A ready-made company in Vietnam is a company that is already registered in accordance with Vietnamese legislation and has all the necessary documents to conduct business. Such a company can be sold or transferred to another party. Most often, ready-made companies in Vietnam, before being resold, did not engage in any commercial activities, so they have no debts or obligations. Therefore, purchasing a ready-made company in Vietnam is attractive to investors who want to acquire a business with minimal risk.
This material covers the main legal conditions and formalities for acquiring a ready-made entity in Vietnam.
Acquiring an existing entity in Vietnam
With the advancement of technology and the economy, new business directions, markets, and growth opportunities emerge. In such conditions, purchasing a ready-made company can be a suitable way to quickly start a business or expand an existing one.
Acquiring an entity in Vietnam can be a good decision for those aiming to develop and expand in the Asian market. Vietnam is recognized as one of the fastest-evolving economies in the world. Some advantages of purchasing a ready-made business in Vietnam comprise:
- Industry entry speed: instead of spending time and resources on opening a new company in Vietnam, you can start working in a relatively short period (just a few days) with an existing business.
- Cost reduction: acquiring a ready-made company may be more cost-effective than creating a company from scratch.
- Risk minimization: a ready-made company already has a certain reputation in the market, reducing the risks associated with launching a new business. Purchasing a company with a history can enhance trust among future partners and clients.
- Participation in contract bidding: in many cases, government and private contracts require companies to have a certain period of existence or experience. Acquiring a ready-made Vietnamese company can help meet these requirements.
- Access to corporate credit: some banks in Vietnam are more willing to provide loans to ready-made companies than to new enterprises. Therefore, purchasing a ready-made company can help an investor access corporate credit, which may be necessary for business expansion or financing new projects.
However, it is essential not to forget that the process of buying a company in Vietnam comes with certain complexities. Investors should be prepared to spend time and money conducting due diligence on the business to ensure that the company they are acquiring does not have financial obligations. Additionally, investors should be ready to face some cultural and language barriers when functioning in Vietnam. Our firm's specialists are ready to assist you at every stage of the process, providing comprehensive support in purchasing a ready-made company in Vietnam.
Buying a ready-made company in Vietnam: the jurisdiction's strengths
Many foreign investors consider the option of acquiring an enterprise in Vietnam, citing the following business preferences of the jurisdiction:
- Rapidly developing economy: with a projected GDP growth rate of 6.5% in 2023.
- Flexible legislation: authorities allow 100% ownership of businesses for foreigners in many industries.
- Openness to foreign investments: Vietnam is a relatively open country for foreign investments. The government offers a range of incentives and stimuli for foreign investors, including tax benefits, access to credit resources, and a simplified business registration process.
- Demographic advantages: Vietnam has a young and growing population, creating potential for growth in consumer demand.
- Cheap labor: the country offers low labor costs (when compared to some other Asian countries). This makes the jurisdiction attractive for companies looking to reduce their production costs.
How to acquire a ready-made enterprise in Vietnam?
Ready-made companies in Vietnam can be of various types, depending on the size and type of activities for which they are registered. The most common forms of ready-made companies are:
- Limited Liability Company (LLC): an LLC is owned by one or more members who are liable for its losses within the limits of their share in the charter capital.
- Public Joint Stock Company (Public JSC): this type of company can offer shares on the open market. JSC is owned by shareholders who are liable for its losses within the value of their shares.
To acquire a ready-made company in Vietnam, you need to follow these steps:
- Conduct legal due diligence to ensure its financial stability and absence of debts.
- Sign the purchase and sale agreement.
- Make the payment.
After the payment, all necessary documents, including the company registration certificate, articles of association, and other documents, will be handed over to the new owner.
After acquiring a ready-made Vietnamese company, various issues need to be addressed promptly. Some of them include:
- Conducting the first meeting: after purchasing the company, the first meeting of participants is necessary, during which a new director will be elected, and other executive bodies of the company will be approved. The first meeting should be held within 30 days from the date of acquiring the company.
- Updating the directors register: it's essential to update the company's directors' register, including new members appointed by the new owner. The directors' register should be updated within 30 days from the date of acquiring the company in Vietnam. The new register should comprise the names, positions, and contact information of all directors.
- Updating the register of individuals with substantial control: the record of individuals exercising significant control over the company must be revised to include the new proprietor. The register of individuals with substantial control must be amended within 30 days of acquiring the company. The updated register should provide details such as names, positions, and ownership percentage for each person with substantial control.
It's worth noting that there is an option to buy a ready-made company with an account in a Vietnamese bank.
Industries where Vietnam has leadership in Asia
Vietnam holds strong positions in Asia in the following industries:
Some specific examples of Vietnam's success in these industries:
- IT (Information Technology): in 2022, Vietnam's export of software amounted to 12.3 billion USD, a 20% increase compared to 2021.
- Fintech (Financial Technology): in 2022, the transaction volume in Vietnam's fintech sector reached 4.5 trillion USD, a 30% increase compared to 2021.
- Logistics: in 2022, Vietnam ranked 5th in the world in terms of container shipping volume.
Buying a company in Vietnam: tax obligations
When acquiring a company in Vietnam, the new owner assumes certain tax obligations. These obligations contain:
- Corporate Income Tax (CIT): applied to the company's profits earned in Vietnam. The basic CIT rate is 20%.
- Value Added Tax (VAT): applied to the added value of goods and services. The standard VAT rate is 10%, with some goods/services having a reduced VAT rate of 5%.
- Personal Income Tax (PIT): applied to the income of individuals earned in Vietnam. The PIT rate is progressive, ranging from 5% to 35% for residents and 20% for non-residents.
Additionally, the new owner may need to pay other taxes, such as land tax, property tax, and capital gains tax. It's worth noting that Vietnam has one of the world's most extensive networks of bilateral trade agreements. These agreements aim to reduce or eliminate tariffs and other trade barriers between Vietnam and its trading partners, facilitating trade and investment procedures. Key agreements for Vietnam include free trade agreements with major economies such as the European Union, the United States, and China.
Conclusion
Vietnam stands as an attractive market for launching or expanding companies in Asia. If you are planning to purchase a ready-made company in Vietnam, you can directly reach out to the business consultants at our company.
YB Case specialists provide legal guidance on the operation and regulation of businesses in Vietnam, offering competent assistance in registering a new company or providing legal support for business acquisitions in Vietnam.
