Indochine Counsel | Business Law Practitioners   Page 1 of 5 
TO  Clients & Associates  (..Khách hàng và Cộng sự)
FROM  Dang The Duc 
DATE   20 September 2007 
RE  Major Corporate Vehicles under the 2005 Enterprise Law in Vietnam
Formation and operations of enterprises in Vietnam are currently governed by the
following main pieces of legislation, among others:
1. Law on Investment No. 59/2005/QH11 passed by the National Assembly of Vietnam
on 29 November 2005, effective from 01 July 2006 (“LOI”); 
2. Law on Enterprises No. 60/2005/QH11 passed by the National Assembly of
Vietnam on 29 November 2005, effective from 01 July 2006 (“LOE”); 
3. Decree No. 88/ND-CP dated 29 August 2006 of the Government guiding the LOE
on business registration (“Decree 88”);
4. Decree No. 108/2006/ND-CP dated 22 September 2006 of the Government
providing guidelines for implementation of a number of articles of the LOI (“Decree
108”); and 
5. Decree No. 139/2007/ND-CP dated 05 September 2007 of the Government guiding
the implementation of a number of articles of the LOE (“Decree 139”). 
Pursuant to the LOI, all forms of investment in Vietnam are grouped under two broad
categories, “direct investment” and “indirect investment”. 

Indochine Counsel | Business Law Practitioners   Page 2 of 5
Direct investment is a form of investment whereby the investor invests its capital and
participates in the management of the investment activity. It includes the establishment
of wholly foreign- or domestic-owned companies, joint venture companies (JVC)
between foreign and domestic investors (in one of the business vehicles / types of
enterprise as mentioned below); entering into a Business Cooperation Contract (BCC) or
a Building – Operation – Transfer (BOT), Building – Transfer – Operation (BTO) or Building –
Transfer (BT) contracts with a competent State body for infrastructure projects; purchasing
shares or contributing capital to become shareholders and participate in the
management of investment activities; and investment in mergers and acquisitions.
Indirect investment is a form of investment by way of the purchase of shares, share
certificates, bonds or other valuable papers through a securities investment fund or by
way of intermediary financial institutions, and whereby the investor does not participate
directly in the management of the investment activity. 
While the LOI governs direct investment, the 2006 Securities Law and the LOE govern
indirect investment. The key difference between “direct investment” and “indirect
investment” is whether or not the investor directly participates in the management of the
investment activity. The distinction is not however always clear. 
The LOE governs regulations regarding corporate formation and operations. Under the
Vietnamese law, an “enterprise” is defined as an economic organization having its own
name, assets and a stable transaction office, with business registration for the purpose
of conducting business operations. There are four (4) main types of enterprises in
ƒ  Limited Liability Companies (LLC): An enterprise with fifty (50) or less members in
which a member may be an organization or an individual. An LLC may consist of a
single member LLC (SM-LLC)
or multiple members LLC (MM-LLC)
all contributing
ƒ  Joint Stock Companies (JSC): Also known as a shareholding company. It is an
enterprise in which the charter capital is divided into equal portions called shares,
with a minimum number of three (3) shareholders and no maximum. Only JSCs may
issue shares, offer securities and get listed on the stock exchange if satisfying listing
requirements under the securities law.
A SM-LLC is similar to a 100% foreign owned company established under the old Foreign
Investment Law.
A MM-LLC is similar to a joint venture or a 100% foreign owned company owned by two or more
investors under the old Foreign Investment Law. 

