The Limited Liability Company – Part II – Updated


Common Limited Liability Companies for Foreign Investment in ASEAN 

The coming ASEAN Economic Community continues to attract global attention as a popular business and investment destination. However, in today’s marketplace, it’s difficult to stay current with all the information available, and for the potential investor, the amount of relevant data is staggering. One of Dej-Udom & Associates’ strengths is its ability to serve as an international legal and business resource for investors interested in Southeast Asia. Our ongoing series of reports and articles allows the firm to pass on significant information about the region. A limited liability company is a preferred business structure for foreign investors in ASEAN countries; and in Part II of this article, our Corporate Department summarizes the process for incorporating a limited company in five ASEAN countries – Laos, Myanmar, Philippines, Singapore, and Vietnam. We’ve updated the Vietnam section to reflect the changes under the new Enterprise Law and Investment Law which come into effect on July 1, 2015.


Introduction – The Limited Liability Company (LLC)

The Limited Liability Company (LLC), a relatively new form of business ownership, is a globally accepted business entity. The LLC structure entices potential investors to take business risks by offering them a blend of benefits that were once only available to specific business entities. In most jurisdictions, an LLC mimics a corporate business structure and limits an investor’s liability to the value of their shares, and it allows investors the organizational flexibility and tax rewards of a partnership. As every country has varying methods of business taxation, the only universal criteria of a limited liability entity is that LLC owners receive protection from unlimited liability. For certain professions, some countries require that licensed service professionals form a Professional Limited Liability Company (PLLC) instead of an LLC to gain the benefits of both a corporation and partnership. However, a PLLC legal structure does not provide as much liability protection to investors, for example, not protecting a lawyer or doctor from being sued for malpractice.

Although the term LLC is most commonly associated with the United States’ limited liability business structure, nearly all countries have enacted laws permitting the use of near equivalent legal entities. While the essence of the LLC structure remains constant in each nation, i.e., limited liability for investors often with versatile management options and tax perks, every country has unique LLC laws. For example, Thai law allows for a Private Limited Corporation (PLC) that is functionally similar to a typical US LLC model, but where Thai PLC law requires 3 or more shareholders, most US LLC laws set no minimum.

The concept of limited liability entities has been around for centuries, but the limited liability entity of today slowly developed from Germany’s LLC laws in the late 1800s. After Germany, the concept spread through most of Latin American and Europe by the 1960s. The United States did not begin adopting the modern day LLC structure until the late 1970s, and it was 1997 before all US state had legalized LLCs.

In the United States, each state enacts its own corporate laws and regulations which include the structures of business entities. This means the US has 50 different LLC business structures that offer a wide range of benefits. However, to utilize a particular state’s LLC laws, an investor must incorporate their business in that state. Delaware and Nevada are very popular as they have investor friendly LLC laws which are very flexible and offer advantageous tax benefits. The LLC framework is particularly desirable in the United States because businesses and individuals are liable for both state and US federal taxes, and corporations are often heavily taxed. If a business is a corporate entity, investors also face double taxation. First, taxation by the state and federal government on a corporation’s profits and then on any dividends distributed to investors through personal taxes. By creating an LLC, however, investors can opt for flow- through taxation just like a partnership. The US LLC system is popular amongst foreign investors, and the US has led the world in Foreign Direct Investment (FDI) since 2006 as the structure offers low foreign entry barriers and quick formation. A disadvantage of a US LLC entity is that foreign countries will likely categorize the LLC as a corporation for tax purposes.

Turning to the ASEAN member states, laws governing limited liability entities started to surface in the region in the mid-1900s. Today, all ASEAN countries permit some form of the LLC business structure. LLC laws in the ASEAN countries vary greatly, and the differences in the ten countries’ laws and regulations range from of number of founding and allowed shareholders and the amount of time it takes to incorporate an LLC to the permissible foreign ownership percentages and the amount of paid in capital. These differences may prove to be an interesting point of contention when the ASEAN Economic Community (AEC) comes into effect in 2015.The AEC calls for the ASEAN members to develop a single market and production base, however, for that principle to fully work, the member nations will need to adopt a universal protocol for the incorporation of LLCs, or at minimum, each member nation will need to recognize other ASEAN member’s LLC entities as valid LLCs. Through the years, the European Union (EU) has attempted to create and ratify an EU-wide LLC. Since AEC and the EU are both similar representations of a geographical alliance, perhaps the AEC can look to the EU for ideas to merge 10 different LLC structures into a single market. A single market with universal LLC laws would lure investors to the region and seamlessly allow investors to incorporate enterprises in multiple ASEAN countries due to the ease of expansion in a single market.



