Setting up a company in Vietnam

The Difference Between The Limited Liability Company And The Joint Stock Company In Viet Nam Law

Under the corporation legislation, the forms of company in Viet Nam are the Limited Liability Company, Joint Stock Co, and Partnership Company. Which, the Limited Liability Company and Joint Stock Company are two common types in Viet Nam and foreign investors also choose these kinds to set up a company in Viet Nam. Because of the common and important nature of the two types of the company above, this article will analyze the Limited Liability Company (“LLC”) and the Joint Stock Company (“JSC”) according to the Law of Viet Nam.

THE DIFFERENCE BETWEEN THE LIMITED LIABILITY COMPANY AND THE JOINT STOCK COMPANY IN VIET NAM

 

LLC

JSC

Number of members of the company

An LLC may take the form of either an LCC with two and more members (“Multiple Member LLC”) or an LLC with one member (“Single Member LLC”). A Multiple Member LLC is an enterprise that has more than one but no more than fifty members, which may be organizations, individuals, or a combination of both. A single Member LLC is owned by one organization or individual member.

 

The members of an LLC are responsible for the debts and liabilities of the enterprise to the extent of the amount of capital that the member has contributed and committed to contributing to the enterprise

It is an enterprise whose charter capital is divided into shares held by three or more organizations or individuals.

 

The shareholders are responsible for the debts and liabilities of the enterprise to the extent of the amount of their contributed capital.

 

 

Issuing the shares and securities

LLC does not issue the shares.

In case the LLC would like to convert to JSC, the company can issue the shares.

Can issue the bonds according to the corporation legislation.

JSC has the right to issue shares and securities to raise capital.

 

Can issue the bonds according to the corporation legislation.

Contributing the capitals

The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration, excluding the time needed to transport or import the contributed assets and for completing ownership transfer procedures.

 

In case the members of an LLC fail to pay or to fully pay for the subscribed shares/capitals within 90 days from the day in which the Business Registration Certificate is issued, this member is no longer a member of the company. The member that only pays for part of the subscribed capitals will be entitled to several votes, dividends, and benefits that are proportional to the paid capitals

The Shareholders shall fully pay for the subscribed shares within 90 days from the issuance date of the Certificate of Enterprise Registration unless a shorter time limit is specified by the company's charter or the registration of the shares contract. In the case of capital contribution by assets, the time needed to transport or import the contributed assets and for completing ownership transfer procedures shall be added to this time limit. The Board of Directors shall supervise the shareholders fully and punctually paying for the subscribed shares.

 

In case the members of a shareholder fail to pay or to fully pay for the subscribed shares within 90 days from the day in which the Business Registration Certificate is issued, this shareholder is no longer a shareholder of the company. The shareholder that only pays for part of the subscribed shares will be entitled to several votes, dividends, and benefits that are proportional to the paid shares.

 

Management of the company

A Multiple Member LLC has a Board of Members, the President of the Board of Members, Director, or General Director. A company shall have at least one legal representative who holds the title of President of the Board of Members, Director/General Director. Unless otherwise prescribed by the company's charter, the President of the Board of Members shall be the company’s legal representative.

For the Single LLC, the Organization structure will be different between the owner being one organization or an individual. 1. A single-member limited liability company owned by an organization shall apply one of the two models below: a) A company with a President and the Director/General Director; b) A company with a Board of Members and the Director/General Director. A single-member limited liability company owned by an individual shall have a President and a Director/General Director.

 

A JSC has the right to select its organizational, managerial, and operational structure by one of two following options:

Option 1: GSM, the Board of Management, Control Committee, and the General Director, or Director. Where a JSC has fewer than 11 shareholders and the shareholders being organizations holdings less than 50% of the total company shares, there is no requirement for a control Committee.

Option 2: GSM, the Board of Management, and the General Director or Director. In this case, at least 20% of the members of the Board of Management must be independent and an Internal Auditing Committee must be established directly under that Board of Management.

 

Two popular types of enterprises in Vietnam are limited liability companies and joint stock companies. Depending on the number of owners and the development orientation of the business, investors can choose the form of LLC or JSC. Choosing the type of business is a very important step and key to the success of each business because each type will have very different regulations on the management structure and organizational structure of the company. Therefore, investors should have specific advice from Lawyers on the forms of business before starting for establishing a company.

For more information: Our Vietnamese social page or  English social page

Local Office Numbers:
Hotline: +84 357 466 579
Email: contact@dblegal.vn

Contact us

Add 1: 3rd Floor, Indochina Riverside Tower, 81 Tran Phu Street, Hai Chau District, Danang City, Vietnam

Add 2: 28 Thanh Luong 20, Hoa Xuan Ward, Cam Le District, Danang city, Vietnam

Hotline 1: (+84) 357 466 579

Hotline 2: (+84) 985 271 242

Phone: (+84) 236.366.4674
Email: contact@dblegal.vn

zalo
facebook