Minimum Capital Rules That Shape Entity Choice in Vietnam

Minimum capital requirements in Vietnam should not be seen as a narrow legal technicality because they directly influence the type of entity that foreign investors can establish, the way regulators assess the credibility of a project, and the level of confidence that local banks and business partners will have in the venture.

By deciding on the right level of capital at the outset, investors avoid costly restructuring later while keeping their operations compliant and financially sound.

Understanding minimum capital in Vietnam

Vietnamese law distinguishes between charter capital and legal capital. Charter capital is the equity pledged and registered by investors and must be fully contributed within 90 days of receiving the Enterprise Registration Certificate. Legal capital, on the other hand, is a statutory minimum imposed only in regulated sectors.

Most industries have no fixed statutory minimum, but licensing authorities still assess whether declared charter capital is sufficient to cover business operations. A consulting company can secure approval with around US$10,000, while a light manufacturing firm with imported machinery may need about US$150,000 to demonstrate financial adequacy.

Entity types and capital expectations

Minimum capital expectations vary depending on the entity chosen.

A limited liability company offers flexibility since charter capital can be sized according to operational needs, provided it meets the sufficiency test applied by licensing authorities.

A joint stock company is typically used when higher thresholds apply or when the investor plans to raise additional funding through share issuances, and the added governance requirements are justified by these objectives.

A representative office does not require capital because it cannot earn revenue, yet investors still need to cover salaries, rent, and administrative overheads.

Sector-specific thresholds that dictate entity choice

Certain industries impose clear legal capital requirements that leave little discretion and directly determine the type of entity available.

In real estate, the former flat minimum of VND 20 billion (US$800,000) was replaced in 2022 by an equity ratio rule. Investors must show equity of at least 20 percent of the total investment for projects under 20 hectares and 15 percent for projects over 20 hectares.

Banking is highly capital-intensive. A commercial bank must hold VND 3 trillion (US$120 million) in legal capital and maintain strong prudential ratios to satisfy ongoing regulatory requirements.

Insurance companies face capital floors defined by Decree 46 of 2023. Non-life insurers must hold at least VND 400 billion (US$16 million), while composite life and health insurers require more than VND 1.3 trillion (US$52 million). Transitional rules are in place until 2028.

Education also requires substantial commitments. A foreign-invested university must have at least VND 1 trillion (US$40 million) in investment excluding land, while a branch campus typically requires between VND 250 billion (US$10 million) and VND 500 billion (US$20 million), depending on its scale.

Financial services have their own rules. Fund management companies must hold VND 25 billion (US$1 million), while payment intermediaries such as clearing and switching operators must maintain VND 300 billion (US$12 million).

Comparative capital requirements in Vietnam

Entity / Sector	Capital Requirement	USD Equivalent	Notes on Entity Choice
Limited Liability Company	No statutory minimum, sufficiency tested	Case by case	Flexible, the most common form for services and light manufacturing
Joint Stock Company	Higher credibility, needed in regulated sectors	Case by case	Preferred for fundraising and compliance with industry-specific capital thresholds
Representative Office	No capital required	N/A	Non-revenue generating, used for liaison and research only
Real Estate Development	20% equity ratio for <20 ha, 15% for >20 ha	Linked to project size	An entity must show proof of equity, usually via JSC or LLC
Banking	VND 3 trillion	US$120 million	JSC required heavy scrutiny from regulators
Insurance	VND 400 billion – VND 1.3 trillion	US$16m–US$52m	Range depends on the scope of the insurance license
Education (University)	VND 1 trillion	US$40 million	JSC structure typically required
Education (Branch Campus)	VND 250–500 billion	US$10–20 million	Capital requirement varies with program scale
Fund Management	VND 25 billion	US$1 million	LLC or JSC, depending on investment strategy
Payment Intermediaries	VND 300 billion	US$12 million	Fintech firms, often structured as JSC

 

How capital rules shape investor decisions

The presence or absence of statutory thresholds often determines project feasibility and the choice of entity. Investors who cannot commit VND 3 trillion (US$120 million) cannot enter banking, and developers who cannot meet equity ratio rules cannot move forward with real estate projects.

ven in unregulated sectors, under-capitalization risks rejection at licensing, while over-declaring ties up shareholder funds unnecessarily and complicates profit repatriation later.

Capital also influences perception. A company registered with only US$5,000 may technically comply in some sectors, but will lack credibility with banks and partners, underscoring the need to balance sufficiency with market reputation.

Common challenges for foreign investors

Foreign investors often miscalculate capital requirements in two ways. Many underestimate working capital needs, particularly in manufacturing or logistics, where upfront costs are high. Others struggle with the 90-day contribution rule, which requires capital to be fully paid in within a short timeframe, creating challenges when bank accounts, foreign exchange transfers, and supporting documentation are not properly sequenced.

Case Scenarios

Education provider

An international education group planning to establish a full university in Ho Chi Minh City must commit VND 1 trillion (US$40 million) and adopt a joint stock company structure to align with governance standards and allow for future fundraising. If the same group instead chooses to start with a smaller training center, it can set up an LLC with about US$50,000 in charter capital, which satisfies sufficiency requirements without locking in a major commitment before the market is fully tested.

Fintech firm

A foreign fintech investor seeking to enter Vietnam as a payment intermediary must meet the legal capital requirement of VND 300 billion (US$12 million). Since this threshold is tied directly to the license, the investor cannot operate under an LLC with minimal capital but must establish a JSC that satisfies both the capital and governance requirements. In contrast, if the same investor only wanted a market presence without processing transactions, it could open a representative office with no capital requirement while preparing for a full entry later.

Timelines and implications for market entry

Registering a foreign-invested company usually takes 30 to 45 working days for investment and enterprise approvals. Projects in regulated sectors with statutory thresholds often require additional appraisal, which can extend the process by several months. Investors who confirm their capital commitments early and align them with regulatory expectations can complete licensing more smoothly and avoid unnecessary delays.

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