A limited company (LC) is the preferred type of business incorporation for foreign investors in Laos and can be 100% foreign owned. Foreign incorporated companies can establish a local company to do business in Laos. Business incorporations are regulated under the Law on Enterprises (2005) and the Investment Promotion Law (2009). In Laos, a limited company is an enterprise which divides its capital into shares in which a shareholder’s liability is limited to the value of a shareholder’s fully paid up shares in the company. An LC cannot hold shares in its own company, but can hold shares in other companies or be a partner in partnership enterprises. An LC must be established by promoters who undertake all activities in starting the limited company. Each promoter must hold at least one share in the company, but cannot be its representative. A Lao limited company must have two, but no more than thirty shareholders, and one director, and corporate shareholders are allowed. A limited company with a single shareholder is also permitted. An LC can have both common and preferred shares and minimum share value is LAK 2000. Minimum paid-up capital is LAK 1 billion (US$ 140,000) for general business activities. An LC is formed through the registration of its Contract of Incorporation with the Ministry of Industry and Commerce (MOIC) and comes into existence on the date indicated on the Enterprise Registration Certificate (ERC) from the MOIC. For general investment business activities, a company must pay in 100% of its registered capital when it receives its ERC. For agricultural business, 40% of the registered capital must be paid in after receiving the ERC and fully paid in within one year. For manufacturing, 60% of the registered capital must be paid in after receiving the ERC and fully paid in within one year. For trade and services, 80% of the registered capital must be paid in after receiving the ERC and fully paid in within one year. All business entities formed under Lao law and all companies incorporated under foreign law are considered Lao tax residents and subject to Lao profit tax. According the 2011 Decree on the Implementation of the Tax Law, for businesses that do not have tax breaks from investment privileges, the corporate profit tax rate is 24%.

According to the World Bank’s Doing Business Report, Laos ranks 154 out of 189 countries for ease of starting a business. For overall ease of doing business, Laos ranks 148 out of 189 countries.

LC Incorporation Procedures

  • Prior to applying for an Enterprise Registration Certificate – At least two promoters must submit the Contract of Incorporation as a notification to the Enterprise Registry Office. The promoters must then ensure all company shares are subscribed to, but not through a public offering. A meeting of incorporation is then convened and the promoters assign all tasks to the director elected by the shareholders. The director calls for payment in full for the subscribed shares. The director must then register the company with the MOIC within 30 days from the date of full payment.
  • Apply for a Name Reservation Certificate with the Enterprise Registry Office in the Ministry of Industry and Commerce (MOIC). A company must submit a signed copy of the Contract of Incorporation and three potential company names. The Contract of Incorporation must contain: the company name; the company’s business objectives; the location of the Company headquarters; the stated registered capital broken down into the value and number of shares, the proportion contributed in kind, the proportion contributed in cash, and the number of common shares and preferred shares; the names, addresses and nationalities of the promoters of the company, and the number of shares subscribed by each promoter; provisions on the directors’ unlimited liability for the debts of the company, if any. The provisions on unlimited liability of the director in this paragraph shall terminate one  year after the date such director is removed from the company; and the names and signatures of the promoters of the company.
  • Apply for an Enterprise Registration Certificate at the Department of Industry and Commerce of Vientiane Capital (DICV). The required documents include: copies of the Contract of Incorporation; copies of the Articles of Association; copies of the resolution of the founders of the company; and copies of the Power of Attorney.
  • The company’s Article of Associate must contain the following: all items from the Contract of Incorporation except the names and signatures of the promoters; the method for the distribution of the company’s profits or dividends; the method and schedule of payment for shares; administration and management policies for the company; meeting formats and methods for voting; methods for dispute resolution; and dissolution and liquidation of the company.
  • After receiving the Enterprise Registration Certificate, apply for a tax registration certificate from the Finance Department in Vientiane, apply for an operating license from relevant ministry, obtain approval of the company signage and building permit from the Ministry of Information Culture and Tourism, obtain a company seal from the Seal Carving Unit within the Ministry of Industry and Commerce and Ministry of Public Security, and register workers for social security at the Social Security Office.


