How to Set up a Joint-Stock Company in Vietnam in 2023?

Joint-stock company is a type of enterprise recognized by Vietnam law, besides other types being limited liability company, partnership and private enterprise. A joint-stock company has legal status from the date of issuance of the Certificate of Business Registration by Vietnam authority. It is not suitable for all investors to set up a joint-stock company in Vietnam. Therefore, it is important to consult with corporate lawyers in Vietnam to learn the advantage of different forms of companies to be set up in Vietnam for the efficient management and purpose of the owner.

Joint-stock company can issue shares

According to the definition of the Law on Enterprises, a joint-stock company is an enterprise whose charter capital is divided into equal parts called shares. Shareholders of a joint-stock company can be organizations or individuals, and the minimum number of shareholders of the company is 03 people.

There is no limit on the maximum number of shareholders, so it will be convenient for the company when it wishes to expand its business on a larger scale. In addition, shareholders will only be liable for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise.

This is an advantage of this type of business because the level of risk that shareholders have to bear. In particular, joint-stock companies have the right to issue shares, bonds and other securities to raise capital, which is a feature that other types of businesses do not have.

Procedure to set up a joint-stock company in Vietnam

The business owner can submit by himself or authorize another individual/organization or a law firm in Vietnam to submit a set of documents to the Business Registration Office where the head office is intended, including:

1.An application for enterprise registration;

2.The company’s charter;

3.List of founding shareholders and list of shareholders being foreign investors;

4.Copies of the following papers:

a) Legal papers of the individual for the legal representative of the enterprise;

b) Personal legal papers for company members, founding shareholders, shareholders being foreign investors who are individuals; Legal papers of the organization for members, founding shareholders, shareholders being foreign investors being organizations; Legal documents of individuals for authorized representatives of members, founding shareholders, shareholders being foreign investors being organizations and documents on appointment of authorized representatives.

For members and shareholders being foreign organizations, copies of legal papers of the organization must be notarized and consularly legalized in Vietnam;

c) Investment registration certificate, in case the enterprise is established or participated in the establishment by a foreign investor or a foreign-invested economic organization in accordance with the provisions of the Investment Law and other legal documents; implementation manual.

How long it takes to set up a joint-stock company in Vietnam?

The processing time will be 03 working days from the date the Business Registration Office receives the valid application.

Readmore: https://lawyersindanangvietnam.blogspot.com/2024/01/how-to-set-up-joint-stock-company-in.html

Differences Between Limited Liability Company and Joint Stock Company | ANT Lawyers

 How to distinguish a Limited Liability Company and Joint Stock Company?”

Vietnam Law allows the establishment company in Vietnam in various forms. It is an important step in investment process.

Investors could choose different forms depending on the needs and capacity on the ability to raise capital and sharing the risk in business as well as the management and operating costs. Each form will have its own organizational structure, operating mechanism, rights and obligations specified under Law on Enterprise 2014.

Currently, Limited Liability Company (“LTD”) and Joint Stock Company (“JSC”) are two popular enterprise forms operating in Vietnam.

What is the difference between these two forms of companies?

I. Organizational Structure

Number of members/shareholders:

LTD

-Single member LTD: Having only one member (member can be an organization or an individual);

-Multi members LTD: Having at least 2 members and not exceed 50 members (member can be an organization or an individual).

JSC

Joint Stock Company has at least 3 shareholders and not limit the maximum number.

Management structure

LTD

-Single member LTD

Single member LTD owner by an organization shall be organized under two models: Company president, Director/General director and Supervisor; (OR) Members Council, Director/General director and Supervisor.

Single member LTD owner by an individual shall be organized as follows: Company president, Director/General director.

-Multi members LTD

Multi members shall be organized by: LTD Council members, Chairman of the Members Council and Director/General director;

Multi members LTD having 11 members or more shall establish the Board of Supervisors.

JSC

JSC can be organized under two models: General Meeting of Shareholders, Board of Directors, Board of Supervisors and Director/General director; (OR) General Meeting of Shareholders, Board of Directors (Board of Internal Supervisors under Board of Directors) and Director/General director.

II. Capital Contribution

Raising capital

LTD

-Single member LTD: Owner increases charter capital

-Multi members LTD: Members increase their charter capital, or increasing the number of capital contributors

JSC

Different from LTD, JSC can raise its capital by various methods as follows: Selling shares to existing shareholders; Selling shares individually to non-shareholders; Issuing shares on the stock market.

Transfer of contributed capital

LTD

-Single member LTD: Owner transfers a part of contributed capital to other persons and this could lead to changes of the type of business or other procedures if all capital is transferred (for instance in a M&A deal).

-Multi members LTD: Offer the stakes to other members in proportion to their stakes in the company under the same conditions; The stakes could only be transferred to other persons if the members do not buy or do not buy completely within 30 days from the offering date.

JSC

The shareholders of JSC are free for transfer their contributed capital after 03 years from the establishment.

