Currently, the economy is growing, the need to establish businesses of individuals and organizations is increasing. And many people still wonder that, when setting up a business in Vietnam, what type of company should you choose? A joint stock company, a one-member limited liability company or a limited liability company with two or more members? And what are the conditions for establishing a company in Vietnam? In the article below, the Van Luat Law Firm will solve the problems you are facing.
Concepts of types of companies:
One member limited liability company
– According to Article 74 of the Enterprise Law 2020, a one-member limited liability company is an enterprise:
-Owned by an organization or an individual (hereinafter referred to as a company owner); the owner of the company is responsible for the company’s debts and other asset obligations within the scope of the company’s charter capital.
-A one-member limited liability company has legal status from the date of issuance of the Enterprise Registration Certificate.
-A one-member limited liability company is not entitled to issue shares.
-A one-member limited liability company is issued a bond.
Limited liability company with two or more members
According to Article 46 of the Enterprise Law 2020, a limited liability company with two or more members is an enterprise, of which:
-Members may be organizations and individuals; the minimum number of members is 02 and does not exceed 50 members
-Members shall be responsible for debts and other property obligations of the enterprise within the scope of the capital contributed to the enterprise, except for the cases specified in Clause 4, Article 47 of this Law;
-Members’ capital contributions may only be transferred in accordance with Articles 51, 52 and 53 of this Law.
-A limited liability company with two or more members has legal status from the date of issuance of the Enterprise Registration Certificate
-Limited liability companies with two or more members are not entitled to issue shares
-Limited liability companies of two or more members are issued bonds
Joint Stock Company
According to Article 111 of the Enterprise Law 2020, joint stock companies are enterprises, of which:
-Charter capital is divided into several equal parts called shares
-Shareholders may be organizations and individuals; the minimum number of shareholders is 03 and there is no limit to the maximum number of shareholders.
-Shareholders are solely responsible for the debts and other asset obligations of the enterprise within the amount of capital contributed to the enterprise
-Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.
-Joint stock companies with legal status from the date of issuance of the enterprise registration certificate
-The joint stock company has the right to issue shares, bonds and other mineral securities.
The difference between business wreckages
| Criteria | One Member Limited Liability Company | Limited liability company of two or more members | Joint Stock Company |
| Number of members | 01 contributing member is the owner of the company | A minimum of 02 members and a maximum of 50 members contribute capital | At least 03 shareholders, no limit to the maximum number of shareholders |
| Property liability | Responsible within the scope of charter capital | Responsible for the amount of capital contributed to the business | Responsible for the amount of capital contributed to the business |
| Right to issue securities | Shares cannot be issued | Shares cannot be issued | Have the right to issue shares to raise capital |
| Capital transfer | In case of converting part of capital to others, procedures for converting the type of enterprise to a limited liability company of two or more members must be carried out. | Transfer of internal shares in the company or may be transferred to outsiders if members do not agree to buy back the contributed capital | Within 3 years from the time of establishment of the enterprise, it can only be transferred to the founding shareholders. If you want to transfer it to someone else, you must be approved by other founding shareholders. |
Conditions for establishing various types of companies in Vietnam
- Conditions on owners
-Organizations and individuals must have full civil act capacity and are not subject to being prohibited by the State from establishing or managing enterprises under Clause 2 Article 17 of the Enterprise Law 2020.
- Capital conditions
-The investment capital to establish the enterprise must be suitable to the field, industry and business size of the enterprise. For enterprises with business lines that need legal capital, the initial investment capital is not lower than this legal capital level.
- Conditions for business lines
-The profession in which the enterprise registers business is not prohibited by law from doing business
-In case the enterprise registering to do business in the professions prescribed by law must have a practice certificate, the enterprise manager or operator must have a practice certificate stored at the company’s headquarters.
- Conditions on company name
-The business name given does not coincide or confuse with other registered business.
-At the same time, the business name must ensure at least two components: the type of business and the name of the business.
Example: “NCT Limited Liability Company” Type is: “LIMITED LIABILITY”, Private name is: “NCT”
- Conditions for headquarters
-The head office is owned or legally used by the enterprise.
-Apartments with functions to stay are not allowed to place the address of the company’s headquarters to perform business functions there.
As such, Van Luat Law Firm has provided you with information about the types of businesses that are common today. In addition, there are some issues related to the procedure that you do not understand well, can immediately call the Van Luat to receive the most dedicated advice.
