because, JSC can issue shares to the public in the form of securities. When the stocks are listed on stock exchange, the information of company’s business operations must be public and more transparent.

The procedure to set up a company in form of an LTD or a JSC has not much differences.

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Authorized Representative of the Company Under New Law on Enterprises

In order to raise the standard of business in Vietnam, Law on Enterprises 2015 reduced many administrative procedures of establishing and running a business, including the representative authorization of the member or shareholder of the company.

One of the distinguished amendments: authorized representative of the member or shareholder which is legal entity is not required to inform the licensing authority (i.e. Department of Planning and Investment).

Law on Enterprises 2015 provides that the appointment of an authorized representative must be made in written, notified to the Company and take valid from the receipt date of the Company while under Law on Enterprises 2005, the same must be registered at the licensing office.

In addition, any restrictions by the authorizing member on his/her authorized representative in the performance as member in the Members’ Council or shareholder in the Shareholders’ Meeting shall not enforce against the third party.

ANT Lawyers is a Vietnam law firm with international standards, recognized by IFLR1000 on Financial and Corporate practice. The firm provides a wide range of legal services, including M&A, corporate establishment, business advisory, tax advisory, dispute resolution for multinational and domestic clients.

This publication is designed to provide updated information of legal matters, and does not constitute professional advice.

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Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our Law firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529

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Enterprise establishment service in Vietnam

ANT Lawyers provides enterprise establishment consulting service for domestic and foreign customers as the following services:

-To consult to establish Joint Stock Company;

-To consult to establish One member Limited liability company;

-To consult to establish Limited liability Company with Two or more members;

-To consult to establish Partnership company;

-To consult to establish Private enterprises;

-To consult to establish Sole trader;

-To consult to establish foreign invested company;

-To consult to establish the parent company, corporations.

Customers procedures established in the ANT Lawyers will enjoy some preferential services such as:

1. Contents of enterprise establishment consulting service:

-To consult legal regulation related to the establishment, operation and management of enterprises;

-To consult to set up personnel structure of the company;

-To consult to select types of enterprises;

-To consult to choose the name of company (lookup and select the appropriate name as the request of customers);

-To consult about the head office of the enterprise;

-To consult on capital, legal capital, investment capital;

-To consult on business lines (lines requires legal capital , professional certification or other conditions);

-To draft legal dossiers for setting up the company (Request for business registration, charter, founders list and other documents as prescribed by law);

-To consult for business on tax issues, financial obligations after the enterprise have been established and the process of production and business activities;

2. Our tasks in the enterprise establishment services:

ANTLawyers will on behalf of clients to perform the following tasks:

-Drafting and preparation the enterprise establishment dossier as regulations;

-To apply the dossier for business and tax codes registration in the Department of Planning and Investment;

-To monitor progress and inform regularly results to clients;

-To obtain the Investment Certificate from the DPI;

-Filing and registration the seal for Company at the Police Department;

-To obtain the seal and the certificate of the seal for the Company at the Police Department;

-To guide the customers to follow procedures in the relevant state authority (as needed);

3. Documents required to provide by clients:

-Information requested form of business;

-A copy of ID / passport of members / founding shareholder who is individual (notarized);

-A copy of business registration / establishment decisions of members / founding shareholders who is organization.

4. Client’s benefits after establishment:

-To be consulted and offered free the activating annual tax dossier, records and procedures for billing the enterprise;

-To consult the necessary tasks of the new enterprise;

-To consult human resources management , provide free labor contracts and the forms of management personnel;

-To consult the procedures for salary scale registration, the social insurance registration of company;

-To consult on tax matters, tax refund, tax credit;

How ANT Lawyers Could Help Your Business?

Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our Law firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529

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