Once you've decided how you'll invest — a new entity, an acquisition, or a contractual arrangement — the next question is which legal vehicle to use. The choice depends on the nature of the proposed business, sector-specific market access conditions, the desired level of control, and the investor's long-term objectives.
The most common structures include foreign-invested enterprises (FIEs), joint ventures, representative offices, branches of foreign traders, and Business Cooperation Contracts (BCCs).
Choosing the right structure at the outset is important because it can affect the investor's market access, licensing requirements, corporate governance, ability to conduct revenue-generating activities, and the procedures applicable to future investments or M&A transactions.
The right structure depends on your business activities, ownership plans and exit strategy — not just incorporation convenience.
Talk to us →For most investors intending to establish and operate a business in Vietnam, incorporating a foreign-invested enterprise (FIE) is the principal entry structure. An FIE is generally established in the form of either a Limited Liability Company (LLC) or a Joint Stock Company (JSC). Both are separate legal entities and may, subject to applicable market access conditions, be a wholly foreign-owned company.
Under Vietnam's investment regime, the distinction between an FIE with 50% or less foreign ownership and one with more than 50% foreign ownership is particularly important for subsequent investment activities. An economic organization with more than 50% foreign ownership may be subject to market access conditions and investment procedures applicable to foreign investors when making further investments or conducting certain M&A transactions.
The LLC is one of the most common corporate structures for foreign investors in Vietnam. Key features include:
An LLC is particularly suitable for investors establishing a controlled operating subsidiary for activities such as manufacturing, trading, services, technology, consulting and other business operations. For investors who do not anticipate raising capital through the issuance of shares or having a large number of shareholders, an LLC is often the more straightforward corporate vehicle.
A JSC is another common vehicle for foreign investment in Vietnam and can also be 100% foreign-owned, provided that the relevant sector permits full foreign ownership. A JSC may be preferable where the investor intends to:
Compared with an LLC, a JSC has a more formal corporate governance structure involving shareholders and corporate management bodies, together with additional reporting and governance requirements.
Both LLCs and JSCs have separate legal personality from their shareholders or members, provide limited liability protection, can (subject to sector-specific restrictions) be wholly foreign-owned, and may be treated as economic organizations with foreign investment for purposes of subsequent investment activities.
Accordingly, the choice between an LLC and a JSC should not be based solely on incorporation convenience. The investor should also consider its anticipated ownership structure, capital-raising plans, governance requirements, exit strategy, and future M&A activities.
A Joint Venture (JV) is a structure in which foreign and Vietnamese investors jointly establish and own an economic organization, typically in the form of an LLC or JSC. Importantly, a joint venture is not a separate type of legal entity under Vietnamese corporate law — rather, it describes the ownership and investment arrangement of an FIE.
A JV may be appropriate where:
The ownership ratio in a JV must comply with the applicable foreign market access conditions for foreign investors. Depending on the sector, Vietnamese law may regulate maximum foreign ownership, permitted forms of investment, permitted business activities, conditions relating to the capacity of the foreign investor, and other sector-specific requirements. For this reason, the proposed ownership structure should be reviewed against the applicable market access regulations before the parties finalize the transaction.
A JV also requires careful consideration of the relationship between the foreign and Vietnamese investors. In addition to the company's charter, investors should consider entering into a comprehensive Shareholders' Agreement or Members' Agreement covering matters such as:
Historically, joint ventures played a much more prominent role in Vietnam's FDI market. Today, wholly foreign-owned structures are widely used in sectors where full foreign ownership is permitted. Nevertheless, JVs remain highly relevant in restricted sectors and strategic partnerships where a Vietnamese partner provides material commercial or regulatory advantages.
A Representative Office (RO) is a relatively simple market-entry structure for foreign traders that wish to establish a presence in Vietnam without directly conducting revenue-generating business activities. An RO is a dependent unit of the foreign parent company and does not have separate legal personality.
Its permitted activities generally include:
An RO is not permitted to conduct independent revenue-generating business activities in Vietnam. In particular, an RO generally cannot:
However, the foreign parent may authorize the RO or its representative to perform certain acts on behalf of the parent where permitted by law. Such authorization does not transform the RO into an independent commercial entity.
An RO can be useful where the foreign company wants to:
However, if the investor's objective is to generate revenue and conduct commercial operations directly in Vietnam, an FIE is generally a more appropriate structure.
A Branch of a foreign trader is another form of presence available to foreign businesses in Vietnam, but its availability is significantly more restricted than that of an RO or FIE. A branch is a dependent unit of the foreign trader and does not constitute a separate legal entity — accordingly, the foreign parent remains ultimately responsible for the branch's obligations.
Unlike an RO, a branch may be permitted to conduct certain commercial activities within the scope of its establishment license. However, the establishment of a branch is only permitted in sectors and circumstances specifically allowed under Vietnamese law and applicable international commitments. Depending on the sector, examples may include certain:
The establishment and operation of a branch may also require approval or licensing from the relevant sector-specific regulatory authority, in addition to registration requirements. Therefore, a branch should not be viewed as a general alternative to establishing an FIE — its feasibility must be assessed on a sector-by-sector basis.
A Business Cooperation Contract (BCC) is a contractual investment structure under which investors cooperate in conducting business and sharing profits, products or other economic benefits without establishing a new economic organization. Under Vietnam's investment legislation, a BCC is a contract entered into between investors for business cooperation and profit or product sharing without establishing an economic organization.
A BCC may therefore provide foreign investors with a way to participate in a Vietnamese business project without establishing a separate subsidiary. BCCs may be particularly relevant to projects in areas such as:
Unlike an FIE or JV:
Where a BCC involves a foreign investor, the applicable investment registration procedures must be considered, including the requirement to obtain an Investment Registration Certificate (IRC) where prescribed by the Investment Law.
A BCC can therefore be attractive where the parties want to combine their resources and expertise for a specific project while avoiding the establishment of a new corporate vehicle. However, because the parties rely heavily on the contractual framework, the BCC should be carefully drafted to address governance, funding, profit allocation, liability, decision-making, deadlock, termination and exit arrangements.
There is no single structure that is universally suitable for all foreign investors entering Vietnam. The appropriate structure depends on several factors:
| Key consideration | Structure(s) to consider |
|---|---|
| Full control over a Vietnamese operating business | 100% foreign-owned LLC / JSC |
| Simple and flexible corporate governance | LLC |
| Multiple shareholders or future share-based fundraising | JSC |
| Foreign ownership restrictions or need for a Vietnamese partner | Joint Venture |
| Market research and business development without revenue generation | Representative Office |
| Specific sectors where branch establishment is permitted | Branch of a Foreign Trader |
| Project-based cooperation without establishing a new entity | BCC |
The investment structure options should ultimately be selected after reviewing the investor's business activities, applicable foreign market access conditions, proposed ownership ratio, investment capital, licensing requirements, governance objectives and long-term exit strategy.
For foreign investors, choosing the correct entry structure at the beginning can significantly reduce regulatory friction and avoid unnecessary restructuring when the business expands, raises capital or undertakes future M&A transactions.