Vietnam Enterprise Law: Key highlights for FDI investors

Date: 2025.08.04

Vietnam stands out as one of Southeast Asia’s most dynamic economies, attracting significant investment from countries like Japan, South Korea, and Singapore. However, a solid grasp of the Enterprise Law is a prerequisite for a smooth investment journey for any foreign direct investor (FDI).

Below are the most crucial highlights from the Enterprise Law 2020 (currently in effect) that FDI businesses should be aware of when establishing and operating in Vietnam.

1. Types of Enterprises: Choose based on your strategy

Vietnam allows foreign investors to choose from the following legal entity types:

– Limited Liability Company (LLC): One or multiple members, up to a maximum of 50

– Joint Stock Company (JSC): Minimum of 3 shareholders, no upper limit

– Branch or Representative Office: Dependent on the foreign parent company

📌 Recommended for Japanese investors: LLCs are the most popular form due to their simplicity, ease of management, and suitability for 100% foreign-owned companies.

2. Charter Capital: No minimum required, but must be practical

While the law does not impose a minimum capital requirement (except for specific conditional sectors), investors must:

– Contribute full capital within 90 days from the issuance of the Enterprise Registration Certificate

– Demonstrate financial capacity in sectors that require it (e.g., education, logistics, fintech)

✅ Note: Tax authorities and banks may review capital sources, so ensure complete documentation for overseas remittances.

3. Legal Representative: Can be a foreigner

FDI enterprises are allowed to appoint a foreigner as the legal representative in Vietnam. However, several conditions apply:

✅ Residency Requirement: The legal representative must reside in Vietnam (i.e., present for over 183 days/year or have legal accommodation).

⚠️ If not residing regularly, the company must appoint at least one additional legal representative to avoid disruptions in business operations when the foreign representative is absent.

💡 In practice, many Japanese firms appoint a Vietnamese CEO or Director to ease language barriers and facilitate domestic paperwork.

4. Company seal: Self-managed and digital

Under the new law, companies can:

– Decide the form, content, and quantity of seals

– Register the seal with the business registration authority

– Use electronic signatures in place of traditional seals

🔐 This flexibility benefits FDI companies, especially in tech or startup sectors that require agile operations.

5. Reporting, Tax obligations, and information disclosure

FDI enterprises must:

– Submit annual financial reports to the Department of Planning & Investment, tax authorities, and statistical agencies

– Register for e-tax, handle VAT deductions, and file corporate/personal income tax returns

– Publicly disclose company information on the National Business Registration Portal

🚨 Non-compliance may lead to administrative penalties, tax code suspension, or classification as an “inactive business at registered address.”

6. Capital contribution & Share transfer: Know the legal boundaries

FDI entities are allowed to contribute capital or acquire shares in Vietnamese companies. However:

– Must register with the Department of Planning & Investment if ownership ≥51% or if the industry is conditional

– Ownership may be restricted in sectors such as banking, logistics, real estate, education, and e-commerce

📝 When acquiring a running business, all transfer procedures and business registration updates must be completed correctly.

Conclusion: Legal compliance is key to Sustainable growth

Vietnam’s Enterprise Law is becoming more aligned with international standards. However, legal and administrative nuances—especially cultural and linguistic—still require careful preparation, particularly for Japanese investors.

Help All offers investment consulting, enterprise registration, and post-registration support to help you build a transparent, legally compliant, and sustainable foundation from Day One in Vietnam.

📩 Contact Help All for professional guidance:
📞 Zalo: 0888 642 299 (Japanese, English, Vietnamese supported)
📧 info@helpall247.com
📱 Line ID: helpall247