Introduction
Choosing the right business structure in Vietnam is crucial for foreign investors expanding into the market, as the success of your expansion depends significantly on the legal vehicle selected to operate the business. Although Vietnam’s Law on Enterprises offers several options, the structure that suits a technology start-up will rarely be the same as the one required by a multinational manufacturer.
Choosing a structure is not merely a registration matter. It affects legal liability, tax obligations, fundraising capacity and the company’s future exit strategy. With the Law on Enterprises amended by Law No. 76/2025/QH15 and enterprise registration now governed by Decree No. 168/2025/ND-CP, making the right choice in 2026 requires more careful analysis than ever.
1. Limited Liability Company (LLC): The Preferred Choice for SMEs
A limited liability company (LLC) remains the most common choice for foreign investors and small and medium-sized enterprises entering the Vietnamese market.
Structure: An LLC may be established as a single-member LLC with one owner or as a multiple-member LLC with between two and 50 members.
The table below summarizes the key features of a Vietnam LLC.
| Feature | Description |
|---|---|
| Governance | A single-member LLC is organised with either a company president or a Members’ Council, as applicable, and a director/general director. A multiple-member LLC has a Members’ Council, its chairperson and a director/general director. |
| Ownership and control | Changes in membership are closely controlled. A member transferring contributed capital must generally offer it to the existing members first. |
| Legal liability | Members are liable for the company’s debts and other property obligations only up to the amount of capital contributed. |
| Fundraising | Capital may be increased by the owner or existing members, or by admitting new members. An LLC cannot issue shares or list on a stock exchange. |
Why it is popular: An LLC offers relatively simple governance, close control and limited liability.
Key limitation: An LLC cannot issue shares or list on a stock exchange. If an IPO is part of the long-term plan, the company will eventually need to convert into a joint stock company.
2. Joint Stock Company (JSC): Designed for Scale and Flexibility
A joint stock company (JSC) is designed for medium-sized and large businesses that plan to raise substantial capital.
Structure: A JSC requires at least three shareholders, with no maximum number.
The following table compares a JSC and an LLC across the main decision criteria.
| Criteria | Limited Liability Company (LLC) | Joint Stock Company (JSC) |
|---|---|---|
| Minimum number of owners | One member, or between two and 50 members | At least three shareholders; no maximum |
| Issuing shares | Not permitted | Permitted |
| Stock exchange listing | Not permitted | Permitted if applicable listing requirements are satisfied (HOSE/HNX) |
| Governance | Relatively simple, depending on the type of LLC | More complex, comprising a General Meeting of Shareholders, Board of Directors and the supervisory arrangements required under the selected governance model |
| Compliance costs | Generally lower | Generally higher because of the more complex governance and internal compliance requirements |
Strategic advantage: A JSC offers stronger fundraising capacity and greater flexibility in transferring shares, making it attractive to venture capital and private equity investors.
Trade-off: Its governance structure is more complex and its compliance costs are higher.
3. Representative Office (RO): A “Test-the-Market” Approach
If the objective is to conduct market research or establish a liaison office for an overseas parent company, a representative office (RO) may be the most cost-effective point of entry.
The table below outlines the key characteristics of a representative office in Vietnam.
| Feature | Details |
|---|---|
| Revenue-generating activities | Not permitted |
| Commercial contracts in its own name | Not permitted |
| Best use cases | Quality control, brand promotion, feasibility studies and market research |
| Statutory licensing period | Generally seven working days after receipt of a complete and valid application. The actual process may take longer if amendments or consultation with a specialised authority are required. |
| Tax compliance | Generally limited because the office does not generate revenue. Personal income tax must still be declared and paid if employees receive salaries. |
Limitation: A representative office cannot conduct direct profit-generating activities or enter into commercial contracts in its own name.
Primary benefit: Establishment is relatively fast and tax obligations are limited.
4. Branch Office: Less Common but Suitable in Specific Cases
Unlike a representative office, a branch may conduct commercial activities. However, it is not a legal entity separate from its parent company.
The table below highlights the main liability difference between a branch and an LLC.
| Criteria | Branch | Limited Liability Company (comparison) |
|---|---|---|
| Separate legal personality | Not separate from the parent company | A separate legal entity |
| Parent company’s liability | Generally unlimited for the branch’s activities | Limited to the amount of contributed capital |
| Recommended for foreign investors? | Rarely, except for certain sectors or specific purposes | Yes, in most cases |
Because the parent company bears unlimited liability for the activities of its Vietnam branch, most legal advisers, including TT Collab, generally recommend an LLC instead to ring-fence the parent company’s assets.
5. Key Factors Foreign Investors Should Consider in 2026
Beyond the basic definitions, foreign investors should also consider the following practical factors.
| Factor | Explanation |
|---|---|
| Conditional sectors and market-access restrictions | Certain sectors, including logistics, tourism, advertising and real estate business, may be subject to investment conditions, foreign market-access conditions or additional sector-specific licences. Depending on the sector and applicable international commitments, foreign ownership caps or cooperation with a Vietnamese partner may be required. |
| Repatriation of profits | Foreign investors may remit lawful profits abroad after the enterprise has fulfilled its financial obligations and submitted its audited financial statements and corporate income tax finalisation return. Profits for a year may not be remitted if accumulated losses remain, and the tax authority must be notified at least seven working days in advance. |
| Enterprise identification number | The “one enterprise-one code” policy helps simplify administrative procedures. |
Both LLCs and JSCs may repatriate profits once these financial obligations are met. Where the two structures differ is in exit documentation: the paperwork required to transfer shares in a JSC is not the same as that required to transfer contributed capital in an LLC.
Under the “one enterprise-one code” policy, the enterprise identification number also serves as the tax identification number, social insurance number and business registration number. This helps simplify post-establishment procedures regardless of the structure selected.
Conclusion: Match the Structure to Your Business Objectives
There is no single structure that is right for every investor. The choice should reflect the business model, investment scale, fundraising plan, desired level of control and risk tolerance.
| If you want to… | Consider |
|---|---|
| Maintain full control, keep management simple and enter the market with limited liability | Limited Liability Company (LLC) |
| Raise multiple rounds of capital and pursue an IPO in Southeast Asia | Joint Stock Company (JSC) |
| Explore the market before generating revenue | Representative Office (RO) |
At TT Collab, we do more than provide a list of options. We analyse your five-year business plan to help ensure that the legal structure selected today does not become a bottleneck to future growth.
Legal basis updated for 2026: Law on Enterprises No. 59/2020/QH14, as amended by Law No. 76/2025/QH15; Decree No. 168/2025/ND-CP on enterprise registration; Law on Investment No. 143/2025/QH15; Decree No. 07/2016/ND-CP on representative offices and branches of foreign traders; and Circular No. 186/2010/TT-BTC on the remittance of profits abroad.
Disclaimer: This article is provided for general information only and does not constitute legal or tax advice for any specific matter. Laws and administrative practices may change; professional advice should be obtained before making an investment or company formation decision.