Having said that, LTD is a type of enterprise that the capital contribution is not the only link between the members of the company but they are also linked together by relationship. They may be acquaintances and trust each other to jointly contribute capital to establish an enterprise. Therefore, the management of the LTD is as complicated as JSC. With the larger the number of shareholders, the level of capital mobilization, voting power to decide on issues of the company based on the ratio of capital contribution of each shareholder, the management and operation of the JSC is more complex.

The ability to raise capital of a JSC is higher than a LTD. Because, JSC can issue shares to the public in the form of securities. When the stocks are listed on stock exchange, the information of company’s business operations must be public and more transparent.

The procedure to set up a company in form of an LTD or a JSC has not much differences.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang.

Quang Ninh Is About to Receive 40 Million USD of FDI From Korean Investors | ANT Consulting

Recently, Chairman of Bumjin Electronic Company from Korea had a meeting with Chairman of Quang Ninh People’s Committee on the implementation of the project in Quang Yen town.

Accordingly, the Company is preparing to deploy the investment project to build audio equipment factory in Dong Mai Industrial Park, Quang Yen Town, Quang Ninh Province with a total investment of 40 million USD. It is expected that the project will be started construction and go into production in December 2019.

Chairman of Quang Ninh People’s Committee affirmed that the investment project of Bumjin Electronic Company is the area that Quang Ninh province is prioritizing to attract investment. To ensure on time schedule that the company has set, Quang Ninh province confirmed to provide maximum support during project implementation.

He also shared with investors that Quang Ninh province is proposing the Government to allow the establishment of Quang Yen coastal economic zone with better preferential policies. At the same time, Chairman of Quang Ninh People’s Committee expressed his desire that besides the project implementation, Bumjin Electronic Company will become a bridge to connect Quang Ninh and Korean investors, contributing to promote investment activities of Korean businesses in Quang Ninh in the future.

Foreign investor in Binh Duong | ANT Consulting

Korean investors have set up business in Vietnam a lot in the recent years and this country is also the third largest foreign investor in Binh Duong province with 619 projects.

At the meeting between Binh Duong People’s Committee and Korean investors held on August 16th, according to reports of Department of Planning and Investment of Binh Duong province on the attraction of foreign direct investment (FDI) in the first six months of 2017, there was positive changes. The total FDI capital reached 1.726 billion USD, equal to 123% of the year plan and increase by 51% over the same period in 2016.

Specifically, there are 97 new projects with capital of 1.034 billion USD, 62 projects adjust and increase capital of 670 million USD. The sectors attracting a lot of investors are electricity, electronics, mechanics, pharmaceuticals, chemicals, trade and services…

Particularly for Korean investors, in six months of 2017, there are 16 new projects and 17 projects adjusted for capital increase. Overall, total investment reached 306 million USD. Accumulated until June 30th, Korea is the third largest foreign investor in Binh Duong (after Taiwan and Singapore) with 619 projects worth 2.694 billion USD.

With the efforts to improve the investment environment, Binh Duong is always attracted by investors, the number of foreign investors coming to the province to explore investment opportunities in the first half of 2017 continued to increase over previous years. FDI attraction results of Binh Duong is a good signal, affirming that the investment environment of the province is very attractive to foreign investors.

Binh Duong currently has 28 industrial parks with an area of 10,560 hectares and 11 industrial clusters with an area of over 802 hectares, occupancy rate reaches over 70%.

Binh Duong is still implementing some new industrial zones and expanding existing industrial parks such as Bau Bang Industrial Park (1,000 ha), Nam Tan Uyen (446 ha), approving new investment of An Lap industrial cluster (75 ha).

In the period 2016 – 2020, Binh Duong will develop up to 33 industrial parks with an area of nearly 15,000 ha.

Foreign investor in Binh Duong | ANT Consulting

Korean investors have set up business in Vietnam a lot in the recent years and this country is also the third largest foreign investor in Binh Duong province with 619 projects.

At the meeting between Binh Duong People’s Committee and Korean investors held on August 16th, according to reports of Department of Planning and Investment of Binh Duong province on the attraction of foreign direct investment (FDI) in the first six months of 2017, there was positive changes. The total FDI capital reached 1.726 billion USD, equal to 123% of the year plan and increase by 51% over the same period in 2016.

Specifically, there are 97 new projects with capital of 1.034 billion USD, 62 projects adjust and increase capital of 670 million USD. The sectors attracting a lot of investors are electricity, electronics, mechanics, pharmaceuticals, chemicals, trade and services…

Particularly for Korean investors, in six months of 2017, there are 16 new projects and 17 projects adjusted for capital increase. Overall, total investment reached 306 million USD. Accumulated until June 30th, Korea is the third largest foreign investor in Binh Duong (after Taiwan and Singapore) with 619 projects worth 2.694 billion USD.

