Choosing the Right Market Entry Vehicle in Vietnam — LLC, JSC, or Representative Office

Vietnam enters 2025 with strong investment momentum. Registered foreign direct investment reached about US$24.09 billion in the first seven months of 2025, up roughly 27 percent year over year, and climbed to about US$28.54 billion by September, up just over 15 percent from 2024. This renewed growth underscores why entity choice is not merely procedural but strategic. It defines control, regulatory exposure, and scalability from the first day of operation.

The three practical entry paths

Vietnam offers three primary vehicles for market entry, each serving a distinct investment purpose depending on the scale of operations, ownership goals, and risk tolerance. The limited liability company (LLC) gives investors full control and direct operating rights. The joint stock company (JSC) enables equity participation and large-scale capital raising. The representative office (RO) provides a cost-efficient way to explore the market without engaging in commercial activities.

Other structures, such as branches, joint ventures, and public-private partnerships, exist but are used mainly in specialized or restricted sectors.

Limited liability company — Control and operational freedom

An LLC is established under Vietnam’s Investment Law 2020 and Enterprise Law 2020. Foreign investors first obtain an investment registration certificate and then an enterprise registration certificate before starting operations. The company’s capital must be fully injected within ninety days of incorporation and deposited through a designated capital account. A single-member LLC can be owned by one investor, while a multiple-member LLC may include up to fifty.

There is no official minimum capital requirement, but authorities expect the amount to reflect the company’s intended scale. In practice, most service-oriented firms begin with around US$10,000 and increase capital as operations expand. The LLC provides broad operational rights across trading, services, and manufacturing sectors that are open to foreign investment. It also offers limited liability protection and straightforward governance.

Annual audits are required for foreign-owned entities, and profits can be repatriated once all taxes and reporting obligations are fulfilled.

For investors seeking full ownership, operational control, and a stable long-term base, the LLC remains the most practical structure.

Joint stock company — Scale and capital access

A JSC is the structure most often chosen by investors planning to scale through multiple shareholders or external capital. It requires at least three shareholders but has no upper limit, allowing both individuals and corporate entities to participate. As with an LLC, investors must secure an Investment Registration Certificate and an Enterprise Registration Certificate, yet the JSC’s governance is more intricate because of its share-based framework.

Unlike an LLC, a JSC can issue shares privately or publicly, giving it flexibility to raise equity and attract new investors. This makes it a natural fit for companies preparing for mergers, acquisitions, or a future stock exchange listing.

Under Decree 155/2020/ND-CP, a main-board listing usually requires charter capital of at least VND 30 billion (US$1.23 million), a minimum of 100 shareholders, and a proven record of profitability. Although compliance and disclosure standards are higher, the JSC’s ability to access broader financing provides a long-term strategic advantage.

It is best suited for larger projects or regional headquarters that anticipate sustained growth and wish to build credibility in Vietnam’s capital market.

Representative office — Market presence without trading

A representative office allows foreign businesses to establish a legal presence without conducting revenue-generating operations. To qualify, the parent company must have operated internationally for at least one year. The RO may conduct liaison, promotion, and market research but cannot trade, sign contracts, issue invoices, or derive income in Vietnam.

Licenses are valid for up to five years and are renewable. The RO must appoint a resident head, maintain a registered office, and fulfill light reporting duties, but faces no corporate income tax. It functions as a preparatory stage for firms testing the market before transitioning to an LLC or JSC.

For early entrants and exploratory strategies, it remains the simplest and least risky structure.

Selecting the right structure — Strategic fit and investor profile

Choosing between an LLC, JSC, and RO requires aligning legal form with business intent, capital trajectory, and operational risk. Each structure represents a different stage of market commitment rather than a separate destination.

For investors seeking immediate commercial activity, the LLC delivers control and a defined compliance path under Vietnamese law. It allows invoicing, hiring, and contracting while keeping governance simple. This form suits companies whose revenue depends on direct local execution rather than strategic partnerships.

The JSC becomes relevant only when long-term growth requires external equity or regional consolidation. Its share-based structure enables capital raising, but that flexibility comes with higher disclosure, board oversight, and audit intensity. It should be adopted when the cost of additional governance is outweighed by financing potential or corporate reputation gains —especially for investors planning mergers, joint ventures, or listings.

The RO fits a different strategic horizon. It is not an alternative to operating entities but an entry step to test market feasibility, conduct due diligence, and build networks under minimal regulatory exposure. Many investors start with an RO for one to two years, then convert to an LLC once market traction or client pipelines justify full licensing.

From a compliance perspective, both LLCs and JSCs fall under the standard corporate income tax rate of 20 percent and must maintain annual audits and beneficial ownership disclosures. ROs are non-taxable but must renew their licenses periodically and keep a Vietnamese resident representative to manage filings.

Strategically, the decision hinges on how soon the business expects to scale. Investors with short ramp-up cycles and predictable cash flow benefit from entering directly as an LLC. Those seeking investor participation or regional credibility may gain more by structuring as a JSC from the outset. Companies still in the exploratory stage should leverage the RO’s low-cost structure as a compliance-safe observation post before upgrading.

In practical terms, the three entities form a progression — RO for discovery, LLC for execution, and JSC for expansion. The right choice depends less on cost and more on how accurately the structure mirrors long-term intent.

Navigating Vietnam’s compliance realities

All foreign-invested companies in Vietnam operate within a clear but increasingly digital compliance environment. Every enterprise must obtain a corporate e-identification to access government portals and complete filings online. Beneficial ownership details must also be disclosed whenever an individual or entity holds 25 percent or more of the company’s shares.

Routine obligations include annual audits, accurate tax submissions, and timely financial reporting — each essential for maintaining good standing and enabling profit repatriation. A resident legal representative is required to oversee compliance, and foreign executives must hold valid work permits or exemption certificates before assuming managerial roles.

In practice, licensing or approval processes may take longer in sectors that require ministerial clearance, such as education, communications, or logistics. These timelines are manageable with careful planning and proactive engagement with local authorities. Consistent communication, clear documentation, and a patient approach to administrative procedures remain key to running operations smoothly in Vietnam.

Aligning structure with strategy

Entity selection in Vietnam is, at its core, a governance and capital decision. The right structure determines how efficiently an investor can deploy funds, manage compliance, and expand regional operations. Once the entity is established, the difference between success and stagnation lies in disciplined execution — accurate reporting, transparent ownership, and proactive engagement with regulators.

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