How is the conversion of a joint stock company into a single-member limited liability company?

How to convert a joint stock company into a one-member limited liability company?

According to Article 203 of the Law on Enterprises 2020 stipulates the conversion of a joint stock company into a single member limited liability company, as follows:

(1) A joint stock company can be converted into a one-member limited liability company by the following method:

– One shareholder receives the transfer of all corresponding shares of all remaining shareholders;

– An organization or individual who is not a shareholder receives the transfer of all shares of all shareholders of the company;

– The company only has 01 shareholder left.

(2) The transfer or receipt of investment capital contribution specified in Clause 1 of this Article must be carried out at market price, the price is determined according to the asset method, discounted cash flow method or other methods.

(3) Within 15 days from the date the company has only one shareholder remaining or completes the transfer of shares as prescribed in Points a and b, Clause 1 of this Article, the company sends the conversion dossier to the Business Registration Authority where the enterprise is registered. Within 03 working days from the date of receipt of the conversion dossier, the Business Registration Authority will issue the Business Registration Certificate and update the company’s legal status on the National Business Registration Database.

(4) The converting company automatically inherits all legal rights and interests and is responsible for debts, including tax debt, labor contracts and other obligations of the converted company.

What does the business registration dossier for converting from a joint stock company to a single-member limited liability company include?

Pursuant to Clause 4, Article 26 of Decree 01/2021/ND-CP stipulating the composition of documents for conversion from a joint stock company to a limited liability company as follows:

“Article 26. Business registration documents for cases of conversion of business type

[…]

4. In case of converting a limited liability company into a joint stock company and vice versa, the conversion registration dossier includes the documents specified in Article 23 and Article 24 of this Decree, which does not include the Investment Registration Certificate specified in Point c, Clause 4, Article 23 and Point c, Clause 3, Article 24 of this Decree. Attached to the application must be the following documents:

a) Resolution and decision of the company owner for a one-member limited liability company or resolution, decision and copy of the meeting minutes of the Board of Members for a limited liability company with two or more members or resolution and copy of the meeting minutes of the General Meeting of Shareholders for a joint stock company on company conversion company;

b) Transfer contract or documents proving completion of transfer in case of transfer of shares or capital contributions; Donation contract in case of donating shares or capital contributions; Copy of document confirming the legal inheritance rights of the heir in case of inheritance according to the provisions of law;

c) Documents confirming the capital contribution of new members and shareholders;

d) Document of the Investment Registration Authority approving the capital contribution, share purchase, purchase of capital contribution of foreign investors, foreign-invested economic organizations in cases where implementation is required. Carry out procedures for registering capital contribution, purchasing shares, purchasing capital contributions according to the provisions of the Investment Law.

[…]”

Accordingly, the dossier includes:

(1) Application for business registration.

(2) Company charter.

(3) List of founding shareholders and list of shareholders who are foreign investors for joint stock companies.

(4) Copies of the following documents:

– Legal documents of the individual for the legal representative of the enterprise;

– Personal legal documents for company members, founding shareholders, and 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 the organization’s legal documents must be consularly legalized;

(6) Resolutions and decisions of the company owner for one-member limited liability companies or resolutions, decisions and copies of meeting minutes of the Board of Members for limited liability companies with two or more members or resolutions and copies of meeting minutes of the General Meeting of Shareholders for joint-stock companies on company conversion;

(5) Transfer contract or documents proving completion of transfer in case of transfer of shares or capital contribution;

What are the procedures and procedures for converting a joint stock company into a single-member limited liability company?

Step 1: Prepare documents.

Step 2: Submit documents to the Business Registration Office where the business is registered.

Step 3: The business registration authority issues the Business Registration Certificate and updates the company’s legal status on the National Business Registration Database.

From the above article, the transfer of all shares from the remaining shareholders must be done at the market price, the price is determined according to the asset method, discounted cash flow method or other methods. You need to prepare complete documents and submit them to the business registration authority. Within 03 days from the date of receiving the conversion documents, the business registration authority will issue a Business Registration Certificate to your company.

The order and procedures for converting a joint stock company into a single-member limited liability company comply with the above regulations.