Vietnam: How to convert limited liability company to joint stock company

1. In what manners may a limited liability company be converted into a joint-stock company?

According to Clause 2 Article 196 of the Law on Enterprises 2014 of Vietnam, a limited liability company may be converted into a joint-stock company in one of the following manners:

- Conversion into a joint-stock company without raising capital from other entities, without selling stakes to other entities;

In this case, it can be understood that there is no change in capital or owner, but only one factor is changed, which is the type of company.

- Conversion into a joint-stock company by raising capital from other entities;

In this case, in addition to changing the type of company, there is also a change in owner; these are organizations and individuals who contribute additional capital and increase charter capital.

- Conversion into a joint-stock company by selling part of or all of the stakes to one or some other entities;

In this case, although there is no change in charter capital, there is a change in owner due to capital transfer.

- Combination of the above methods.

2. Compositions of the application for enterprise registration in case of conversion

According to Clause 4 Article 25 of Decree No. 78/2015/NĐ-CP of Vietnam’s Government, in case of conversion of a limited liability company into a joint-stock company and vice versa, the application for registration of conversion consists of:

- Application form for enterprise registration;

- Charter of the converted company according to Article 25 of the Law on Enterprises;

- A decision of the company’s owner or a decision and legitimate copy of the minutes of meeting of the Board of members or the General Meeting of Shareholders on conversion of the company;

- A list of members or a list of founding shareholders, foreign shareholders, and legitimate copies of the documents prescribed in Clause 4 Article 22 and Clause 4 Article 23 of the Law on Enterprises;

- The contract for stake transfer or documents proving completion of the transfer or agreement on capital contribution.

3. Procedures for conversion

Depending on each case, other procedures will arise. However, basically, the procedure for converting the company type will include the following steps:

- Step 1: Enterprises submit documents at the Business Registration Office;

- Step 2: The Business Registration Office checks the validity of documents and processes the enterprise's documents; give receipts to enterprises;

- Step 3: Based on the appointment date on the Receipt, the enterprise goes to the Business Registration Office to receive the results of document processing.

4. Time limit for carrying out conversion procedures

According to Clauses 3, 4, 5 Article 196 of the Law on Enterprises 2014 of Vietnam, this time limit is specified as follows:

- The company shall register the conversion with a business registration authority within 10 days from the day on which the conversion is completed. Within 05 working days from the receipt of the application, the business registration authority shall reissue the Certificate of Business registration.

- The converted company obviously inherits all of the lawful rights and interests, debts including tax debts, employment contracts, and other obligations of the old company.

- Within 07 working days from the day on which the Certificate of Business registration is issued, the business registration authority shall notify relevant regulatory bodies, and concurrently update the company’s legal status on the National Business Registration Database.

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