Choosing the Right Business Lines in Compliance with the Law – Avoiding Legal Risks

2.1. For Newly Established Enterprises

– Select appropriate business codes from the five-tier classification under Decision No. 27/2018/QĐ-TTg;

– Accurately record both the business name and code in the enterprise registration dossier (within the Application for Enterprise Registration form);

– Prepare the registration dossier in accordance with the enterprise type (LLC, JSC, partnership, etc.) as prescribed in Decree No. 168/2025/NĐ-CP;

– Submit the dossier to the Department of Finance where the enterprise’s head office is located;

– Once the Enterprise Registration Certificate is issued, the registered business lines will be officially recorded and published on the National Business Registration Portal.

2.2. For Existing Enterprises

– Carry out the procedure to add or amend business lines through the Business Registration Office;

– No new company seal is required when adding business lines;

– The updated information will be reflected in the new Enterprise Registration Certificate (if any) and officially updated on the national registration system.

3. Key Notes for Selecting Business Lines in Compliance with Legal Regulations

Choosing business lines is not merely a procedural formality in the business registration process — it directly affects the legality, rights, obligations, and future scalability of a company’s operations. Below are essential considerations businesses must keep in mind:

3.1. Selecting the Correct Business Codes under Decision No. 27/2018/QĐ-TTg

The Vietnam Standard Industrial Classification (VSIC) issued under Decision No. 27/2018/QĐ-TTg serves as the mandatory legal basis for determining and declaring business lines when establishing or amending enterprise registration. Companies should:

– Select Level 4 or Level 5 codes that accurately reflect their actual business activities;

– Avoid using outdated or abolished codes, and always update to the latest version of the VSIC;

– Refrain from self-describing business lines in their own wording, as this may cause misinterpretation or rejection of registration dossiers;

– For specialized or emerging sectors (e.g., new technologies or innovative business models), consult a corporate lawyer to identify the most appropriate equivalent code.

3.2. Avoid Registering Prohibited Business Lines

Under the Law on Investment 2020, certain business activities are strictly prohibited, including:

– Debt collection services;

– Prostitution-related businesses;

– Explosives trading;

– Trading of narcotic substances;

– Trading of prohibited minerals or chemicals;

– Trading of endangered wildlife or aquatic species from natural exploitation;

– Activities involving human trafficking, sale of organs or embryos, or human cloning.

Registering or engaging in these activities may lead to license rejection and potential criminal or administrative liability if conducted illegally.

3.3. Pay Attention to Conditional Business Lines

More than 200 business lines are classified as conditional under Appendix IV of the Law on Investment 2020. These typically require:

– Legal capital (e.g., real estate businesses must have a minimum capital of 20 billion VND);

– Professional certificates (e.g., lawyers, accountants, auditors);

– Sub-licenses or permits from specialized authorities (e.g., security, environmental, or safety certifications);

– For regulated sectors such as education, finance, transportation, and tourism, enterprises must obtain specific operating licenses under Decree No. 168/2025/NĐ-CP.

Operating without fulfilling these conditions may result in administrative fines from 20 to 30 million VND or suspension of business activities under Decree No. 122/2021/NĐ-CP.

3.4. For Foreign-Invested Enterprises (FDI)

According to Decree No. 31/2021/NĐ-CP, foreign investors face restrictions in certain sensitive sectors, such as:

– Journalism and publishing;

– Telecommunications and broadcasting;

– Preschool and primary education;

– Insurance and banking services.

To participate in these areas, FDI enterprises must obtain prior approval from the Department of Planning and Investment (currently the Department of Finance) and relevant line ministries, or operate through a joint venture with limited foreign ownership ratios.

3.5. Align Business Lines with Long-Term Development Strategy

Do not only register for activities you are currently conducting — plan ahead:

– Register auxiliary or supporting business lines to enable future expansion;

– For companies planning to engage in manufacturing or trading, consider adding related codes for warehousing, import–export, or logistics;

– Avoid registering an excessive number of unrelated business lines, as this may create an impression of lack of focus or professionalism, and may raise risk flags during due diligence or banking reviews.

3.6. Add Business Lines When Expanding — Avoid Operating Outside Registered Scope

Under Article 44 of Decree No. 122/2021/NĐ-CP, enterprises conducting activities not listed in their registered business scope may face fines of 5–10 million VND and be required to update their registration.

Therefore, companies should promptly supplement business lines when:

– Opening new branches or divisions offering different services;

– Adjusting business direction to new markets or investment areas.

Timely updates through the Business Registration Office will help ensure compliance and avoid unnecessary legal risks.