Are you wondering how much capital is enough to establish a limited liability company (LLC)? The good news is that there is no minimum capital requirement under the law for setting up either a single-member or multi-member LLC. However, you will want to determine how much capital is actually needed for your FDI enterprise to operate effectively—and to gain the trust of partners and banks regarding your financial capacity.
In this article, I will help you answer that question.
Types of Capital Required When Establishing a Limited Liability Company (LLC)
Charter Capital
Charter capital refers to the amount of money, gold, land use rights, intellectual property rights, technology, or other assets contributed by members or the owner when establishing a limited liability company (LLC).
This type of capital is mandatory and must be clearly stated in the company’s charter. It also affects the business license tax: you must pay VND 2 million per year if the charter capital is under VND 10 billion, and VND 3 million per year if it exceeds VND 10 billion.
The charter capital must be fully contributed within the committed timeframe—typically 90 days from the date of issuance of the enterprise registration certificate.
Legal Capital
Legal capital refers to the minimum amount of capital required by law to establish a company in certain specialized sectors such as securities, insurance, real estate, or international postal services.
For example, a minimum legal capital of VND 5 billion is required to operate international postal services, and VND 10 billion for providing securities investment consultancy services.
The purpose of this regulation is to ensure that companies have sufficient financial capacity to minimize risks when operating in sensitive industries.
Escrow Capital
Escrow capital is the amount of money a company must deposit in a bank to ensure financial security for certain business sectors, such as international travel services or large-scale investment projects.
This amount is typically temporarily frozen and can only be accessed in specific circumstances. Below are the specific escrow capital requirements for certain industries and investment projects:
- International travel services (inbound): VND 250 million
- International travel services (outbound): VND 500 million
- 3% of the total capital for investment projects under VND 300 billion
- 2% for projects from VND 300 billion to VND 1,000 billion
- 1% for projects over VND 1,000 billion
Foreign Investment Capital
This refers to the portion of capital contributed by foreign investors to a limited liability company (LLC) in Vietnam.
There are two main forms of capital contribution: foreign investors can either contribute capital to establish a company or acquire shares/ownership stakes (direct investment), or invest through methods such as purchasing bonds or entering into business cooperation contracts (indirect investment).
Foreign investment capital is crucial for FDI enterprises, as it determines the legal status of the business. Moreover, it affects the business license tax and other financial obligations.
How Much Capital Is Required to Establish a Limited Liability Company (LLC)?
According to the 2020 Law on Enterprises, Vietnamese law does not prescribe a mandatory minimum charter capital for LLCs, except for certain specific business sectors that require legal capital or escrow deposits. This provides foreign investors with flexibility in deciding the appropriate amount of charter capital based on their business strategy.
For business lines that do not require legal capital, FDI enterprises are free to choose any level of charter capital—from just a few million to several billion VND. However, setting the charter capital too low may negatively impact your company’s credibility when dealing with partners, banks, or tax authorities. A reasonable level of capital will help build trust and facilitate smoother business transactions.
If your business falls under sectors requiring legal capital—such as security services, banking, insurance, or film production—the law mandates that the charter capital must be at least equal to the required legal capital, as specifically stipulated.
Deciding on the amount of charter capital depends not only on legal regulations but also on various other factors. For example, your capital should be sufficient to operate and grow your business, so consider whether you plan to stay small-scale or aim for expansion.
Frequently Asked Questions About How Much Capital Is Needed to Establish an LLC
Do you need to prove your charter capital when setting up an LLC?
No. However, if your company operates in sectors that require escrow capital—such as banking, insurance, or other specific industries—you will need to prove your charter capital when establishing the LLC.
Although it’s not mandatory in most cases, it’s advisable to declare a reasonable level of capital to avoid potential risks regarding credibility or future financial obligations.
How can a business contribute capital to an LLC?
FDI enterprises often contribute capital through non-cash methods to ensure transparency. Therefore, you can:
- Transfer funds to the company’s capital account
- Make payments by cheque
- Contribute valuable assets such as machinery, real estate, or technology
These transactions must be clearly documented in accordance with both Vietnamese and international regulations.
How can an individual contribute capital to an LLC?
Individuals (including foreign investors) can contribute capital via:
- Cash (must be supported by clear invoices and receipts)
- Bank transfer from a personal account to the company’s account
- Other assets such as land, equipment, or vehicles (must be appraised and transferred legally)
If you’re contributing capital in the form of assets, it’s advisable to hire an independent valuation firm to ensure transparency and avoid future disputes.
So how much capital is needed to establish an LLC?
Now you know that you don’t need a large amount of capital to establish an LLC. However, if the capital is too low, your FDI business may face difficulties in operations due to a lack of financial credibility with partners and banks.
If you need advice on a suitable amount of capital, KMC—a consulting service specializing in the FDI market, especially Japanese enterprises in Vietnam—can offer valuable guidance.
We have a team of experienced legal and accounting professionals in this field. Contact us via hotline: +84814894789, +84919889331 (Ho Chi Minh City), or +84814894789 (Hanoi) for immediate consultation.