Under Laos’ Investment Promotion Law (2009), all economic sectors are open to foreign investment except for areas considered detrimental to national security, the environment, public health, and national culture. Three types of foreign investment are available in Laos: general business, concession business, and activities in the special and specific economic zones. There is a negative investment list for general business; however, all business types on the list just require permission from the relevant authorities to undertake. Concession business includes rights on land concession, minerals, electric power, airlines, telecommunication, insurance, and financial institutions. Investment activities in the special economic zones are the construction of complete infrastructure and new city development, and investment activities in the specific economic zones are the construction of infrastructure and the development of specific zones; e.g., industrial zones, export processing zones, and touristic zones.

Law on Enterprises of the Lao People’s Democratic Republic (2005)
Law on Investment Promotion of the Lao People’s Democratic Republic (2009)
The Lao Investment Promotion Department
World Bank – Doing Business Reports


In Myanmar, the private limited liability company (PLLC) is a favored business type for foreign investors and can be 100% foreign owned. A company can be incorporated either under the Myanmar Companies Act of 1914 (MCA) or under the Myanmar Foreign Investment Law (MFIL) which came into effect in 2012. The incorporation process is nearly the same under both laws except that a company under the MFIL must start by obtaining an investment permit from the Myanmar Investment Commission (MIC). Under the MCA, a PLLC is formed when at least two people subscribe their names to a memorandum of association and complete the registration process. In Myanmar, articles of association are not required for a PLLC, but can be drawn up and included in the registration papers. A company comes into legal existence on the date shown on the certificate of incorporation issued by the Companies Registration Office (CRO) in the Directorate of Investment and Company Administration (DICA). A PLLC must have a minimum of two shareholders, but not more than 50, and must restrict its members’ rights to transfer shares and cannot offer shares or debentures subscriptions to the public. Shareholder liability in a PLLC is limited to the amount, if any, unpaid on the shares held by the individual shareholders. However, unlimited liability for the directors of a PLLC is possible if stated in the memorandum of association. Under the MCA, there are minimum share capital requirements for foreign companies – a minimum of US$150,000 for manufacturing, hotels, and construction companies and a minimum of US$ 50,000 for services companies. For companies under the MFIL, share capital requirements are decided on a case-by-case basis. All foreign companies must first obtain a Permit to Trade from the CRO and can only proceed with the registration process after receiving one. Minimum capital must be brought into Myanmar in two stages – 50% before starting the Permit to Trade process and the remaining 50% no later than 12 months after issuance of the Permit to Trade. Companies formed under both the MCA and MFIL are considered resident companies for tax purposes. MCA companies are liable for a flat tax rate of 25% on worldwide income; however, MFIL companies are eligible for tax incentives and are not taxed on their foreign income.

Under the MFIL, any investment in Myanmar can be up to 100% foreign-owned, and the law also dropped the minimum capital requirements for joint ventures and capital on foreign share ownership by allowing overseas firms to fully own joint ventures. Foreign investors will receive five-year tax holidays, and manufacturing companies may be entitled to tax relief of up to 50% on profits made from exports. Foreign investors can also take advantage of fifty-year land leases that can be extended for another twenty years. The law also opens the restricted sectors to foreign investors and states that output can be used for both export promotion and import. Myanmar plans to use the MFIL to develop and expand different business types including natural resource extraction and export, human resource development, banking and finance, infrastructure (roads, highways, and utilities), high technology, communications, and transportation (rail, water and air).

According to the World Bank’s Doing Business Report, Myanmar is the most difficult place in the world to start a business and ranks in last place at 189 out of 189 countries for ease of starting a business. For overall ease of doing business, Myanmar ranks 182 out of 189 countries.

