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Should you establish a limited liability company or joint stock company in Vietnam

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Should you establish a limited liability company or joint stock company in Vietnam is 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 way, helping individuals and businesses understand the main issues, common risks and appropriate solutions.

Should you establish a limited liability company or a joint stock company? What type of business suits your business needs? For more clarity, let’s compare and distinguish between a limited liability company and a joint stock company with ANT Legal through the content below!

Similarities between a joint stock company and a limited liability company

Before making a choice whether to establish a joint stock company or a limited liability company, let’s learn about the similarities between these two types. Basically, a limited liability company and a joint stock company have some similarities as follows:
All members/shareholders in the company are only responsible to the extent of the capital contributed for the company’s debts and other property obligations.
A joint stock company and a limited liability company both have legal status according to the provisions of the Enterprise Law. Enterprise;
Members/shareholders in the company can be domestic or foreign organizations and individuals;
All can issue bonds to raise capital;
The procedures for establishment, dissolution, and bankruptcy are the same;
Company members/shareholders have the right to transfer capital according to legal regulations law.

About the difference:

NUMBER OF MEMBERS

LIMITED COMPANY JOINT STOCK COMPANY
1.     One Member LLC: has 1 member

2.    LLC with 2 or more members: Has from 2 – 50 members contributing capital

1.  There are at least 3 founding shareholders

2.  Unlimited quantity

 

charter capital

LIMITED COMPANY JOINT STOCK COMPANY
1.       Division according to the percentage of capital contribution of members of the company1.       Divided into parts equivalent to the capital contribution ratio of shareholders, called shares

 

 ORGANIZATIONAL STRUCTURE

LIMITED COMPANY JOINT STOCK COMPANY
1.       A company can be established in one of two forms:

·   2-member LLC

·   1-member LLC

1.       Have the right to choose a management organization and operate under 1 of 2 models:

·         Board of directors, general meeting of shareholders, general director or director, supervisory board

·         Board of directors, general meeting of shareholders and general director or director

 

ABILITY TO MOBILE CAPITAL

 

COMPANY LIMITEDJOINT STOCK COMPANY
1.       Mobilize capital, increase charter capital through increasing capital contributions of existing members or receiving capital contributions from new members

No shares are issued

1.       Mobilize capital by issuing shares, stocks and bonds on the stock exchange

2.       Allowed to issue shares, bonds, and securities

 

CAPITAL TRANSFER

COMPANY LIMITEDJOINT STOCK COMPANY
1.       No need to pay personal income tax when transferring capital

Capital can only be transferred to non-members of the company if the remaining members do not buy it all or do not repurchase it

1.       Founding shareholders: Freely transfer common shares to other founding shareholders or individuals who are not founding shareholders if approved by the general meeting of shareholders (*)

2.       Ordinary shareholders: Freely transfer shares (except voting preference shares) to anyone

3.       When transferring shares, personal income tax must be paid

(*) Founding shareholders have the right to freely transfer ordinary shares within 3 years from the date of issuance of the business registration certificate.

Should I establish a joint stock company or LLC?

In fact, deciding whether to establish a joint stock company or LLC when doing business depends on many factors:

  1. Number of members
  2. The number of members in the company will help determine whether to establish a joint stock company or LLC.
  3. In case there is 1 member: you can only choose a 1-member LLC
  4. In case there are 2 members: you can only choose a 2-member LLC.
  5. In case there are 3 or more members but less than 50 members: you can choose a joint stock company or a limited liability company with 2 or more members

Industry regulations

Whether to establish a limited liability company or a joint stock company depends on industry regulations. If you register to do business in an industry that requires a business type, you must choose the appropriate company type according to the regulations of that industry.

For example:

Securities investment companies can only operate in the form of Joint Stock Company.

Legal consulting – Law firms operate in 02 forms: Partnership or Company. Limited.

Business development vision

To choose whether to open a joint stock company or LLC, rely on the business development vision.

Specifically:

If the business is small in scale, with few shareholders, little capital and few customers, establishing a limited liability company is the right choice. This type will help simplify legal and tax procedures when operating.

If the business is large-scale and listed on the stock exchange, establishing a joint stock company is the most appropriate choice.

So in conclusion, every company model has its own advantages and disadvantages. Hopefully, after ANT Legal analyzes the above article, it will help you optimally choose the formation model. establish a Company.

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.

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