Table Of Contents

Primary Laws:

  • Law on Investment 2020 (Law No. 63/2020/QH14):
    • Sets out regulations for foreign investors establishing businesses in Vietnam, including e-commerce ventures.
    • Defines allowable foreign investment sectors and potential restrictions applicable to e-commerce.
    • Guides investment incentives and guarantees offered to foreign investors.
  • Law on Enterprises 2020 (Law No. 59/2020/QH14):
    • Establishes the legal framework for various business entities, including JSCs.
    • Outlines the process for establishing and operating JSCs, including corporate governance structures, shareholder rights and obligations, and capital contribution requirements.
    • Addresses specific regulations for JSC publicly offering shares.

Additional Relevant Legislation:

  • Law on E-commerce 2019 (Decree No. 73/2019/ND-CP):
    • Defines e-commerce activities and outlines regulations governing online transactions.
    • Establishes requirements for e-commerce service providers, including registration, consumer protection obligations, and data privacy compliance.
    • Addresses electronic payment regulations and dispute resolution mechanisms.
  • Law on Personal Data Protection (Law No. 41/2018/QH14):
    • Sets out regulations for the collection, storage, use, and disclosure of personal data in Vietnam.
    • E-commerce JSCs must comply with these regulations to protect customer data privacy.
  • Tax Laws:
    • Several tax laws are relevant to e-commerce businesses, including Corporate Income Tax (CIT) Law, Value Added Tax (VAT) Law, and Personal Income Tax (PIT) Law.
    • Understanding and complying with these laws is crucial for proper tax planning and reporting.

Regulations and Circulars:

Several regulations and circulars issued by relevant authorities provide additional details and specific requirements for e-commerce businesses. These include:

  • Circular No. 12/2020/TT-BTTTT: Electronic contracts, commercial information, and electronic payments in e-commerce.
  • Circular No. 15/2019/TT-BTTTT: Guidelines for e-commerce information announcement and product origin declaration.

Staying Updated:

The Vietnamese legal and regulatory landscape for e-commerce is evolving rapidly. It's essential to stay updated on the latest developments by consulting with qualified legal professionals and relevant government websites.

Seeking Legal Advice:

Navigating the intricate legal framework surrounding e-commerce JSCs in Vietnam can be complex. Seeking guidance from experienced lawyers specializing in foreign investment and e-commerce regulations is crucial to ensure compliance, mitigate risks, and navigate the establishment process smoothly.

 

2. Key Steps for Establishment

1. Pre-Registration:

  • Market Research: Conduct thorough market research to understand the Vietnamese e-commerce landscape, target audience, and competitive environment.
  • Business Plan Development: Develop a comprehensive business plan outlining your e-commerce venture's concept, target market, business model, financial projections, and marketing strategies.
  • Choose a Business Name: Select a unique and compliant name for your JSC after checking its availability.
  • Appoint Legal Representatives: Designate legal representatives, including a Chairperson and Board of Directors, for your JSC.

2. Investment Registration:

  • Prepare Application Documents: Gather all necessary documentation, including the business plan, relevant licenses, and legal documents of involved individuals.
  • Submit Application to DPI: Apply for an Investment Registration Certificate (IRC) to the relevant provincial Department of Planning and Investment (DPI).
  • Await Processing: The DPI will review the application and conduct due diligence, typically within 15 working days.

3. Enterprise Registration:

  • Prepare Enterprise Registration Dossier: Once the IRC is obtained, compile the registration dossier for the JSC, including the company charter, shareholder list, and legal documents of founders and shareholders.
  • Submit Dossier to BRO: Submit the completed dossier to the Business Registration Office (BRO) under the relevant DPI.
  • Obtain Enterprise Registration Certificate (ERC): Upon successful processing, the BRO will issue the ERC, officially establishing your e-commerce JSC. This process usually takes 3 working days.

4. Post-Registration:

  • Open a Corporate Bank Account: After receiving the ERC, open a corporate bank account for your JSC to manage financial transactions.
  • Apply for Tax Code: Register with the tax authorities and obtain a tax code for your JSC.
  • Obtain Business Seal: Apply for and acquire a company seal for official documents and contracts.
  • Fulfill Ongoing Compliance Requirements: Maintain compliance with relevant tax regulations, submit annual reports, and conduct mandatory audits (if applicable).

