A joint stock company (JSC) in Vietnam is a type of business organization in which the capital is divided into shares and owned by shareholders. In Vietnam, a JSC is governed by the Law on Enterprises and must have at least three shareholders and a reasonable share capital, depending on the business lines. If you are planning to open a company in Vietnam, our company formation agents can assist you.
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The main features of the joint stock company in Vietnam
In order to open a joint stock company in Vietnam, there are certain procedures to follow based on Vietnam’s Law on Enterprises from 2020. You can rely on our company formation services on support and information about the types of companies in Vietnam and other shareholder characteristics in this country. Shareholders can be of any nationality, as a JSC in Vietnam has an investor structure composed of 2 major types: owned solely by foreigners or a joint venture formed of locals and foreigners.
A joint stock company in Vietnam has the ability to list its share on the public stock exchange, which makes it easier for this type of company to sell shares, raise funds easily and assemble the capital.
If you decide to open a joint stock company, you need to know what the requirements for its creation are. Here are its most important features:
- it must have at least 3 shareholders;
- the shareholders can be natural persons or other companies;
- it is also possible for the company to have foreign stockholders;
- it can be fully owned by foreigners or it can be set up as a joint venture with local and foreign shareholders;
- it can provide the shares to the wide public.
The company can also have foreigners on its management board, however, the executives must obtain Vietnamese residence permits and have at least 12 months of managerial experience.
If you want to set up a company in Vietnam that takes the form of a joint stock enterprise, you can rely on our local specialists.
Steps to register a joint stock company in Vietnam
To set up a joint stock company in Vietnam, you are required to follow the steps mentioned below, or you can also get in touch with our Vietnamese specialists for their incorporation services:
- obtain an Investment Registration Certificate from the local Department of Planning and Investment;
- register the company with the Business Registration Office of the same department;
- obtain a tax code and pay registration fees;
- apply for a seal and open a bank account;
- hold the first meeting of the Board of Directors to appoint company executives and adopt company bylaws.
The time frame for company incorporation in Vietnam is 30-45 working days, a little longer than in other countries, such as New Zealand, where opening a company lasts only one week.
After registration, the JSC in Vietnam must also comply with various ongoing legal requirements, such as filing tax returns and financial reports, holding annual shareholder meetings, and maintaining corporate records. If you need any help with the company’s accounting, you are recommended to get in touch with our accountants in Vietnam.
Categories of shares in a Joint Stock Company in Vietnam
A JSC in Vietnam has 2 main types of shares which can be owned:
- Ordinary shares. These shares are most commonly used among JSCs in Vietnam. Laws and regulations in this country express that a business which is a company shareholder in a JSC and owns no less that 10% of ordinary shares is entitled to assign up to 3 representatives for the company.
- Preferred shares. These shares are divided into various types of shares as: voting preference shares, redeemable preference shares and dividends preference shares. Founding shareholders are the only ones assumed with the right to own voting preference shares and this is only available in the first 3 years after the JSC obtained a Business Registration Certificate.
Joint stock companies in Vietnam are very attractive for foreign investors because of their flexibility in shares transfer. According to the Law on Enterprise, the shares of a JSC in Vietnam can be freely transferred, making it an exception in the case where ordinary shares are transferred from a founding shareholder to a non-shareholder.
Documents to register a joint stock company in Vietnam
Here is what to prepare when incorporating a Vietnamese joint stock company:
- a recent bank statement to show the availability of the funds to operate in Vietnam;
- a plan containing the investment project;
- the necessary documents to apply for the investment registration certificate in the case of foreign shareholders;
- the details of each shareholder and the number of shares they have;
- passport copies in the case of foreign shareholders, as well as residence permits in Vietnam or other documents attesting to their right to be in Vietnam;
- proof of legal address which is obtained by opening a virtual office. This represents a special service rather than a traditional office. It is used by foreign or local companies who are looking to have a contact point in one or more cities of Vietnam. Our agents can help you with acquiring this type of office.
Considering the joint stock company can also be used to expand foreign business’ activities in Vietnam, these are also required to file:
- the last annual return;
- the last audited financial statements.
In this case too, the parent company must also obtain the investment certificate.
If you need assistance in filing for such a certificate, you can rely on our company formation specialists in Vietnam. In addition, you can rely on our accountants in Vietnam for drafting the financial statements.
What to consider after registration
Vietnamese business laws and regulations might require some additional steps to follow after the JSC registration, such as:
- Depending on the business sector chosen, it can be required to obtain an additional business license application in order to successfully integrate a joint stock company in Vietnam.
- Registered shares must be paid by the shareholders of the JSC in a maximum time limit of 90 days. Board of Directors is responsible to inform and announce shareholders about the deadline for this payment.
- The JSC has to act in accordance with all the tax regulations in Vietnam and corporate income taxes must be paid. Besides the corporate income tax, the business has to comply the law and pay business license tax and additional other taxes mentioned by the authorities.
