Short answer. The choice depends on three questions: how many owners, whether you plan to raise capital from outside investors, and whether you intend to generate revenue in Vietnam at all. A Limited Liability Company (LLC) — single-member or multi-member, up to 50 members — cannot issue shares but is the simplest structure to govern and is the default choice for a straightforward trading, services, or manufacturing subsidiary. A Joint-Stock Company (JSC) requires a minimum of three shareholders, has no maximum, and is the only one of the three that can issue shares and other securities — making it the right structure when external capital-raising, an eventual IPO, or a broad shareholder base is part of the plan, at the cost of a materially heavier governance structure (General Meeting of Shareholders, Board of Directors, and in some cases a Board of Supervisors). A Representative Office cannot generate revenue at all — no invoicing, no direct sales, no service delivery — and exists solely to conduct market research and liaison activities on behalf of a foreign parent, making it a market-testing vehicle rather than an operating entity.
LLC: the default for a straightforward operating subsidiary
A Limited Liability Company may be single-member (wholly owned by one investor) or multi-member, with a statutory cap of 50 members. Governance runs through a Members' Council for multi-member LLCs, which is comparatively simple to administer relative to a JSC's shareholder-meeting apparatus. The structural limitation is capital-raising: an LLC is not permitted to issue shares, though it may issue bonds. For the majority of foreign investors setting up a single operating subsidiary in Vietnam — a trading company, a manufacturing entity, a services business — an LLC is the default, unremarkable choice precisely because its governance overhead matches what a business with a small, stable ownership group actually needs.
JSC: the structure for external capital and a broad shareholder base
A Joint-Stock Company requires a minimum of three shareholders with no upper limit, and — critically — is the only one of the three structures permitted to issue shares, bonds, and other securities. This makes a JSC the correct structure where the business plan includes raising capital from outside investors, preparing for an eventual public listing, or otherwise needing a shareholder base broader than a small, closely held group. The trade-off is governance complexity: a JSC requires a General Meeting of Shareholders, a Board of Directors, and, depending on scale and structure, a Board of Supervisors — a materially heavier compliance and governance burden than an LLC, and one that should be taken on deliberately rather than by default.
Representative Office: market testing, not operating
A Representative Office is not a revenue-generating entity under any circumstances — it cannot invoice, sell, or deliver services directly, and exists solely to conduct market research, liaison, and promotional activity on behalf of its foreign parent company. It is materially faster and cheaper to establish than an LLC or JSC, which makes it a genuinely useful vehicle for a foreign company testing the Vietnamese market, building relationships, or scoping a future investment before committing to an operating entity — but it is not, and should not be treated as, a lower-cost alternative to actually establishing an operating business in Vietnam.
Can a foreign investor set up a single-member LLC in Vietnam?
Yes. A single-member LLC, wholly owned by one foreign investor, is a common and straightforward structure for a wholly foreign-owned operating subsidiary in Vietnam.
Can an LLC be converted into a JSC later if we need to raise external capital?
Yes, conversion from LLC to JSC is a recognised process under Vietnamese company law, though it involves its own procedural steps and is worth planning for in advance rather than treating as a simple formality if external capital-raising is a realistic medium-term plan.
Is a Representative Office allowed to sign sales contracts in Vietnam?
No. A Representative Office cannot conduct direct revenue-generating activity, including signing sales contracts on its own account — it is limited to market research, liaison, and promotional functions on behalf of its foreign parent.
How many shareholders does a JSC need at minimum?
A minimum of three shareholders is required, with no statutory maximum, which is one of the structural reasons a JSC suits a business with a broader or evolving ownership base.
Which structure has lower ongoing compliance costs, LLC or JSC?
An LLC generally carries lower ongoing governance and compliance costs than a JSC, since it avoids the JSC's General Meeting of Shareholders, Board of Directors, and potential Board of Supervisors requirements.
How does JMT Private & Partners help decide between these structures?
JMT assesses the investor's ownership plans, capital-raising intentions, and revenue model before recommending a specific entity type, as part of its Pre-Investment Feasibility and Company Set-Up service lines.