With the efforts to improve the investment environment, Binh Duong is always attracted by investors, the number of foreign investors coming to the province to explore investment opportunities in the first half of 2017 continued to increase over previous years. FDI attraction results of Binh Duong is a good signal, affirming that the investment environment of the province is very attractive to foreign investors.

Binh Duong currently has 28 industrial parks with an area of 10,560 hectares and 11 industrial clusters with an area of over 802 hectares, occupancy rate reaches over 70%.

Binh Duong is still implementing some new industrial zones and expanding existing industrial parks such as Bau Bang Industrial Park (1,000 ha), Nam Tan Uyen (446 ha), approving new investment of An Lap industrial cluster (75 ha).

In the period 2016 – 2020, Binh Duong will develop up to 33 industrial parks with an area of nearly 15,000 ha.

Japanese Companies Invest in The Environmental Sector in Vietnam | ANT Consulting

With the partnership with Biwase, JFE Engineering hopes to gain more orders, including projects to expand Biwase’s existing plants and construct waste treatment plants.

JFE Engineering Japan has just spent 900 million yen (8.6 million USD) to invest in Vietnam. The Company purchase 3.87% stake in Binh Duong Water and Environment Joint Stock Company (Biwase).

This is one of the steps of JFE Engineering to tap into the demand for water treatment facilities in Vietnam.

JFE Engineering has participated in a tender to build two wastewater treatment plants in Vietnam. Both factories use Japan’s official development assistance (ODA) capital.

According to Nikkei Asia, with the cooperation with Biwase – the unit that are operating 8 water treatment plants and one waste treatment plant in Binh Duong province, JFE Engineering hopes to have more orders, including projects to expand Biwase’s existing factories and construct waste treatment and recycling plants.

JFE Engineering plans to recruit local engineers and salespeople to increase its staff in Vietnam by 10 more per year.

JFE Engineering hopes to increase annual sales in the Vietnamese market to 10 billion yen over the next 10 years from 2 billion yen in fiscal 2019.

Set-up Joint Stock Company in Vietnam | ANT Consulting

Joint Stock Company is an enterprise which has charter capital divided into equal portions called shares. The minimum number of shareholders shall be three and there shall be no restriction on the maximum number.

Shareholders shall be liable for the debts and other property obligations of the enterprise only within the amount of capital contributed to the enterprise.

Joint Stock Companies may issue all types of securities to raise funds. Founding shareholders must together register to subscribe at least twenty per cent (20%) of the number of ordinary shares which may be offered for sale.

The main difference between Joint Stock Company and Limited Liability Company is the Joint Stock Company can raise funds by offering shares or securities. In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company. Management system of Joint Stock Company is more complicated than Liability Company.

Assistance in Setting-up Business Venture | ANT Consulting

To help Clients start business in Vietnam, ANT Consulting introduces the service to assist in setting up business venture in Vietnam.

Foreign investors could make direct investment in Vietnam through setting up one hundred per cent (100%) capital of foreign investors, or establishing joint venture between domestic and foreign investors, or investing in the contractual forms of: BCC, BO, BTO, and BT

Types of enterprise for foreign investors to invest in Vietnam are as following:

Limited Liability Company

A limited-liability company may not issue securities to mobilize capital.

Joint Stock Company

The main difference between Joint Stock Company and Limited Liability Company is the Joint Stock Company can raise funds by offering shares or securities. In addition, an enterprise tends to join the Stock exchanges or public company must be a Joint Stock Company. Management system of Joint Stock Company is more complicated than Liability Company.

Partnership

Unlimited liability partners must be individuals who shall be liable for the obligations of the company to the extent of all of their assets. Limited liability partners shall only be liable for the debts of the company to the extent of the amount of capital they have contributed to the company.

Representative Office of Foreign Trader

Representative Office is not allowed to directly conduct profit making activities in Vietnam (i.e: the execution of contracts, direct payment or receipt of funds, sale or purchase of goods, or provision of services)

Branch of Foreign Trader

The Branch is permitted to conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

Investing by Signing Contracts

Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Build-operate-transfer contract (BOT) means the investment form signed by a competent State body and an investor in order to construct and operate commercially an infrastructure facility for a fixed duration; and, upon expiry of the duration, the investor shall, without compensation, transfer such facility to the State of Vietnam.

Build-transfer-operate contract (BTO) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall grant the investor the right to operate commercially such facility for a fixed duration in order to recover the invested capital and gain profits.

Build-transfer contract (BT) means the investment form signed by a competent State body and an investor in order to construct an infrastructure facility; and, upon completion of construction, the investor shall transfer the facility to the State of Vietnam and the Government shall create conditions for the investor to implement another project in order to recover the invested capital and gain profits or to make a payment to the investor in accordance with an agreement in the BT contract.

Foreign investors may sign BOT, BT and BTO contracts with a competent State body to implement infrastructure construction projects in Vietnam. Typically, the contracts are for projects in the fields of transportation, electricity production, water supply, drainage and waste treatment.