Additional Considerations:

  • Shareholder Agreements and Internal Regulations: Depending on the number and type of shareholders, consider drafting shareholder agreements and internal regulations to govern company operations and shareholder rights.
  • E-commerce Platform and Infrastructure: Establish your e-commerce platform, secure necessary licenses and permits, and ensure compliance with e-commerce regulations and data privacy requirements.
  • Recruitment and Staffing: Hire qualified individuals to manage your e-commerce business operations, including logistics, marketing, customer service, and technical support.

Seeking Professional Assistance:

Due to the complexities involved, it's highly advisable to consult with experienced legal and business advisors to navigate the establishment process effectively and ensure compliance with all legal and regulatory requirements. They can assist with:

  • Document preparation and application procedures
  • Legal and regulatory compliance
  • Tax planning and registration
  • Business structure and governance
  • E-commerce platform setup and compliance

By following these steps and seeking professional assistance, you can successfully establish your e-commerce JSC and embark on your entrepreneurial journey in Vietnam.

 

3. Advantages of a Joint Stock Company

1. Limited Liability:

  • Protection of Shareholders' Assets: This is one of the key benefits of a JSC. Shareholders' liability is limited to the amount they have invested in the company. In case of debts or legal issues, their assets are shielded.
  • Encourages Risk-taking: Limited liability fosters a conducive environment for risk-taking and innovation. Entrepreneurs and investors can make more ambitious business decisions without worrying about the potential consequences extending to their finances.

2. Flexibility in Raising Capital:

  • Issuing Shares: JSCs can raise substantial capital by issuing shares to the public or through private placements. This allows for scaling up e-commerce ventures beyond what would be possible with limited funds from a few owners.
  • Public Offerings: JSCs can choose to list their shares on a stock exchange, enabling them to access even larger pools of capital and attracting a broader range of investors.
  • Diverse Funding Sources: JSCs can explore other funding options like issuing bonds or obtaining loans from financial institutions, leveraging the company's financial strength and credibility.

3. Ease of Ownership Transfer:

  • Share Trading: The shares of a JSC are freely transferable. This allows investors to easily sell their shares and exit their investment if needed, fostering liquidity and promoting investment attractiveness.
  • Attracts Investors: The ease of ownership transfer encourages participation from various investors as they know they wouldn't be locked in for an indefinite period.

4. Professional Management:

  • Board of Directors: JSCs are governed by a Board of Directors elected by shareholders. This brings in diverse expertise, knowledge, and strategic insights for guiding company operations and making sound decisions.
  • Specialized Talent: JSCs can afford to hire experienced and specialized professionals for key managerial positions, such as a CEO, CTO, or CMO, to drive business growth and manage complex operations.

5. Perpetual Succession:

  • Unaffected by Changes in Ownership: The lifespan of a JSC is not tied to its founders or shareholders. The company continues to exist regardless of transfers of ownership, deaths, or retirements of shareholders.
  • Long-term Stability and Sustainability: This characteristic ensures longevity and offers stability for business partnerships, contracts, and long-term e-commerce strategies.

6. Enhanced Credibility and Reputation:

  • Established Structure: JSCs are perceived as more structured and stable compared to sole proprietorships or partnerships.
  • Improved Perception: This increased credibility can improve relationships with potential partners, suppliers, and customers, facilitating growth and expansion.

Notes:

  • The advantages of a JSC are particularly relevant in the e-commerce domain, where scaling, access to funding, and establishing a trustworthy brand image are essential for success.
  • The suitability of the JSC structure depends on the specific needs and goals of your e-commerce venture. It's advisable to consult with a legal advisor to determine if it's the right structure for your business.

 

4. Additional Considerations

1. Foreign Ownership Regulations:

  • Restrictions in Certain Sectors: While Vietnam generally welcomes foreign investment, certain sectors within e-commerce, like online retail of specific products or services, may have limitations on foreign ownership percentages.
  • Consult Legal Experts: Thoroughly research and understand the current foreign ownership restrictions applicable to your specific e-commerce business activity. Seek guidance from legal professionals specializing in foreign investment regulations to ensure compliance.