PLLC Incorporation Procedures

  • A company registering under the Myanmar Foreign Investment Law must apply for an Investment Permit from the Myanmar Investment Commission (MIC). The required documents include: proposal to the MIC (Form I) – Basically a detailed business plan and financial model; draft contract(s); draft memorandum of association and articles of association; feasibility study and profit projections for the project period or first ten years; bank references proving financial standing; land or property lease with maps; and for a company, previous two years’ annual reports, and performance guarantee.
  • Request approval of the PLLC name from the Company Registration Office (CRO) at the Directorate of Investment and Company Administration (DICA)
  • Apply for a Permit to Trade from the DICA. Foreign companies are only eligible for a Permit to Trade for the manufacturing, hotel or construction industries, and the services sector. The required documentation includes: Form A of the Myanmar Companies Regulation 1957; Memorandum and Articles of Association (Copy); completed questionnaire form; summary of intended business activities; estimated expenditures to be incurred in Myanmar for the first year of operations; financial credibility of the company/individual; if the parties is a company, a Board of Director’s resolution; undertaking not to do trading activities; and passport copy or NRC copy of each shareholder and director.
  • Company directors sign memorandum of understanding before a lawyer or certified public accountant. The memorandum must be printed both in English and the Myanmar language, be divided into paragraphs numbered consecutively, and be signed by each subscriber in the presence of at least one witness.For a PLLC, the memorandum of understanding must state: the Company name with Limited as its last word; that the registered office of the company will be located in Myanmar; the amount of share capital to be registered and its division into shares of a fixed amount; that the liability of the members is limited; that each subscriber to the memorandum must take at least one share and write the amount of shares next to their name; and the address, nationality and description of each subscriber.
  • After paying the registration fees to the DICA, obtain the automatically generated temporary certificate of incorporation from the CRO. It is valid for six months and allows the company to start business immediately.
  • Pick up permanent incorporation certificate from the CRO after final reviews of the application by different government department.


Myanmar has further approved the Foreign Investment Rules, Notifications 1/2013 and 11/2013, of the Foreign Investment Law of 2012. Notification 1/2013 lists the economic activities that are prohibited, the economic activities which require a joint venture with Myanmar citizens, and the economic activities permitted under certain conditions. Activities not specified in the notification will be considered upon request. Notification 11/2013 contains the rules and procedures for investment licenses, and all potential foreign investment candidates must first obtain an investment license from the MIC. It also details the regulations on land use rights, employment matters, foreign capital and foreign currency transfer rights, and the rules for lease, mortgage, share transfer, or transfer of business. Of particular interest to Myanmar are labor intensive industries that will create employment opportunities for Myanmar citizens and businesses which produce value added products for the country, are part of capital intensive industries, utilize high technology, produce goods and services focused on the welfare of citizens, promote the living standard of the citizens, or increase the capital for small and medium enterprises operated by citizens.

Some prohibited economic activities may be approved for foreign investment; however, approval will depend on multiple factors and be subject to different conditions. If an investment in this category is approved, there is an 80% equity cap on the foreign investor’s participation. Any foreign investment in restricted economic activities must take the form of a joint venture with Myanmar citizens and be approved by the relevant authorities. Again, there is an 80% equity cap on the foreign investor’s participation. Foreign investments in economic activities permitted under certain conditions must follow the requirements listed in Notification 1/2013 and the stipulations from the relevant ministry. The most common requirement is approval by the Union Government and a recommendation from a specific ministry while other requirements include caps on foreign investment participation, acquisition of permits and licenses, compliance with standards and practices, or participation in environmental or social impact assessments. There are 176 economic activities permitted under certain conditions listed in Notification 1/2013.

Myanmar Company Act of 1914
Foreign Investment Law, Pyidaungsu Hlattaw Law No. 21/2012, approved on November 2, 2012, that supersedes the previous Foreign Investment Law of 1988
Foreign Investment Rules, Notifications 1/2013 and 11/2013, promulgated on January 31, 2013
Directorate of Investment and Company Administration (DICA)
World Bank – Doing Business Reports


A domestic stock corporation (DSC) is the most common type of business incorporation in the Philippines and can be 100% foreign owned. A foreign incorporated company can also do business in the Philippines as the full or majority owner of a locally incorporated company. A DCS must have a minimum of five individual shareholders and a majority must be residents of the Philippines. Corporate shareholders are allowed, but only in addition to the required five individual shareholders. Shareholders are not liable for losses in excess of their prospective share capital. A DCS must have a minimum of five directors with the majority being local residents. A DCS is deemed a local Philippine corporation if its stock is 60% local-40% foreign owned. If foreign ownership is greater than 40%, it is considered a foreign-owned corporation. Shares in a DSC can be divided into classes or series of shares, and approval for founders’ shares which give additional rights and privileges for the first five years of incorporation can be granted by the Securities and Exchange Commission (SEC). A DSC comes into legal existence and deemed incorporated on the date the SEC issues its Certificate of Incorporation. There are no minimum capital stock requirements for a DSC, but the SEC requires that for incorporation at least 25% of the authorized capital stock be subscribed and that at least 25% of the total subscription be fully paid in. For foreign-owned DSCs engaged in domestic market enterprises, the minimum paid in capital is USD 200,000 and for export enterprises it is PHP 5,000. A domestic market enterprise is defined as an enterprise which produces goods for sale, renders services, or engages in any business entirely in the Philippines. An export enterprise must export 60% or more of its output. Foreign-owned DSCs that are domestic market enterprises are encouraged to increase local participation by taking on Filipino partners, electing Filipinos to the board of directors, implementing transfer of technology, generating more local employment, and enhancing the skills of Filipino workers.

