Tiếng Việt
中文Short answer: The choice between an LLC and a joint stock company depends on the number of owners, the need to raise capital, and the level of governance complexity you accept. Rule of thumb: 01–50 members, lean governance, few ownership changes → choose an LLC; 3 or more shareholders, plans to raise capital widely, flexible capital transfer → choose a joint stock company. Both types have legal personality and a limited liability regime. Comparison under the Law on Enterprises 2020 (as amended by Law No. 76/2025/QH15).
Legal basis
- The Law on Enterprises 2020, as amended and supplemented by Law No. 76/2025/QH15 — provisions on LLCs (Articles 46–110) and joint stock companies (Articles 111–134).
Comparison table: LLC vs joint stock company
| Criterion | LLC | Joint Stock Company |
|---|---|---|
| Number of owners | 01 (single-member LLC) or 02–50 (multi-member LLC) | Minimum 03 shareholders, no maximum |
| Capital | Contributed capital | Shares (ordinary, preference) |
| Capital raising | Limited (cannot issue shares) | Most flexible (share offerings, bond issuance) |
| Capital transfer | Priority to remaining members (multi-member LLC) | Free (except the 03-year restriction on founding shareholders) |
| Governance structure | Lean: Chairman/Members’ Council, Director | Complex: GMS, Board of Directors, Supervisory Board/Audit Committee |
| Liability | Limited to contributed capital | Limited to contributed capital |
| Legal personality | Yes | Yes |
Choose an LLC when…
- You have only 01 owner or a small group of 02–10 members who trust each other;
- You want lean governance, fast decisions, few meeting procedures;
- No plans to raise capital from many investors in the near future;
- You want tight control over capital transfers to outsiders (the remaining members’ pre-emptive purchase right).
Choose a joint stock company when…
- You have 03 or more shareholders from the outset;
- Plans for expanded fundraising: more shareholders, investment funds, share issuance;
- You want flexible capital transfer (free share trading);
- Aiming for stock exchange listing or M&A in the future;
- You accept a more complex and costly governance structure (GMS meetings, Board of Directors, audits…).
Common misconceptions
- “A joint stock company is more prestigious than an LLC”: wrong — reputation depends on actual operations, not the type;
- “An LLC cannot raise capital”: wrong — an LLC can still increase capital by admitting members, borrowing, issuing bonds; it just cannot issue shares;
- “Shares are easier to exit”: partly true — share transfers are freer, but founding shareholders are restricted in the first 03 years;
- “The two types are taxed differently”: basically, CIT and VAT obligations apply the same; differences lie in personal income tax on capital/share transfers.
Can you convert later?
Yes. An LLC may be converted into a joint stock company and vice versa; the converted company inherits all rights and obligations. So the initial choice is not “irreversible” — but conversion costs time and money, so it is still best to choose correctly from the start.
Related services
Corporate Legal Advisory
If your company needs to review governance authority, resolutions, charter documents or internal dispute risk, ANT Legal can help assess the file and suggest appropriate next steps.
Frequently asked questions
Which type should a fundraising startup choose?
A joint stock company — the share mechanism, share offerings to investors, and ESOP for employees suit multi-round fundraising models.
Which type should a family business choose?
An LLC (single-member or multi-member) — lean governance, and control over capital transfers outside the family.
Can one person establish a joint stock company alone?
No — a joint stock company requires at least 03 shareholders. One person should choose a single-member LLC.
Notes on applying current regulations
The Law on Enterprises was amended in 2025; comparisons based on the old law need updating. The choice of enterprise type is a strategic decision affecting fundraising and governance for many years. Contact an ANT Legal lawyer at 0966.475.966 for advice on the suitable type.
Common risks to note
- Choosing a joint stock company with only 01–02 people — having to “borrow” shareholders;
- Choosing an LLC then getting “stuck” when wanting to raise capital widely;
- Applying the expired 2014 Law on Enterprises;
- Not anticipating type conversion in the charter.
How ANT Legal can help
ANT Legal advises on the optimal enterprise type under business goals and fundraising plans; drafts the charter and establishment dossier; advises on type conversion upon expansion. For prompt advice, please contact a lawyer at 0966.475.966.
Related articles
- Dossier and procedures for establishing a single-member LLC in Vietnam
- Dossier and procedures for establishing a two-member LLC in Vietnam
- Establishing a joint stock company — order and procedures in Vietnam
- Procedures for converting a joint stock company into a single-member LLC
- Model decision on establishing a joint stock company in Vietnam
