Today, the economy is on a strong development trend, so setting up a company is becoming more and more popular. Establishing a company – bringing your business idea into reality is a very important decision. However, to succeed in setting up a business, entrepreneurs need to prepare certain steps. Choosing a type for your company is among the decisive procedure. What about a joint stock company? Follow this article of LSX legal firm to answer the question: “Why establish a Joint-stock company in Vietnam?”
Legal grounds
- Law on Enterprise 2020
- Decree 01/2021/ND-CP
- Relevant legal documents
Why establish a Joint-stock company?
Number of members
Firstly, depending on the expected number of members to register a business to determine the appropriate business model:
- Sole proprietorship or Single-member limited liability company: An enterprise with only one member.
- Limited liability company with 2 members or partnership: Enterprise with 2 members.
- Multi-member Limited liability company, partnership, or joint-stock company: Enterprise with 3 or more members.
The joint-stock company is one of the types of business that allow you to gather many people to shake hands and contribute capital to do business. This helps to strengthen the company’s financial potential and human resources, creating advantages in production and business in the market, an advantage of joint-stock companies compared to Sole proprietorships and Single-member limited liability companies.
Limited liability
According to the law, joint-stock companies have limited liability. Limited liability means a liability that is limited to the amount of capital that the members contribute to the company, even if it goes bankrupt.
For example, A, B, and C contribute capital of 100 million VND to joint-stock company D. Unfortunately, company D made a loss, went bankrupt, and owed up to 1 billion VND. At this time, A, B, and C are only responsible for paying the debt of 300 million; divided equally among each of them as 100 million as the contributed capital, because members of D take limited liability. Unlike a sole proprietorship and partnership which has unlimited liability, if the company loses, members have to make up for it with their own money.
Shareholders of a joint-stock company can be assured that they will not lose any more than the amount of contributed capital in accordance with the law. A very good guarantee for shareholders, an important reason for entrepreneurs to choose the joint-stock company model.
Ability to raise capital
With a large number of members, the company takes limited liability are the characteristics of not only joint-stock companies but also limited liability companies with 2 or more members.
However, a joint-stock company has a unique feature – a unique advantage: it has the right to offer and issue shares (Stock). This makes it easy for joint-stock companies to raise capital, attracting many potential investors to contribute to building the company, helping the company to have strong financial capacity. Also, having many knowledgeable and experienced individuals to directly support the company.
On the other hand, you should consider about offering shares, because this is also a double-edged sword. The issue of shares by the company can attract many outside investors, and also, directly reduces the power to control and manage your own company. There are even cases where the founder has been kicked out of his own company.
Of course, getting to these cases or not is a long road for those who are about to start a business and are still wondering about the type of company, so don’t worry too much.
LSX legal firm’s service on company establishment
When establishing a company, people must carry out the procedure following the law at the competent business registration authority (under the Law on Enterprise 2020). The process of establishing a business includes many different steps and phases. If you are not familiar with the law, this process may take a lot of time.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself. We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application; submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
Related articles
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Procedures for offering shares to the public of a joint-stock company in Vietnam
How are shares of a joint-stock company in Vietnam issued?
Related questions
This type of company has many advantages such as:
Firstly, the members of a multi-member limited liability company are only responsible for the company’s operations to the extent of the capital contributed to the company. As a result, the members take little risk.
Secondly, the members are usually people who know and trust each other. Therefore, the management and operation of the company is not too complicated.
Thirdly, the mode of capital transfer is strictly regulated; so investors can easily control the change of members.
Fourthly, members who want to transfer capital will have to give priority to the remaining members of the company. This limit the penetration of outsiders into the company.
Business establishment dossiers
To establish a company, the business has to prepare a valid set of documents:
– Firstly, the Business registration application form.
– Secondly, the Company charter
– Thirdly, List of founding members/shareholders (According to the form issued by the Ministry of Planning and Investment).
– Lastly, the business owner’s identity papers.
Method to submit the application
In the entire Department of Planning and Investment of provinces and cities nationwide, there are currently 02 (two) methods of business registration documents, including:
– Submit business registration applications directly at the One-Stop Department of the Department of Planning and Investment where the company located.
– submit online: https://dangkykinhdoanh.gov.vn
Contact LSX
Finally, hope this article is useful for you to answer the question about “Why establish a Joint-stock company in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
Conclusion: So the above is Why establish a Joint-stock company in Vietnam?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
