Vietnam: Can a two-member limited liability company be converted into a joint stock company without raising capital?
- Can a two member limited liability company be converted into a joint stock company without raising capital?
- What is the application for registration of conversion of a two-member limited liability company into a joint stock company in Vietnam?
- What is the organizational structure of a joint stock company in Vietnam?
Can a two member limited liability company be converted into a joint stock company without raising capital?
According to the provisions of Clause 2, Article 202 of the 2020 Law on Enterprises in Vietnam, the conversion of a limited liability company into a joint stock company is as follows:
Conversion of a limited liability company into a joint stock company
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2. A limited liability company can be converted into a joint stock company:
a) without raising additional capital from other organizations and individuals or selling stakes;
b) by raising additional capital from other organizations and individuals;
c) by selling all or part of the stakes to one or some organizations and individuals; or
d) combining the methods specified in Points a, b and c of this Clause and other methods.
3. The conversion shall be registered with the business registration authority within 10 days from the day on which the conversion is complete. Within 03 working days from the receipt of the application for conversion, the business registration authority shall reissue the Certificate of Enterprise Registration and update the company’s status to the national enterprise registration database.
4. The joint stock company obviously inherits all lawful rights and interests, debts including tax debts, employment contract and other obligations of the limited liability company.
Thus, a limited company can be converted into a joint stock company without mobilizing other organizations and individuals to contribute capital, without selling the contributed capital to other organizations or individuals. In addition, the conversion shall be registered with the business registration authority within 10 days from the day on which the conversion is complete. The joint stock company obviously inherits all lawful rights and interests, debts including tax debts, employment contract and other obligations of the limited liability company.
Vietnam: Can a two member limited liability company be converted into a joint stock company without raising capital?
What is the application for registration of conversion of a two-member limited liability company into a joint stock company in Vietnam?
An application of registration for conversion is specified in Clause 4, Article 26 of Decree No. 01/2021/ND-CP as follows:
Application for enterprise registration in case of conversion
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4. In case of conversion from a limited liability company into a joint-stock company and vice versa, the application for registration of conversions shall include the documents specified in Articles 23 and 24 hereof but exclude the investment registration certificate specified in Point c Clause 4 Article 23 and Point c Clause 3 Article 24 hereof. The application must be also include the following documents:
a) The resolution or decision of the owner of the single-member limited liability company or the resolution or decision and copy of the minutes of meeting of the Board of Members of the multi-member limited liability company or the resolution and copy of the minutes of the General Meeting of Shareholders of the joint-stock company on the conversion from company;
b) The contract for transfer of shares/stakes or documents proving completion of such transfer; the contract for donation of shares/stakes; the copy of certificate of the inheritor’s lawful right to inheritance;
c) Documents certifying the capital contribution by new members/shareholders;
d) A written approval given by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities in case procedures for registration of capital contribution or purchase of shares/stakes must be followed in accordance with the Law on Investment.
Thus, the application for registration of conversions of a two-member limited liability company shall include:
- Application form for enterprise registration.
- The company’s charter.
- List of members of the multi-member limited liability company.
- Copies of the following documents:
+ Legal documents of the enterprise’s legal representative;
+ Legal documents of members or founding shareholders and foreign shareholders that are individuals; legal documents of members or founding shareholders and foreign shareholders that are organizations; legal documents of authorized representatives of members or founding shareholders and foreign shareholders that are organizations and their letters of appointment of authorized representatives.
- The resolution or decision and copy of the minutes of meeting of the Board of Members of the multi-member limited liability company.
- The contract for transfer of shares/stakes or documents proving completion of such transfer.
- Documents certifying the capital contribution by new members/shareholders;
- A written approval given by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities in case procedures for registration of capital contribution or purchase of shares/stakes must be followed in accordance with the Law on Investment.
What is the organizational structure of a joint stock company in Vietnam?
According to the provisions of Article 137 of the 2020 Law on Enterprises in Vietnam, the organizational and management structure of a joint stock company is as follows:
- Unless otherwise prescribed by securities laws, a joint stock company may choose one of the following models:
+ A joint stock company with the General Meeting of Shareholders, Board of Directors, Board of Controllers and Director/General Director. If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory;
+ A joint stock company with the General Meeting of Shareholders, Board of Directors and Director/General Director. In this case, at least 20% of the members of the Board of Directors shall be independent members and there has to be an audit committee affiliated to the Board of Directors. The organizational structure, functions and duties of the audit committee shall be specified in the company's charter or the audit committee’s operating regulations promulgated by the Board of Directors.
- If the company has only one legal representative, the President of the Board of Directors or the Director/General Director shall be the legal representative. The President of the Board of Directors shall be the company’s legal representative unless otherwise prescribed by the company's charter. If the company has more than one legal representative, the President of the Board of Directors and the Director/General Director shall be the company’s legal representatives.
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