I want to establish a garment joint stock company, can I? What documents and procedures are needed?

Who has the right to establish a Joint Stock Company?

According to the provisions of Article 17 of the Law on Enterprises 2020 as follows:

“Article 17. Right to establish, contribute capital, buy shares, purchase capital contributions and manage enterprises

1. Organizations and individuals have the right to establish and manage enterprises in Vietnam according to the provisions of this Law, except for the cases specified in Clause 2 of this Article.

2. The following organizations and individuals do not have the right to establish and manage businesses in Vietnam:

a) State agencies and units of the people’s armed forces use state assets to establish business enterprises to make private profits for their agencies and units;

b) Cadres, civil servants and public employees according to the provisions of the Law on Cadres and Civil Servants and the Law on Public Employees;

c) Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the Vietnam People’s Army; officers, professional non-commissioned officers, and police workers in agencies and units of the Vietnam People’s Police, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises or manage state-owned enterprises;

d) Leading and professional managers in state-owned enterprises as prescribed in Point a, Clause 1, Article 88 of this Law, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;

d) Minors; people with limited civil act capacity; people who have lost their civil act capacity; people with difficulty in cognition and behavior control; organizations without legal status;

e) People who are being prosecuted for criminal liability, detained, are serving prison sentences, are serving administrative measures at compulsory drug treatment facilities, compulsory education establishments or are banned by the Court from holding certain positions, practicing professions or doing certain jobs; Other cases according to the provisions of the Bankruptcy Law and the Law on Prevention and Combat of Corruption.

If the Business Registration Authority requests, the person registering to establish a business must submit a criminal record card to the Business Registration Authority;

g) Organizations are commercial legal entities banned from doing business and operating in certain fields according to the provisions of the Penal Code.

3. Organizations and individuals have the right to contribute capital, buy shares, and purchase capital contributions to joint stock companies, limited liability companies, and partnerships according to the provisions of this Law, except for the following cases:

a) State agencies, units of the people’s armed forces using state assets to contribute capital to enterprises to gain private profits for their agencies and units;

b) Subjects not allowed to contribute capital into enterprises according to the provisions of the Law on Cadres and Civil Servants, the Law on Public Employees, and the Law on Prevention and Combat of Corruption.

4. Gaining private profits for your agency or unit as prescribed in Point a, Clause 2 and Point a, Clause 3 of this Article is the use of income in any form derived from business activities, from capital contribution, share purchase, purchase of capital contributions for one of the following purposes:

a) Divide in any form to some or all of the people specified in Point b and Point c Clause 2 this;

b) Adding to the operating budget of an agency or unit contrary to the provisions of law on state budget;

c) Establishing a fund or adding to a fund to serve the private interests of the agency or unit.”

Based on legal regulations, organizations and individuals can establish joint stock companies in Vietnam, except for organizations and individuals who are prohibited from establishing and managing businesses in Vietnam according to the provisions of Clause 2, Article 17 of the Law on Enterprises 2020.

What does the registration file for establishing a Joint Stock Company include?

In Article 23 of Decree 01/2021/ND-CP, there are detailed regulations on the registration file for a Joint Stock Company as follows:

“Article 23. Business registration file for a limited liability company with two or more members up, joint stock company

1. Application for business registration.

2. Company charter.

3. List of members for limited liability companies with two or more members; list of founding shareholders and list of shareholders who are foreign investors for joint stock companies.

4. Copies of the following documents:

a) Legal documents of the individual for the legal representative of the enterprise;

b) Personal legal documents for company members, founding shareholders, shareholders who are foreign investors who are individuals; Legal documents of the organization for members, founding shareholders, shareholders who are foreign investors being organizations; Legal documents of individuals for authorized representatives of members, founding shareholders, shareholders who are foreign investors who are organizations and documents appointing authorized representatives.

For members and shareholders who are foreign organizations, copies of legal documents of the organization must be consularly legalized;

c) Investment registration certificate in case the enterprise is established established or participated in the establishment by foreign investors or economic organizations with foreign investment capital according to the provisions of the Investment Law and its guiding documents.”

In particular, the content of the Business Registration Application is specified in Article 23 of the Law on Enterprises 2020 as follows:

“Article 23. Contents of application for business registration

The application for business registration includes the following main contents:

1. Business name;

2. Head office address of the enterprise, phone number; fax number, email (if any);

3. Business lines and professions;

4. charter capital; investment capital of private business owners;

5. Types of shares, par value of each type of share and total number of shares authorized to be offered for each type of share for a joint stock company;

6. Tax registration information;

7. Estimated number of employees;

8. Full name, signature, contact address, nationality, legal document information of individuals for private business owners and general partners of partnerships;

9. Full name, signature, contact address, nationality, legal document information of the individual for the legal representative of a limited liability company or joint stock company.”

