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New Company vs. Shelf Company in Vietnam

New Company vs. Shelf Company in Vietnam

Vietnam is one of Asia’s most prolific economies and it attracts an increasing number of foreign investors year after year. Setting up a company in Vietnam as a foreigner implies respecting certain requirements, however, an overseas entrepreneur has two ways of starting a business here: by registering a new business form or buying a shelf company.

Below, our company formation specialists in Vietnam explain the main differences between registering a new company and buying a shelf company. We can assist with the opening of a company in Vietnam, no matter your choice.

What does it imply to register a new company in Vietnam?

The Commercial Code in Vietnam allows both local and foreign investors to register companies. Compared to other countries, the requirements imposed on foreign entrepreneurs are more stringent, or better said different, than those imposed on local investors.

In order to register a new company in Vietnam as a foreigner, one must:

  1.           select a business form which allows him or her to fully own the company or a business form which provides for a partnership with a local investor;
  2.           based on the chosen business form, the minimum share capital for the company is established;
  3.           the foreign investors must also draft obtain a foreign investment certificate from the government;
  4.           then, the company can be registered with the Vietnam Companies Register and the bank account can be opened;
  5.           the company must also obtain the necessary licenses to start operating in a specific industry.

It should be noted that based on the sector to operate in and the size of the business, the share capital requirements will differ.

Our Vietnam company formation agents can explain all the requirements imposed when registering a new business in this country. You are also welcome to get in touch with our Vietnamese accountants if you are looking for expert services for your company. If you are an established enterprise, you should know that declaring licensing payments and making declarations to the tax management authorities prior to January 30 of the year is necessary. If you are a newly established enterprise in Vietnam, you are welcome to consult with our lawyers. They can further guide you in detail.

Buying a shelf company in Vietnam

Compared to registering a new company, purchasing a shelf company in Vietnam is simpler. Foreign investors should know that a shelf company is already registered and can be bought as such. One of the greatest advantages of ready-made companies is that they are usually tailored to the needs of foreign investors.

Vietnamese shelf companies usually take the form of limited liability companies.

The purchase of a shelf company in Vietnam implies selecting the right company form a list of such businesses and sign the share transfer agreement. However, it is advisable to first check the ready-made company to buy and our local consultants can help you in this regard.

Another important aspect to consider when deciding to buy a shelf company instead of registering a new business in Vietnam is that the new owner must make certain changes to the company. Among these:

  •           the Articles of Association must be amended with the new owner’s name;
  •           new company directors must be appointed, and their nomination must be announced with the Trade Register;
  •           the company name and registered address can also be modified and announced with the Trade Register;
  •           new business licenses could be required for companies changing the object of activity.

If required, the share capital of a Vietnam shelf company can also be altered. This is why it is best to discuss with our company registration representatives in Vietnam about the changes which need to be brought to a ready-made company after purchasing it. You can also rely on us if you need help in choosing the right shelf company or in setting up a representative office in this country.

New company or shelf company in Vietnam?

This is one of the most common questions our experts in company registration in Vietnam get. The answer is that each investor should first know the type of activity he or she will undertake and then make a decision.

Both types of companies have their advantages, among which foreign entrepreneurs should know that registering a new company is a lengthier process compared to that of buying a Vietnam shelf company. However, buying a ready-made company is more expensive than registering a new one.

Another aspect to consider is that when registering a new business, the investor can choose the type of entity, however, when purchasing a shelf company, this option is limited because, as mentioned earlier, these usually take the form of limited liability companies.

When it comes to the licensing procedure, which takes the longer, for both types of entities obtaining specific business permits can be required, so the differences are not that different.
From a taxation point of view, new companies and shelf companies will be treated the same, as they are both registered in Vietnam.

If you plan on starting a business in Vietnam and need help in choosing between registering a new company or buying a shelf company, do not hesitate to contact us. We specialize in offering personalized company formation services in Vietnam. We can also assist you in case you want to open a representative office in Vietnam.