When investing and establishing a company in Vietnam, choosing the appropriate company type is crucial. Below, we will deeply compare the main company types in Vietnam: Limited Liability Company (LLC), Joint Stock Company (JSC), and Wholly Foreign-Owned Enterprise (WFOE), analyzing them from multiple perspectives to help the public make informed decisions.

Limited Liability Company (LLC)

Registered Capital Requirements:

No minimum registered capital requirement, but should match the scale of operations. Capital can be injected in installments, must be fully satisfied within 3 years after the company’s establishment. Registered capital can be in Vietnamese Dong or foreign currency.

Number of Shareholders:

Minimum 1 shareholder, maximum 50 shareholders. Can be individuals or legal entities, foreign businesspeople and local labor.

Management Structure:

Shareholders’ Meeting: The highest decision-making body of the company, responsible for major decision-making. Board of Directors (Members’ Council): Responsible for daily company management, can consist of 1 or more members. General Director (Legal Representative): Responsible for daily company operations. If there are more than 11 individual shareholders or an organizational shareholder holds over 50%, a supervisory board must be established.

Legal Liability:

Limited Liability: Shareholders are only liable for company debts to the extent of their capital contribution. Tax Structure: Usually adopts a “single-layer taxation” system, i.e., company profits are only taxed at the individual level (subject to national policy).

Advantages:

Relatively simple establishment procedure. Flexible management structure, suitable for small and medium-sized enterprises. Shareholders’ liability is limited to their capital contribution.

Disadvantages:

Limited financing channels. Potential restrictions on equity transfer.

Joint Stock Company (JSC)

Registered Capital Requirements:

No minimum registered capital requirement, but should match the scale of operations. Capital must be fully satisfied at the time of company establishment. Registered capital is divided into equal shares, with a par value of 10,000 Vietnamese Dong.

Number of Shareholders:

Minimum 3 shareholders, no maximum limit on the number of shareholders. Can be individuals or legal entities, foreign businesspeople and local labor.

Management Structure:

Shareholders’ General Meeting: The highest decision-making body of the company, meets at least once a year. Board of Directors: Responsible for company strategic decisions, at least 3 members, maximum 11 members. Supervisory Board (applicable in specific situations): Supervises the activities of the board and general director. General Director (Legal Representative): Responsible for daily company operations. Can set up independent directors and various professional committees.

Legal Liability:

Limited Liability: Shareholders are liable for company debts to the extent of their shareholding. Financing Capability: Strong, can raise funds through issuing stocks (IPO) and bonds.

Advantages:

Attracts investment and allows for public listing. Relatively easy equity transfer. Suitable for large enterprises and companies planning to go public.

Disadvantages:

Relatively complex establishment procedure. Very strict management structure, highest operating costs. Higher information disclosure requirements.

Wholly Foreign-Owned Enterprise (WFOE)

Registered Capital Requirements:

No minimum registered capital requirement, but the actual registered capital should match the investment scale and business scope. Capital can be injected in installments, usually fully satisfied within 3 years after the company’s establishment. Registered capital can be in foreign currency but needs to be converted to Vietnamese Dong at the exchange rate of the Vietnamese Central Bank.

Number of Shareholders:

Only allows foreign investors to hold shares, can be 1 or more foreign investors. Can be individuals or legal entities.

Management Structure:

• Investor: As the sole shareholder, is the highest decision-making body of the company.
• Board of Directors (Members’ Council): Responsible for daily company management, can consist of 1 or more members.
• General Director (Legal Representative): Responsible for daily company operations.
• Can establish a supervisory board if needed.

Legal Liability:

• Limited Liability: Shareholders are liable for company debts to the extent of their capital contribution.
• Tax Structure: Depends on the tax laws of the home country, usually enjoys certain tax policies and policy support.

Advantages:

Foreign investors can have 100% ownership. Enjoys foreign investment preferential policies. Flexible management structure, high decision-making efficiency.

Disadvantages:

Very complex establishment procedure, may take the longest to set up. Some industries may have restrictions on foreign investment access. May face cultural and language barriers.

Comparison of Key Factors:

• Establishment Procedure: LLC < JSC < WFOE (from simple to complex)
• Management Flexibility: WFOE = LLC > JSC
• Financing Capability: JSC > LLC > WFOE
• Ease of Equity Transfer: JSC > LLC > WFOE
• Information Disclosure Requirements: JSC > LLC = WFOE
• Suitable Scale: LLC Small and medium-sized enterprises; JSC Large enterprises or companies planning to go public; WFOE Depends on the investment scale of foreign investors.

Selection Recommendations:

If you are a foreign investor hoping to conduct business independently in Vietnam and maintain full control, WFOE might be the choice. If you plan to go public in the future or need to attract large investments, a Joint Stock Company (JSC) might be a better option. For small and medium-sized enterprises or joint ventures, a Limited Liability Company (LLC) is usually a balanced choice, considering both reasonable establishment and management flexibility. Consider your specific industry, as some industries may have special regulations for foreign investment, which might affect your choice. Evaluate your long-term development plans and choose a company type that can support your future growth. Consult local legal and financial experts who can provide more tailored advice based on your specific situation.

In summary, choosing the appropriate company type is a key step for successful investment in Vietnam. Limited Liability Companies, Joint Stock Companies, and Wholly Foreign-Owned Enterprises each have their advantages and characteristics, suitable for different investment objectives and operational needs. By thoroughly understanding the features of each company type, combined with their own circumstances and long-term planning, investors can choose the most suitable company form for their business in Vietnam, laying a solid foundation for future development.