What to prepare when setting up a company?

When the need to enter the market is increasing, the establishment of a company (enterprise) obviously becomes a matter of special concern. However, we need to clearly understand what it is to set up a company and what to prepare for it.

Through this article, PL & Partners Law Firm wants to send you some knowledge relating to this issue.

1. WHAT IS SETTING UP A COMPANY?

Setting up a company or business registration is the formation of a new enterprise in the economy. This activity shall be conducted by owners and investors of the enterprise on the basis of regulations on the legal form of enterprise, business lines, methods of contributing capital, organizing, and managing the enterprise, rights and obligations of enterprises, investors establishing enterprises, etc.

This is a mandatory procedure for all companies before they actually run their business. If an enterprise did not or does not carry out the procedure of setting up a company, it will not be recognized as a legal enterprise.

*Business registration is a compulsory procedure for all enterprises before operating.*

2. CONDITIONS FOR SETTING UP A COMPANY.

In order to set up a company, you must meet all of the following 6 conditions:

Conditions on the registered business lines (if any);
Conditions on the name of the enterprise to be established;
Conditions on the head office of the enterprise;
Conditions on valid dossiers;
Condition on the obligation of fully paying the business registration fee;
Conditions on the founder, and the manager of the enterprise.

3. WHAT TO PREPARE WHEN SETTING UP A COMPANY?

In the past few years, the business environment in Vietnam has continuously changed. Therefore, before setting up a company, you need to rigorously prepare the following factors:

3.1. A suitable form of enterprises

Depending on the desired organizational structure, the number of founding members, as well as the scope of responsibility within the capital contribution or the assets contributed as capital, you can choose one of the following forms of enterprise:

Single-member limited liability company
Multi-member limited liability company
Joint-stock company
Partnership
Sole proprietorship

In addition to the above, you must also choose a suitable form for your business regarding taxation, legal liability, scale of production or service, ability to transfer capital or convert it into other forms.

It is necessary to carefully study the characteristics of each form to find out the orientation as the form of enterprise will accompany the business throughout its operation and future development. Moreover, it takes a lot of time and complicated procedures to change the form of the enterprise which can cause discontinuity in business.

3.2. Name and address.

The rule for naming: Form of enterprise + Specific name. The name of the enterprise must be written in the Latin alphabet and must not be identical or confusing to the name of other enterprises.

Please note that we must not use trade names, trademarks or geographical indications of protected organizations or individuals to name the enterprise (except for enterprises licensed by the owner)

The address where the head office is located is the place to contact the enterprise in the territory of Vietnam as specified in Article 42 of the Law on Enterprises 2020.

In addition, newly established enterprises need to add a phone number, email address and fax number (if any). The address of the head office of the enterprise must not be an apartment, a condominium that has no commercial function.

3.3. Business lines.

Enterprises should prepare in advance the expected business lines to avoid time-consuming supplementation after operating for a period of time. Enterprises completely can register many business lines at the same time, as long as they are not on the prohibited list in accordance with the law.

Business lines are divided into two different categories: conditional and unconditional business lines.

Business lines without conditions include all lines of business that are not prohibited by the law and excluding conditional business lines.

For conditional business lines, enterprises must meet the conditions in Article 7 of the Investment Law 2020 i.e., national defense and security, social order, safety, and ethics. the health of the community and specific conditions stipulates in the corresponding legal normative documents, e.g. conditions of capital, facilities, etc. When it comes to conditional business lines, in addition to the enterprise registration certificate granted by the Department of Planning and Investment, enterprises also need to obtain certain other licenses and certificates, also known as sublicenses.

*06 factors to prepare when setting up a company.*

3.4. Appropriate amount of charter capital.

Charter capital is the amount of capital that the members of the company have contributed or committed to contributing in the future. The maximum time limit to complete the capital contribution shall not exceed 90 days from the date the enterprise is granted the enterprise registration certificate.

Charter capital will directly affect the annual license fee and is the basis for determining the size of your enterprise. Therefore, when deciding how much to contribute, enterprises should not register too much or too little charter capital compared to their ability.

3.5. Legal representative.

The legal representative of an enterprise can be the Director, General Director, Chairman of the Members’ Council, Chairman of the Board of Directors or other titles in the company.

The legal representative is an individual to represent the enterprise to exercise the rights and obligations arising from the enterprise’s transactions, to sign contracts and procedures, as well as to participate in litigations at the Court or arbitration organization.

3.6. Documents for business registration.

After having decided on the above factors, you will have to prepare an adequate dossier for business registration including the following documents:

A certified true copy of the identity card/passport of the owner of the sole proprietorship, capital contributors, shareholders and legal representatives;
An application for enterprise registration according to the form;
Company Charter;
List of members or shareholders of the enterprise;
Some specific documents depending on the form of enterprise and the business lines.

Thus, in order to run your business, you have to conduct the business registration procedure. To carry out this procedure thoroughly and quickly, it is necessary to know what to prepare when setting up a company.

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