Joint-stock company in Vietnam: What are the pros and cons, and should you set up one? Let take a look and see if this type of company fits your goal.
- 2020 Enterprise Law
What is a Join-stock Company?
A joint-stock company is an enterprise in which the charter capital is divided into equal parts called shares; hence the regulation of Enterprise Law 2020. The company has a minimum number of shareholders of 3 and no maximum limit. Indeed, shareholders are only responsible for the debts and other property obligations to the extent of the amount of capital contributed to the enterprise.
Pros of Join-stock Company
A joint-stock company is the most popular type of company for investors because of the benefits it brings. Here are a few reasons that might convince you to start one:
Firstly, the level of risk is not high. The liability regime of a joint-stock company is limited liability; therefore, shareholders are only liable for debts and other property obligations of the company to the extent of their contributed capital.
Secondly, the ability to raise capital is very high, through issuing shares to the public. This is a unique feature that only joint-stock companies have. Moreover, the company has no limit on the number of shareholders and can raise capital all over the world. Therefore, the joint-stock company has the ability to raise capital most widely.
Thirdly, the operation of the company is highly efficient due to the independence between management and ownership. The thing that makes it possible might be because all decisions in business will be collected from shareholders; so it is very transparent in management and administration.
Lastly, a joint-stock company has a large scale of operation and the ability to expand business in most industries.
Cons of Joint-stock Company
Although JSC may appear to be beneficial to the owners; yet, it still has quite a few cons.
First of all, the management and operation of a JSC are uneasy because the number of shareholders can be very large, many people do not know each other, and there may even be a division into opposing groups of shareholders benefit.
Moreover, the establishment and management of a joint-stock company are harder than other types of companies because it is strictly bound by the provisions of law; especially on the financial and accounting regime.
By understanding both sides of opening a JSC, the investors will have more chance of achieving their goal and access to the market. Thank you for paying attention. Above are all types of enterprises that a foreign investor could try setting up, with their pros and cons. If you have any questions, please contact Lawyer X for quick and best legal services: 0833102102.
The provisions of the 2020 Enterprise Law and WTO Law allow enterprises to freely conduct business in industries, as long as the regulation does not prohibit.
Normally, if your dossier is valid, it will take around 3-4 days to register a Joint-stock Company.
The applicant must pay VND 100,000 in order to register a JSC directly; or free if they apply virtually.