Vietnam Limited Liability Partnership Registration - The Company in Vietnam

Vietnam Limited Liability Partnership Registration

04-07-2018 84 Comments 268 Views

A Vietnam Limited Liability Partnership is a type of business structure where two or more partners incorporate a partnership entity that shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners.

For a Limited Liability Partnership to exist, there must always be two or more partners. Although Vietnam’s Limited Liability Partnership Act of 2005 does not restrict the benefit of Limited Liability Partnership structure to certain classes of professionals only, in practice, Limited Liability Partnership structure makes the most sense for chartered professions only (such as lawyers, accountants) when two or more such professionals decide to work together. For a typical entrepreneur however, incorporating a private limited company is the preferred option.

To learn about various types of business entities in Vietnam, refer to vietnam sole proprietorship registration

Vietnam limited liability partnership registration

Vietnam limited liability partnership registration

Quick Facts.

Vietnam Limited Liability Partnership Liability:

  • A Vietnam Limited Liability Partnership is rendered a separate legal identity. Thus a Limited Liability Partnership can own property, sue or be sued.
  • A partner of the Vietnam Limited Liability Partnership cannot be held personally liable for the wrongful commission or omission of any other partners.
  • In the course of business of a Vietnam Limited Liability Partnership, if a partner becomes liable to any person or company through his acts of commission or omission, the Limited Liability Partnership is liable to the same extent as the partner. Therefore claims can be made against an Limited Liability Partnership to the full extent of its assets.
  • A partner during the course of the business is personally responsible for liabilities that arise due to his act of commission, omission, or negligence. Claims for liabilities can be made against him and his personal assets. However other innocent partners and their personal assets will remain insulated from such liabilities and their liabilities will be limited only to the capital contributed by them to the Limited Liability Partnership.
  • The mutual rights and duties of the Vietnam Limited Liability Partnership and its partners are governed by the limited liability partnership agreement. In the absence of agreement as to any matter, the First Schedule of the Limited Liability Partnership Act 2005 shall apply.

Taxation of a Vietnam Limited Liability Partnership:

From a tax perspective, Vietnam Limited Liability Partnership are not taxed at the entity level and profits are treated as part of each partners’ personal income and are taxed at personal income tax rates. Where the partner is an individual, his share of income from the Limited Liability Partnership will be taxed based on his personal income tax rate. Where a partner is a company, its share of income from the Limited Liability Partnership will be taxed on the tax rate for companies.

Members and Management of a Vietnam Limited Liability Partnership:

  • There must be a minimum of two partners. However there is no cap on the maximum number of partners in a Limited Liability Partnership.
  • The partners can be natural persons or companies.
  • A partner may cease to be a partner upon his death or dissolution or in accordance with the limited liability partnership agreement, in the absence of such agreement, by giving 30 days’ notice to the other partners.
  • A proposed new partner requires the consent of all existing partners. Other matters are decided by majority vote, with each partner having one vote.
  • Unlike private limited companies, an Limited Liability Partnership in Vietnam does not have directors, shareholder or secretary, instead the partners own and run the business.
  • Every limited liability partnership must appoint at least one manager who is a natural person of at least 18 years of age and who is ordinarily resident in Vietnam, a Vietnam Citizen or a Permanent Resident.

Vietnam Limited Liability Partnership Name and Address:

  • A Vietnam LLP’s name must include the words limited liability partnership or the acronym Limited Liability Partnership.
  • Every limited liability partnership shall have a registered office within Vietnam to which all communications and notices may be addressed.

Vietnam Limited Liability Partnership Compliance:

  • Limited Liability Partnership is required to keep its books up-to-date so as to substantiate all the transactions and financial position of the Limited Liability Partnership, failure to do so may lead to prosecution and penalties.
  • An Limited Liability Partnership in Vietnam is not required to file its accounts or have them audited. Nor does it need to disclose its capital.
  • The manager of an Limited Liability Partnership must submit to the Registrar an annual declaration of solvency or insolvency; such declaration must be lodged within the first 15 months from the date of the registration of the Limited Liability Partnership. Subsequently a declaration once in every calendar year must be submitted at intervals of not more than 15 months.
  • Every limited liability partnership must ensure that its invoices and official correspondence bear the statement that it is registered as an Limited Liability Partnership, and the name and registration number of the limited liability partnership must be visibly printed on all its bills, invoices and official correspondence.
  • Any changes to the particulars of the Limited Liability Partnership must be lodged with the Registrar within 14 days from the date of change.