According to the World Bank’s Doing Business Report, the Philippines is a difficult place to start a business and ranks 161 out of 189 countries for ease of starting a business. For overall ease of doing business, the Philippines ranks 95 out of 189 countries.

DSC Incorporation Procedures

  • Obtain approval for the corporation name from the Securities and Exchange Commission – Name Verification Unit
  • Deposit the minimum paid in capital in a bank in the Philippines
  • Notarize the Articles of Association and by-laws with a local notary. The Articles of Association must include: the corporation’s name; the corporation’s specific business objective or objectives. If the corporation has more than one stated objective, the Articles of Association must state a primary business objective and then any secondary objectives; the address of the corporation’s principal office which must be located in the Philippines; the corporation’s term of existence; the names, nationalities, and addresses of the incorporators; the number of directors or trustees – no less than five and no more than fifteen; the names, nationalities, and addresses of the persons who act as directors or trustees before the elections at the first company shareholder meeting are held; and the amount of its authorized capital stock in Philippine Pesos, the number of shares into which it is divided, and for par value shares, the par value of each, the names, nationalities and addresses of the original subscribers, and the amount subscribed and paid by each on their subscription, and state if any shares are without par value; the corporation’s by-laws.
  • Register the corporation with the Securities and Exchange Commission (SEC). The required documents include: the name verification slip from the SEC Name Verification Unit
    o Notarized copies of the Articles of Incorporation and by-laws; the Treasurer’s Affidavit which affirms that at least 25% of the authorized capital stock is subscribed and that at least 25% of the total subscription has been fully paid in; and if the corporation has more than 40% foreign equity, an application form for registration under the Foreign Investments Act
  • After receiving the Certificate of Incorporation, obtain business permit from the local Business and Permit Licensing Office, apply for a Certificate of Registration and Tax ID number at the Bureau of Internal Revenue, and register with the Social Security System

In the Philippines, the corporate income tax rate is 30% for resident corporations and based on net taxable income. A corporation is deemed resident and taxed on its global income if it is carrying on business in the Philippines as a domestic corporation or a branch of a foreign corporation. A non-resident company is only taxed on income generated in the Philippines.

The Philippine Board of Investments (BOI) is the government agency responsible for the promotion of investments in the Philippines. The BOI’s investment priority areas are business process outsourcing, the electronics industry, renewable energy, and shipbuilding. Investment incentives include income tax holidays, tax exemptions, tax credits, simplification of customs procedures, importation of consigned equipment, and operation of bonded manufacturing or trading warehouses. The Philippine Foreign Investment Negative List, revised in 2012, details the business sectors that are closed to foreign investment and the maximum percentage of foreign equity participation in other reserved business sectors.

The Corporation Code of the Philippines (1980)
The Foreign Investment Act of the Philippines (1991)
The Securities and Exchange Commission of the Philippines
The Philippine Board of Investments 
World Bank – Doing Business Reports


A private limited company (PLC) is the standard type of business incorporation for foreign investors in Singapore and can be 100% foreign owned. A foreign company can do business in Singapore by incorporating a local company. Under the Singapore Companies Act (Chapter 50), a PLC must have one or more shareholders, individual or corporate, who subscribe their name(s) to a memorandum and comply with all Accounting & Corporate Regulatory Authority of Singapore (ACRA) registration requirements. One director of a PLC must be ordinarily resident in Singapore: a Singaporean citizen or permanent resident or a person who holds an Employment Pass, Approval-in-Principal Employment Pass, or Dependent Pass. A PLC’s sole shareholder can also be the required director. A PLC must restrict its members’ rights to transfer shares and cannot have more than 50 shareholders. If a PLC has more than 50 shareholders, it must convert to a public company. Shareholder liability in a PLC is limited to the amount, if any, unpaid on the shares held by the individual shareholders. A PLC comes into legal existence on the date specified on its certificate of incorporation from the ACRA. Foreign individuals and companies cannot self-register a company in Singapore and must either hire a professional firm to do so or apply for an EntrePass with the Ministry of Manpower. Also, eligible applicants with a SingPass can submit an online application through BizFile, ACRA’s one stop business services portal.