More information about tax regulations, steps to follow after opening a JSC in Vietnam and maintaining a successful joint-stock company in this country can be provided by our specialized accountants in Vietnam.
Joint stock company structure in Vietnam
The organizational management structure of a joint stock company (JSC) in Vietnam typically includes the following:
- Shareholders’ General Meeting: This is the highest decision-making body of the JSC, consisting of all shareholders. It meets annually to elect the Board of Directors and discuss important matters related to the company;
- Board of Directors: This is the executive body of the JSC, responsible for managing the company’s operations and making strategic decisions. It is elected by the shareholders’ general meeting and typically consists of between three and eleven members. The Board of Directors appoints a Chairman, a Vice Chairman, and a CEO to manage the day-to-day operations of the company;
- Supervisory Board: This is a separate body from the Board of Directors, responsible for monitoring the Board’s performance and ensuring that the company complies with legal and ethical standards. It consists of three and five members, who are appointed by the shareholders’ general meeting;
- CEO (Chief Executive Officer): This is the top executive of the JSC, responsible for managing the company’s day-to-day operations. The CEO is appointed by the Board of Directors and is typically the highest-ranking employee of the company;
- departments: Under the CEO, there may be various departments responsible for different functions of the company, such as finance, marketing, human resources, and operations. Managers who run these departments report directly to the CEO.
The organizational management structure of a JSC in Vietnam is designed to ensure that the company is run efficiently and ethically, with appropriate checks and balances in place to prevent abuses of power or conflicts of interest. If you are interested in starting a joint stock company in Vietnam, the services of our company incorporation consultants are at your disposal. They can also offer you detailed information about the organizational management structure of a Vietnamese JSC.
Besides JSC, you can also consult our agents if you are interested in opening a branch in Vietnam.
Brief comparison between the LLC and JSC in Vietnam
As a foreign investor, you may ask what to choose when opening a company in Vietnam given the resemblances between the LLC and JSC in terms of liability. However, there are also important differences between the two business forms. Specifically:
- the LLC cannot sell its shares to the public or on stock exchanges, while the JSC can;
- the JSC is more suitable for large investment projects, while the LLC is the preferred vehicle for small and medium-sized enterprises (SMEs);
- the minimum number of stockholders in JSCs is larger than in the LLC, which requires at least one shareholder;
- the management of the JSC is more complex than the LLC’s.
Taxes in Vietnam
In Vietnam, taxation is regulated by the Law on Tax Administration and various other related laws and regulations. The main types of taxes imposed on businesses and individuals in Vietnam include:
- corporate Income Tax (CIT): represents a 20% standard rate tax which is eligible on the profits of companies and business organizations operating in Vietnam. However, certain types of businesses may be eligible for lower rates or exemptions. These lower rates are called preferential CIT rates and can be of 10%, 15% or 17%. Usually, they apply when certain criteria are met and the company in case works with research and development or has large investment projects that are specified in the Law on Investment.
- value added tax (VAT): This tax applies on goods and services used for consumption, production or trading in Vietnam and has a standard rate of 10%. Certain goods and services may be subject to a reduced rate of 5% or exempted from VAT. The 5% rate applies for the companies producing and offering services that are considered essential, such as clean water, books, medical equipment, scientific studies, teaching support products and more. The 0% tax rate is eligible for the exported goods and services which are sold and consumed outside Vietnam.
- personal income tax (PIT): This is a tax on the income earned by individuals in Vietnam, including both Vietnamese and foreign nationals. The tax rate varies depending on the level of income, with a maximum rate of 35%.
- special consumption tax (SCT): This is a tax on the production or import of certain luxury goods and products that are considered harmful to health or the environment, such as alcohol, tobacco, and automobiles.
- import and export duties: These are taxes imposed on the import and export of goods, with rates varying depending on the type of product and the country of origin or destination.
In addition to these taxes, businesses may also be subject to other charges, such as land use and environmental protection fees. It is important for businesses and individuals to comply with tax regulations if they are interested in company formation in Vietnam. As taxation in this country can be complex, it is recommended to consult with our professional tax advisor for specific guidance.
Our specialized accountant in Vietnam can provide support and more information about tax
rates and fiscal requirements available in this country.
Vietnam economy and profitable business sectors
According to recent data, Vietnam economy and business development has increased considerably over the past years, making this country a favorable option to set up a company in Vietnam:
- Vietnam ended the year 2023 with a 5.05% overall growth in Gross Domestic Product (GDP), with an impressive 6.72% rate increase in the fourth quarter of this year.
- Profitable sectors that brought an increase in Vietnam’s economy were divided into mostly Services with 42.5% followed by Industry and Construction with 37.1% and lastly Agriculture with 11.96%.
If you need assistance regarding opening a joint stock company in Vietnam, the services of our company formation specialists are at your disposal. Please contact our agents for details.