Incorporation of Software Company in Vietnam: Legal Guidelines and Key Points

What are the considerations when setting up a technology business in Vietnam? The experts at ECOVIS Vietnam outline the steps for those considering an investment in this booming startup arena.

Vietnam’s technology sector is thriving, attracting entrepreneurs and investors alike with its favourable business environment, skilled workforce and expanding local market. To ensure long-term success, startups must prioritize compliance, protect their interests, and foster sustainable growth from the outset. In this guide, we delve into the legal intricacies of setting up a technology business in Vietnam and offer key insights for investment in the startup sector.

In this guide, we explain how technology/software companies are set up, the legal procedures for incorporating technology companies and the key considerations for investing in the technology startup sector.

1. Permitted Foreign Ownership

The technology sector generally permits 100% foreign ownership, providing opportunities for international investors to fully capitalize on the market.

2. Finding the Right Legal Entity

Choosing the best legal structure for your business is crucial. Whether you opt for a Limited Liability Company (LLC) or a Joint-Stock Company (JSC), we will guide you through the legal requirements and tax implications so you can make an informed decision.

3. Company Formation and Registration

3.1 Choosing the Right Legal Entity

Assessing business needs and selecting the appropriate legal structure such as a Limited Liability Company (LLC) or Joint Stock Company (JSC) is crucial. Professional legal advisors at Ecovis can help navigate the advantages, disadvantages, and specific requirements of each entity.

3.2 Registration and Licensing Procedures

Expect a timeframe of 25-30 working days for completion, ensuring compliance with regulatory requirements. Ecovis Vietnam’s legal team excels in facilitating a smooth registration process for technology companies entering Vietnam.

4. Minimum Capital Requirement

In general, there are no minimum capital requirements for starting a business (including software/technology or trading services) under the applicable laws, with the exception of some highly regulated business sectors (e.g. banking, insurance, securities, education, medical, aviation, etc.). Typically, the investment capital must be sufficient to cover costs until the business becomes self-sustaining. To obtain this approval (IRC & ERC), your expected minimum capital contribution must match the actual budgeted costs of your business.

5. Intellectual Property Protection

Intellectual property (IP) protection is critical for technology companies to protect innovation and create competitive advantage. Understanding the application process, legal requirements and scope of IP protection in Vietnam is essential. Technology companies can apply for copyright protection, patent protection for inventions, and trademark registration for brand identity. It is advisable to seek legal advice on IP matters from Ecovis’ professional legal advisors.

6. Employment Law and Labor Contracts

Human resources are essential to the development of a business. Hiring employees brings with it obligations and requirements under the Labour Code. The company must cooperate with local labour authorities, fulfil social security and payroll tax obligations, and comply with employment contract regulations. Employing foreign nationals requires compliance with specific visa, work permit and residence card requirements.

Employment contracts and employee rights: Employment contracts are legally binding agreements between employers and employees. The company should familiarise itself with the mandatory terms, including employment conditions, job descriptions, salary and benefits, working hours, leave entitlement, labour discipline, termination procedures and compliance with labour regulations to help the company avoid administrative fines and labour disputes.

7. Data Protection and Privacy Regulations:

As data-driven technologies proliferate, prioritizing data protection and privacy is imperative. Vietnam has enacted laws and regulations, such as the Law on Cybersecurity and Personal Data Protection Decree, to safeguard personal data. Understanding and adhering to these regulations governing data collection, processing, storage, and transfer is critical for technology companies.

8. Leveraging Ecovis Vietnam’s Expertise for Success:

Embark on your journey with confidence by partnering with Ecovis Vietnam’s experienced lawyers and advisors. With their deep understanding of local laws and regulations, Ecovis lawyers offer tailored advice, efficient communication, and proactive risk mitigation. By ensuring compliance and addressing potential challenges, they empower clients to seamlessly navigate registration, setting the stage for success in the Vietnamese technology market.

Ecovis can help your company navigates regulatory complexities seamlessly, maximizing your chances of success in Vietnam’s dynamic tech sector.

Ready to take the next step? Contact Ecovis Vietnam today at quynh.vu@ecovislaw.vn or hotline +84 898 120 121. Let’s make your tech setup in Vietnam a resounding success!

*Disclaimer: This article provides informational guidance and does not constitute legal advice. For specific inquiries, consult with professional legal advisors of Ecovis.