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Establishing a joint stock company – order and procedures in Vietnamis legal content that readers often need to check carefully before implementing it in practice. This article has been systematized by ANT Legal in an easy-to-understand manner, helping individuals and businesses understand the main issues, common risks and appropriate solutions.

A Joint Stock Company is one of the popular types of businesses that individuals and organizations consider when registering to establish a company. But there are still many questions about the nature of this type; What are the advantages and disadvantages; Whether or not the legal procedures are more complicated than the type of limited liability company, through this article, Quoc Luat will help customers better understand and advise on the entire order and procedures for registering to establish a Joint Stock Company.

What is a joint stock company?

1) A joint stock company is an enterprise in which:

a) charter capital is divided into equal parts called shares;

b) Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number;

c) Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

d) Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of the Law on Enterprises 2020.

2. A joint stock company has legal status from the date of issuance of the Business Registration Certificate.

3. A joint stock company has the right to issue shares, bonds and other securities of the company.

Advantages and disadvantages of Joint Stock Company

1/ Advantages:

– Limited liability regime: Shareholders are only responsible for the debts and other property obligations of the business within the amount of capital contributed to the business, so the risk level of shareholders will be divided equally and not too high.

– The capital structure of a joint stock company is very flexible, creating conditions for many people to contribute capital to the company.

– Has the right to issue shares, bonds and other securities of the company to mobilize capital. At the same time, the Joint Stock Company does not limit the maximum number of shareholders, so it has the ability to mobilize very high capital and from many different capital sources. Since then, a Joint Stock Company is usually a large-scale type, easily expanding its business field.

– After 03 years from the date the company is granted a Business Registration Certificate, shares in the company are freely transferable, so the scope of subjects allowed to join a joint stock company is very wide.

2/ Disadvantages Points:

– Joint Stock Company does not limit the maximum number of shareholders, so the management and operation of the company internally is very complicated, requiring many levels and control boards for the company to operate in accordance with the proposed orientation.

– The large number of shareholders contributing capital leads to the organization of a meeting of the General Meeting of Shareholders to decide on business plans, change the content of business registration or solve problems. Resolving the risk issues that the company faces will take more time and make it more difficult to reach consensus.

– Within 03 years from the date the company is granted the Business Registration Certificate, common shares of founding shareholders are freely transferable to other founding shareholders and can only be transferred to people who are not founding shareholders if approved by the General Meeting of Shareholders. In this case, the founding shareholder who intends to transfer common shares does not have the right to vote on the transfer of those shares.

– The joint stock company must send the annual financial report approved by the General Meeting of Shareholders to the competent state authority in accordance with the provisions of law on accounting and other relevant provisions of law. As well as having to publish on its website information about the Company’s Charter; Resumes, educational qualifications and professional experience of members of the Board of Directors, Controllers, Director or General Director of the company; The annual financial report has been approved by the General Meeting of Shareholders; The report evaluates the annual performance of the Board of Directors and the Supervisory Board, therefore, the security of company information cannot be guaranteed.

Conditions for establishing a Joint Stock Company

1. A newly established joint stock company must have at least 03 founding shareholders.

2. Founding shareholders must jointly register to buy at least 20% of the total number of common shares authorized to be offered for sale when registering to establish a business.

Business registration documents for Joint Stock Companies

Dossier components need to be standard device:

1. Application for business registration.

2. Company charter.

3. List of founding shareholders and list of shareholders who are foreign investors.

4. Copies of the following documents:

Individual legal documents for the legal representative of the enterprise;
Personal legal documents for founding shareholders, shareholders who are foreign investors who are individuals; Legal documents of the organization for founding shareholders and shareholders who are foreign investors being organizations; Legal documents of individuals for authorized representatives of 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;
Investment registration certificate in case the enterprise is established or participating established by foreign investors or economic organizations with foreign investment capital according to the provisions of the Investment Law and guiding documents.

Business registration procedures for Joint Stock Companies

Step 1

Prepare and submit business registration documents

Resolving agency: Business Registration Office under the Department of Planning and Investment of the province/centrally-run city where the enterprise is headquartered.
Resolution time limit: 03 working days, if the dossier is valid and complete, the Department of Planning and Investment will issue a Business Registration Certificate.

Step 2

( 1-2 working days job)
Engrave the seal of the enterprise
Enterprises have the right to decide on the form, quantity and content of their seal. Enterprises do not need to notify the seal sample to the Department of Planning and Investment before use.

Step 3

(~ 30 working days)
Disclosure of business registration content
After being granted a business registration certificate, an enterprise must publicly announce on the National Information Portal about business registration according to the order and procedures within 30 days from the date of publication.

Step 4

(~ 7-14 working days)

Procedures Complete tax obligations:

+ Hang signs/signs at the company headquarters;

+ Notice of application of tax calculation method;

+ Open the business’s bank account and notify the account number to the tax authority;

+ Register for an electronic digital signature to make electronic tax payment death;

+ Declare and pay license tax;

+ Print and issue value-added invoices.

Note on Applying Current Legal Regulations

This article belongs to the Business & M&A group and is presented for reference purposes, helping readers understand the legal issue at an overview level before preparing a dossier or carrying out a transaction.

Legal regulations may vary depending on the timing, locality, type of dossier and specific circumstances. If you need to determine the exact legal basis applicable to your case, you should contact ANT Legal’s lawyers at 0966.475.966 for review and advice before proceeding.

Common Legal Risks to Note

Applying legal instruments that have been amended, supplemented or replaced.
Preparing an incomplete set of documents, materials or necessary evidence.
Misunderstanding the conditions, procedure, timeline or competent authority.
Signing, submitting a dossier or carrying out a transaction before fully assessing legal risks.

How Can ANT Legal Support You?

ANT Legal can review the specific circumstances, examine the dossier, identify the applicable legal basis, advise on an appropriate handling plan and represent clients in working with individuals, organizations or competent authorities where necessary.

For prompt advice, you may contact a lawyer at 0966.475.966.

Business & M&A, Legal Knowledge

Establishment of a joint stock company – order and procedures in Vietnam