VIETNAM Law and Practice Contributed by: Thang Nguyen, Minh Nguyen and Nguyet Le, ACSV Legal
Branch Foreign investors in certain business sectors, such as banking, IT, construction, franchising, non-life insurance and some securities servic - es, could set up a branch as an alternative to establishing a new company. However, certain requirements need to be met. A foreign investor must have operated its offshore business for at least five years before the foreign investor can establish a branch in Vietnam. Branches are permitted to conduct a wide range of commercial activities including the purchase and sale of goods, unless this is specifically pro - hibited in the licence granted to the branch or under the local laws. Definitions of Independent Legal Entities • A single-member LLC is an enterprise under the ownership of an organisation or individual. • A multiple-member LLC is an enterprise under the ownership of two to 50 organisa - tions or individuals. • A JSC is an enterprise with at least three shareholders. There is no restriction on the maximum number of shareholders. Share - holders may be organisations or individuals. Liability • The single-member LLC’s owner is liable for debts and other liabilities up to the single- member LLC’s charter capital. • The members of a multiple-member LLC are liable for debts and other liabilities to the extent of their contributed capital. • The shareholders of a JSC are liable for the debts and other liabilities of the JSC to the extent of their own contributed capital.
• a limited liability company (LLC) in the form of either a single-member LLC or a multiple- member LLC; and • a shareholding or joint-stock company (JSC). There are two other types of common commer - cial presences that could be established to rep - resent foreign investors in Vietnam: • a representative office; and • a branch. The activities these presences can perform depend on the treaties that exist between Viet - nam and the country in which the head office is based. For business activities that are outside the scope of a treaty or where no treaty exists, an authorisation from the competent Vietnamese authorities is needed. Considering that these are not independent legal entities, the parent com - pany is liable for various aspects such as debts and obligations. Legal claims can be brought against the parent company. Representative Office Foreign investors not yet ready to invest in Viet - nam may establish a representative office, which is generally quicker and less complex than set - ting up a commercial entity. The investor’s busi - ness must have operated for at least one year before applying. Representative offices are prohibited from profit- generating activities but may conduct marketing, display products, and liaise with authorities. With a power of attorney, the head may sign contracts on behalf of the offshore company. They may also hire foreign and local staff in line with Viet - namese law.
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