Documents Required for a Vietnam Limited Liability Partnership.

In order to register an Limited Liability Partnership in Vietnam, the following information or documents are needed:

  • Proposed Limited Liability Partnership name.
  • Particulars of the Limited Liability Partnership partners-managers as per the foreign passport or Vietnam identity card.
  • Residential address of the Limited Liability Partnership partners-managers.
  • Declaration of compliance.
  • Details of the registered address for the Limited Liability Partnership.
  • Consent to Act as Manager and Statement of Non Disqualification to Act as Manager.
  • In case the partner is a company: Registration details of the company such as registration number, jurisdiction, registered address.

Vietnam Limited Liability Partnership Registration Procedure.

A limited liability partnership is registered with Accounting and Corporate Regulatory Authority of Vietnam. Foreign individuals must appoint a professional services firm to handle the registration process. Even for locals, it is suggested to engage a professional services firm for Limited Liability Partnership registration including drafting the partnership agreement.

The Limited Liability Partnership registration process consists of two steps: name reservation and registration of the entity. Under normal circumstances, an Limited Liability Partnership registration can be completed in a single day.

Corporate Documents Issued for Singapore Limited Liability Partnership.

Accounting and Corporate Regulatory Authority will send an email notification confirming the Vietna Limited Liability Partnership registration. A business profile containing the registration details can be obtained from Accounting and Corporate Regulatory Authority upon successful registration of the Limited Liability Partnership. Both of these documents are provided in a softcopy format via email which is sufficient to all purposes in Vietnam. If required, certified hard copies can always be requested from Accounting and Corporate Regulatory Authority office by filing an application accordingly.

Bank Account Opening for a Vietnam Limited Liability Partnership.

After registering the Limited Liability Partnership, a bank account can be opened in any of the several international, foreign and local banks in Vietnam. Limited Liability Partnership may open a multiple account of various currencies or can also open a single multi currency account. Typically, the banks will require the following documents:

  • Account Application Form.
  • Partners’ Resolution of bank account and authorized signatories.
  • Certified True Copies of photocopies of NRIC/Passport of all Partners and Authorized Signatories.
  • Partnership Agreement.
  • A latest print out of the Limited Liability Partnership’s business profile.

Annual Filing Requirements of a Vietnam Limited Liability Partnership.

A Vietnam Limited Liability Partnership is required to keep an uptodate books of accounts so as to substantiate all the transactions and financial position of the Limited Liability Partnership. Accounting and other financial records need to be maintained for 7 consecutive years.

The manager of an Limited Liability Partnership must submit to the Registrar an annual declaration of solvency or insolvency, such declaration must be lodged within the first 15 months from the date of the registration of the Limited Liability Partnership. Subsequently a declaration once in every calendar year must be submitted at intervals of not more than 15 months.

Vietnam Limited Liability Partnership Advantages.

  • Separate Legal Identity: An Limited Liability Partnership has a separate legal identity and can own property, enter into contracts, sue or be sued in its own name.
  • Limited personal liability: The partners of the Limited Liability Partnership will not be held personally liable for any business debts incurred by the Limited Liability Partnership or the wrongful acts of another partner. A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission.
  • Perpetual succession: Any changes in the Limited Liability Partnership do not affect its existence, rights or liabilities.
  • Ease of compliance: Compliance requirements are more complex than sole proprietorship but simpler than a private limited company.

Vietnam Limited Liability Partnership Disadvantages.

  • Requires a minimum of 2 partners at all times.
  • Individual partners can commit the partnership to formal business agreements without the consent of the other partners.
  • Limited Liability Partnership lack the ease of ownership transfer and investment that a company structure provides.
  • No corporate tax benefits: Tax exemptions available to private limited companies are not available to Limited Liability Partnership. Limited Liability Partnership is treated as tax transparent which means an Limited Liability Partnership is not taxed as an entity. Instead each partner is taxed on their share of the profits as per the personal income tax rates.

In Summary.

In tune with the changing business needs and to be in tandem with the international developments, the government of Vietnam after extensive public consultation and based on the recommendations of the Company Legislative and Regulatory Framework Committee gave the green signal for Limited Liability Partnerships in 2005.

Read more: Vietnam limited liability company and limited liability partnership

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