Regulations on the Charter of a Joint Stock Company when registering a business are in Clauses 2 and 3, Article 24 of the Law on Enterprises 2020, specifically:

“Article 24. Public Charter ty

…

2. The company’s charter includes the following main contents:

a) Name and address of the company’s headquarters; name and address of branch and representative office (if any);

b) Business lines;

c) charter capital; total number of shares, types of shares and par value of each type of shares for joint stock companies;

d) Full name, contact address, nationality of partners for partnerships; of company owners and members in the case of limited liability companies; of founding shareholders for joint stock companies. Capital contribution and capital contribution value of each member for limited liability companies and partnerships. Number of shares, types of shares, par value of each type of shares of founding shareholders for joint stock companies;

d) Rights and obligations of members for limited liability companies and partnerships; of shareholders for joint stock companies;

e) Management organization structure;

g) Number, management titles and rights and obligations of the legal representative of the enterprise; division of rights and obligations of the legal representative in case the company has more than one legal representative;

h) Procedure for approving the company’s decisions; principles for resolving internal disputes;

i) Basis and method for determining salaries, remunerations and bonuses of managers and controllers;

k) In cases where members and shareholders have the right to request the company to repurchase capital contributions for limited liability companies or shares for joint stock companies;

l) The following principles for profit distribution taxes and handling of business losses;

m) In case of dissolution, dissolution process and procedures for liquidation of company assets;

n) Procedures for amending and supplementing the company’s Charter.

3. When registering a business, the company charter must include the full names and signatures of the following people:

a) General partner for a partnership;

b) The company owner is an individual or the legal representative of the company owner who is an organization for a one-member limited liability company;

c) Members are individuals individual and legal representative or authorized representative of a member who is an organization for a limited liability company with two or more members;

d) Founding shareholders are individuals and legal representatives or authorized representatives of founding shareholders who are organizations for joint stock companies.”

Requirements for the list of founding shareholders and shareholders of a joint stock company are specified in Article 25 of the Law on Enterprises 2020 as follows:

“Article 25. List of members of limited liability companies, partnerships, list of founding shareholders and shareholders who are foreign investors for joint stock companies

List of members of limited liability companies, partnerships, list of founding shareholders and shareholders who are foreign investors for joint stock companies must include the following main contents here:

1. Full name, signature, nationality, contact address of members who are individuals for limited liability companies and partnerships; of founding shareholders and shareholders who are foreign investors for joint stock companies;

2. Name, business code and head office address of members who are organizations for limited liability companies and partnerships. name; founding shareholders and shareholders who are foreign investors for joint stock companies; share;

4. Contributed capital, value of capital contribution, ownership ratio of capital contribution, type of assets, number of assets, value of each type of capital contribution asset, capital contribution period of each member for limited liability companies, partnerships; number of shares, type of shares, share ownership ratio, asset type, number of assets, value of each type of capital contribution asset, capital contribution period of each founding shareholder established and shareholders are foreign investors for joint stock companies.”

How are the order and procedures for registering the establishment of a Joint Stock Company?

Pursuant to Article 26 of the Law on Enterprises 2020, the order and procedures for registering the establishment of a Joint Stock Company are carried out as follows:

“Article 26. Submission Procedures for business registration

1. The business founder or authorized person shall register the business with the Business Registration Authority in the following manner

a) Register the business directly at the Business Registration Office;

b) Register the business via postal service;

businesses through electronic information networks.

2. Business registration via electronic information network means the business founder submits a business registration application via electronic information network at the National Business Registration Portal. Business registration dossiers via electronic information network include data as prescribed by this Law and are presented in electronic document form. Business registration documents via electronic information network have the same legal value as paper business registration documents.

3. Organizations and individuals have the right to choose to use digital signatures in accordance with the law on electronic transactions or use business registration accounts to register businesses via electronic information networks.

4. A business registration account is an account created by the National Business Registration Information System, issued to individuals to register a business via the electronic information network. The individual who is granted a business registration account is responsible before the law for the registration and use of the business registration account to register a business via the electronic information network.

5. Within 03 working days from the date of receipt of the application, the Business Registration Authority is responsible for reviewing the validity of the business registration application and issuing the business registration; In case the dossier is not valid, the Business Registration Authority must notify in writing the content that needs to be amended or supplemented to the business founder. In case of refusal to register a business, it must be notified in writing to the business founder and clearly state the reason.

6. The Government regulates documents, order, procedures, and connections in business registration.”