Regulations on accepting tax obligations after converting the type from a joint stock company to a liability company limited liability under Vietnamese law

The company changed from a joint stock company to a limited liability company. So does the new limited liability company need to take on all tax obligations?

1. Is a limited liability company converted from a Joint Stock Company obliged to take on all tax obligations?

According to the provisions of Article 203, Article 204 of the Law on Enterprises 2020 on the conversion of a Joint Stock Company into two types of Limited Liability Company as follows:

“Article 203. Converting a joint stock company into a single-member limited liability company

1. A joint stock company can convert into a single-member limited liability company by the following method:

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

b) An organization or individual who is not a shareholder receives the entire transfer number of shares of all shareholders of the company;

c) The company has only 01 remaining shareholder.

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

3. Within 15 days From the date the company has only one shareholder left or completes the transfer of shares as prescribed in Points a and b, Clause 1 of this Article, the company sends the conversion documents to the Business Registration Authority where the enterprise is registered. Within 03 working days from the date of receipt of the conversion documents, the Business Registration Authority issues a Business Registration Certificate and updates 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.”

“Article 204. Converting a joint stock company into a limited liability company with two or more members

1. A joint stock company can be converted into a limited liability company with two or more members by the following method:

a) Convert into a limited liability company with two or more members without mobilizing additional shares or transferring shares to other organizations or individuals;

b) Convert into a limited liability company with two or more members and mobilize other organizations and individuals to contribute capital;

c) Convert into a limited liability company with two or more members and transfer all or part of the shares to other organizations and individuals to contribute capital;

d) The company only has 02 remaining shareholders;

d) Combining the methods specified in Points a, b and c of this Clause and other methods.

2. The company must register company conversion with the Business Registration Authority within 10 days from the date of completion of the conversion. 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.

3. The converting company naturally inherits all legal rights and interests, and is responsible for debts, including tax debt, labor contracts and other obligations of the converted company.”

Pursuant to the above legal regulations, both types of Limited Liability Companies, after being converted from Joint Stock Companies, automatically inherit all legal rights and interests, and are responsible for debts, including tax debts, labor contracts and other obligations of the converted company, including tax obligations.

2. What does the application file for converting a Joint Stock Company into a Limited Liability Company include?

Pursuant to Clause 4, Article 26 of Decree 01/2021/ND-CP stipulating documents for converting a Joint Stock Company into 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) 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 the conversion of the company;

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

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

d) Document from the Investment Registration Authority approving capital contribution, stock purchase, capital contribution purchase by foreign investors, foreign-invested economic organizations in cases where capital contribution registration procedures, stock purchase, capital contribution purchase must be carried out according to the provisions of Investment Law .”

In case of converting a Joint Stock Company into a 1-member Limited Liability Company, the documents include:

– Application for business registration;

– New charter of the company;

– Copies of the following documents:

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

b) Personal legal documents for company owners who are individuals; Legal documents of the organization for the company owner being an organization (except in cases where the company owner is the State); Legal documents of the individual for the authorized representative and document appointing the authorized representative.

For company owners who are foreign organizations, copies of the organization’s legal documents must be consularly legalized;

– 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 the conversion of the company;

– Transfer contract or documents proving completion of transfer in case of transfer of shares or capital contribution; 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;

– Documents confirming the capital contribution of new members and shareholders;

– Document of the Investment Registration Authority approving capital contribution, share purchase, purchase of capital contribution of foreign investors, foreign-invested economic organizations in cases where formalities must be carried out Procedures for registering capital contribution, buying shares, purchasing capital contributions according to the provisions of the Investment Law.

For the case of converting a Joint Stock Company into a Limited Liability Company with 2 or more members, the documents include:

– Application for business registration.

– Company Charter.

– List of members. 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.

– Copies of the following documents:

a) Personal legal documents for the legal representative of the enterprise;

b) Personal legal documents for company members, founding shareholders, shareholders who are investors foreign is an individual; 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;

– Resolutions and decisions of the company owner for liability companies limited liability company with one member 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;

– Transfer contract or documents proving completion of transfer in case of transfer of shares or capital contribution; 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;

– Documents confirming the capital contribution of new members and shareholders;

– Document of the Investment Registration Authority approving capital contribution, share purchase, purchase of capital contribution of foreign investors, foreign-invested economic organizations in cases where formalities must be carried out Procedures for registering capital contribution, purchasing shares, purchasing capital contributions according to the provisions of the Investment Law.

3. How are the procedures and procedures for converting a Joint Stock Company into a Limited Liability Company?

Step 1: Prepare documents corresponding to the type of Limited Liability Company you want to convert.

Step 2: Submit documents.

Place to submit documents: Business Registration Office – Department of Planning and Investment where the enterprise is located Head office.

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

Step 3: Return results.