According to the World Bank’s Doing Business Report, for overall ease of doing business, Singapore takes the top spot and ranks 1 out of 189 countries. Singapore is one of the easiest counties to start a business and ranks 6 out of 189 countries for ease of starting a business.

PLC Incorporation Procedures

  • Register for approval and reservation of company name with the Accounting & Corporate Regulatory Authority of Singapore (ACRA). An approved company name will be reserved for 60 days from the date of name application.
  • Submit incorporation application to ACRA. Required information includes: company name; planned business activity and SSIC code; shareholders and directors particulars; registered address; company secretary particulars; and Memorandum and Articles of Association
  • The Memorandum and Articles of Association must include: company name; that the registered office of the company will be situated in the Republic of Singapore and its address; that the liability of the members is limited; restricts the right to transfer its shares; limits its members to a maximum of 50; the share capital of the company – currency and the share capital amount; and names, addresses and occupations of subscribers, number of shares allotted, class of shares, and currency
  • • Apply for business license if necessary, register with the Inland Revenue Authority of Singapore (IRAS) for the goods and services tax (GST) if projected annual revenue exceeds SGD 1 million, and purchase Employee Compensation Insurance from an insurance agency

In Singapore, corporate income is taxed at a flat rate of 17%. Foreign and resident companies are liable for corporate income tax on both local and foreign income, but capital gains are not taxed. A company is considered resident if controlled and managed in Singapore. Resident companies are eligible for tax benefits: an income tax exemption scheme for new start-up companies, income tax exemptions on foreign-sourced dividends, branch profits, and service income, and benefits under all Double Taxation Agreements signed by Singapore.

Singapore is very open to foreign investment and there are no restrictions on investment, except for national security and in certain industries. The government of Singapore actively encourages foreign investment, and investment incentives include a reduced corporate tax rate for international and regional headquarters, an initial tax allowance of 25% and annual tax allowance of 5% on qualifying capital expenditure incurred during construction or renovation of a qualifying building or structure, an allowance of 5% of the value of acquisition with a maximum of $5 million for each year of assessment for M&As, and a corporate tax exemption for businesses that qualify for the pioneer incentive.

Singapore Companies Act (Chapter 50)
Accounting & Corporate Regulatory Authority of Singapore (ACRA)
Singapore Economic Development Board
World Bank – Doing Business Reports


A limited liability company (LLC) is a common business incorporation in Vietnam and can be 100% foreign owned. As of July 1, 2015, business incorporations in Vietnam are regulated by the Investment Law of 2014 and the Law on Enterprises of 2014. In Vietnam, an LLC can be established with multiple members, who can be foreign individuals and corporations, but cannot have more than 50 members. Single member LLCs are also permitted. Member liability in an LLC is limited to the amount of the agreed upon capital contribution to the enterprise. In Vietnam, an LLC cannot issue shares; instead, the charter capital is considered equity. An LLC receives legal entity status on the issuance date of its business registration certificate (BRC) from the Ministry of Planning and Investment. For an LLC, there are no minimum capital requirements, except for specific industries, and no minimum paid in capital requirements. Under the new Enterprise Law, all members must now fully pay in their capital contribution within 90 days of the issuance date of the BRC, instead of the previously allowed three years. Single member LLCs can now reduce their charter capital too. A multiple member LLC must have Member’s Council, a Chairman of the Member’s Council, and a General Director. The Members’ Council oversees and governs an LLC and is the highest decision making authority. The Member’s Council elects or hires the General Director, and the Chairman of the Member’s Council can also serve concurrently as General Director. Under the new Enterprise Law, an LLC can have more than one legal representative, but one legal representative must always be a permanent resident of Vietnam.

According to the World Bank’s Doing Business Report, Vietnam ranks 125 out of 189 countries for ease of starting a business. For overall ease of doing business, Vietnam ranks 78 out of 189 countries.