2. Taxation:

  • Corporate Income Tax (CIT): E-commerce JSCs are subject to CIT at the prevailing rate, currently 20%. Understanding CIT regulations and implications for your business is crucial.
  • Value Added Tax (VAT): Depending on the nature of your e-commerce transactions (e.g., B2B, B2C, cross-border), VAT registration and compliance may be required. Consult with tax advisors to determine your VAT obligations.
  • Personal Income Tax (PIT): If employing individuals or distributing dividends to foreign shareholders, understanding PIT regulations and withholding tax requirements is essential.

3. E-commerce Regulations:

  • Compliance with E-commerce Law: Ensure your e-commerce platform and business practices adhere to the regulations outlined in the Law on E-commerce 2019, including consumer protection, product information disclosure, and electronic payment security.
  • Data Privacy Compliance: Comply with the Law on Personal Data Protection and relevant regulations regarding the collection, storage, use, and disclosure of customer data to safeguard user privacy.

4. Intellectual Property Protection:

  • Trademark Protection: Register your e-commerce brand name and relevant trademarks with the National Office of Intellectual Property of Vietnam to protect your intellectual property rights.
  • Copyright Protection: If your e-commerce business involves copyrighted content (e.g., software, music, images), understand and comply with copyright protection laws in Vietnam.

5. E-commerce Platform and Infrastructure:

  • Platform Selection and Development: Choose a reliable and secure e-commerce platform tailored to your specific needs and target market. Consider factors like scalability, security features, and integration with payment gateways.
  • Logistics and Delivery: Establish efficient logistics and delivery partnerships to ensure timely and reliable product delivery to your customers.
  • Payment Gateway Integration: Integrate secure and popular payment gateway options on your platform to facilitate seamless and convenient transactions for your customers.

6. Marketing and Customer Acquisition:

  • Develop a Marketing Strategy: Craft a comprehensive marketing strategy to reach your target audience and build brand awareness in the Vietnamese market. Consider utilizing various digital marketing channels like social media, search engine optimization (SEO), and influencer marketing.
  • Localization: Adapt your marketing messages, product descriptions, and branding to resonate with the Vietnamese cultural context and consumer preferences.

7. Ongoing Compliance and Reporting:

  • Maintain Financial Records: Maintain accurate and complete financial records as required by Vietnamese accounting standards.
  • Submit Annual Reports: Meet the legal requirement to submit annual reports to relevant authorities, including financial statements and tax filings.
  • Stay Updated on Regulations: Regularly monitor changes in e-commerce regulations, tax laws, and other relevant legal frameworks to ensure ongoing compliance.

By carefully considering these additional aspects and seeking professional guidance when necessary, you can effectively navigate the establishment process and ensure the long-term success of your e-commerce JSC in Vietnam.

 

5. Conclusion

Establishing an e-commerce Joint Stock Company (JSC) in Vietnam presents an exciting opportunity for foreign investors seeking to tap into the vibrant Vietnamese e-commerce market. While the process involves specific legal and regulatory considerations, the advantages offered by a JSC structure, such as limited liability, access to capital, and enhanced credibility, can be highly beneficial for e-commerce ventures.

By thoroughly understanding the legal framework, navigating the key steps for the establishment, and addressing crucial additional considerations, foreign entrepreneurs can effectively navigate the process and contribute to the dynamic Vietnamese e-commerce landscape. Remember, seeking guidance from qualified legal and business professionals is highly recommended to ensure a smooth and compliant entry into the Vietnamese market.

This guide has provided a foundation to explore the possibilities and navigate the intricacies of establishing an e-commerce JSC in Vietnam. With careful planning, strategic execution, and a commitment to compliance, your e-commerce venture can flourish in this promising market. If you need further explanation on this subject, please don't hesitate to contact us through email at lienhe@luatminhkhue.vn or phone at: +84986 386 648. Lawyer To Thi Phuong Dzung