Indochine Counsel | Business Law Practitioners   Page 3 of 5
ƒ  Incorporated Partnerships: An enterprise with at least two (2) members being co-
owners of the company jointly conducting business under one common name (also
known as unlimited liability partners). Partnerships may also have partners with
limited liability. 
ƒ  Private Enterprises (i.e. sole proprietorships): An enterprise owned by one (1)
individual who shall be liable for all activities of the enterprise to the extent of all his
or her own assets (unlimited liability).  Each individual can establish one private
enterprise only. 
The following are the distinctions between a LLC and a JSC as two corporate vehicles
available under the laws of Vietnam for investors to adopt. 
LLC    Limited Liability Company 
SM-LLC   Single Member LLC 
MM-LLC  Multiple Member LLC 
JSC    Joint Stock Company / Shareholding Company 
MC    Members’ Council (for LLCs)
GSM    General Meeting of Shareholders 
BOD   Board of Directors / Board of Management (for JSCs)
BOC   Board of Controllers / Inspection Board 
Issues  LLC  JSC
Required number of members/shareholders (promoters)
LLCs have 2 types, SM-LLC and MM-LLC
• 1 member for SM-LLC 
• 2 or more members, but not exceeding 50 members, for MM-LLC
At least 3 shareholders are required, and there is no restriction on the maximum number of shareholders
Liabilities for the members / shareholders 
Limited liability Limited liability  Issuing shares LLCs may not issue shares JSCs may issue shares, i.e. more flexible for fund raising Listing on securities market  Not allowed  A JSC can be listed on the official stock exchange (e.g. HOSE3) or trading center (e.g. HASTC4), provided the listing conditions are
Ho Chi Minh City Stock Exchange
Hanoi Stock Trading Center 

Indochine Counsel | Business Law Practitioners   Page 4 of 5
Issues  LLC  JSC
satisfied as per the Securities Law.
Management Structure
(In order, in terms of powers)
• MC (or Company Chairman)
• MC Chairman 
• Director/General Director,
• BOC (in case of having 11 or more members) 
MC is the highest authority of the LLC, including all members of the LLC.
Members can be individuals or corporate entities. If member is corporate entity, it must appoint an authorized
representative to participate in the MC.
(In order, in terms of powers)
• GSM 
• BOD 
• Director / General Director, and 
• BOC (in case of having 11 or more shareholders, or with a corporate shareholders holding more than 50% shares)
GSM is the highest authority of the JSC, including all shareholders holding voting shares. If shareholder is corporate entity, it must appoint one or more authorized representative(s) to participate in the SM. 
BOD is the management body of the JSC, with full authority to make decisions in the name of the JSC, except for issues which fall within the authority of the GSM. The BOD consists of between 3 and 11 members, appointed and dismissed
by the GSM.
Pre-emptive rights for transfer of capital contribution/ shares 
For MM-LLCs, the members when transferring his share of capital contribution shall be subject to the pre-emptive
rights of other members (“right of first refusal”)
Transfer of shares not subject to pre-emptive rights by the laws, unless the shareholders agreement between the shareholders provide otherwise. 
Only restriction is that, within three (3) years from the date of establishment of a JSC, a founding shareholder if willing to sell his/her shares to the others who are not founding shareholders, the approval of the GSM must be obtained. But
he/she may freely transfer his/her shares to another founding shareholder.

Indochine Counsel | Business Law Practitioners   Page 5 of 5
1. A clear advantage of a JSC is that a foreign partner / investor may always sell shares to raise capital, or it would be more flexible for fund raising. It is also appropriate for the exit strategy for the foreign investor if it wants to sell shares to
the others. 
2. The LLC structure is likely to be the best structure for a wholly foreign owned enterprise. The sole investor has complete control of the company and is not subject to rules governing business relationships with partners, quorums, and
majority voting. The LLC structure may also be preferable for foreign investors entering into joint ventures with Vietnamese parties. In a LLC, the foreign investor may choose his partners, rather than in a JSC where the public has the rights to purchase shares. 
For further information or any inquiries, please contact
Dang The Duc | Managing Partner 
T +848 3823 9640 | E
This Client Memo is designed to provide our clients and contacts with general information of the relevant topic for
reference only, without the assumption of a duty of care by Indochine Counsel. The information provided is not intended
to be nor should it be relied upon as a substitute for legal or other professional advice. Please contact the author or our
partners if you wish to have more information or specific advice for the topic of this memo. 

© 2007 Indochine Counsel. All Rights Reserved.
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