LLC Incorporation Procedures

  • Obtain approval of the LLC’s name from the Department of Planning and Investment (MPI). An enterprise’s name must be written in Vietnamese and must include “limited liability” which can be abbreviated as TNHH
  • For an LLC considered a foreign invested economic organization, prepare an investment project, a collection of proposals on the expenditure of medium and long-term capital to carry out investment activities in a specific area over a specific time period, and apply for an investment registration certificate from the Foreign Investment Agency in the Ministry of Planning and Investment.
  • Apply for business registration certificate from the MPI. Upon approval, an enterprise code number will be issued that is both the business registration code number and the tax code number. The application documents must include: draft company charter; list of members with proper ID documents; confirmation from an authorized body or organization certifying the legal capital if legal capital is required by law; and valid copies of any practicing certificates, if required by law, and investment registration certificate, if necessary.
  • The draft company charter must include: same and address of the head office and any secondary offices; company’s business objectives; method of increasing or reducing charter capital; names, addresses, and other pertinent information of all members; ratio and value of each member’s capital contribution; member rights and obligations; management and organizational structure; company’s legal representative; procedures for passing resolutions of the company and rules for resolution of internal disputes; basis and method of calculating remuneration, wages and bonuses of managers and members of the inspection committee or of inspectors; circumstances in which a member can redeem its capital contribution; rules for distribution of dividends after tax profits and dealing with losses; causes for dissolution, dissolution procedures, and procedures for liquidation of the company’s assets; procedures for amendments of or additions to the company charter of the company; and other matters as agreed upon by the members.
  • After receiving the business registration certificate, register the company seal with the police department, publish all registration materials on the National Business Registration Portal, pay the business license tax, register with the local labor office of the Municipal Department for Labor, Invalids and Social Affairs, register employees with the Social Insurance Fund, and register the trade union with Vietnam General Confederation of Labor.


In Vietnam, an LLC is subject to a 22% enterprise income tax (EIT), but a 32-50% EIT if involved with the exploration and extraction of oil and other rare resources. Enterprises established in Vietnam must pay tax on both domestic and foreign income. Foreign enterprises with no permanent establishment in the country only pay tax on income generated in Vietnam, but foreign enterprises with a permanent establishment in the country pay tax on income generated in Vietnam and any income generated outside Vietnam related to its operation. The EIT will drop to 20% on January 1, 2016. However, enterprises with yearly revenue of less than VND 20 billion are already eligible for the 20% tax rate.

Under the new Investment Law of 2014, investors can invest in all sectors, industries, and trades which are not prohibited by law. The Investment Law details which investment sectors are encouraged and offer incentives, the 267 that are subject to conditions, and the prohibited sectors which have dropped from 51 to 6. Encouraged businesses eligible for investment incentives include the manufacture of high-tech products, the production of new materials, new energy, and renewable energy, the production of electronics and machinery, information technology, and support for the garment and textile industries. Under the new Investment Law, the registration process has been overhauled and streamlined and one of the major changes involves the definition of a foreign investor and the requirements for a company to be deemed a foreign invested company. This is important for attracting investment because domestic companies have fewer restrictions and less stringent licensing requirements. Previously, the rules were unclear and a company could be deemed a foreign invested company by the local authorities even with very low levels of foreign ownership. The new law defines a foreign investor as an individual with foreign nationality or an organization established under foreign law conducting business in Vietnam. Under the new law, a company is only deemed an economic organization with foreign investment capital if a foreign investor, a foreign enterprise, or both hold 51% or more of the charter capital. All others can register as domestic companies. The 51% maximum only relates to the charter capital, not voting shares, so foreign investors can structure their investment to control the company by controlling all the voting shares.

The Law on Enterprises of Vietnam (2014)
The Law on Investment of Vietnam (2014)
The Law on Enterprise Income Tax of Vietnam (2008) and Amendments (2013)
The Ministry of Planning and Investment of Vietnam
World Bank – Doing Business Reports


Disclaimer: All material provided here by Dej-Udom & Associates is for informational purposes only. It does not constitute legal advice from this law firm nor any of its attorneys. It was compiled from multiple sources, and while every effort has been made to verify the material, a country’s laws and incorporation rules can change suddenly with no notice. Before acting on any of the information contained herein, please obtain professional advice from a qualified lawyer in the respective country.

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