Differences Between Limited Liability Company and Joint Stock Company

 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.

Nguồn:https://antlawyers.vn/library/distinguish-a-limited-liability-company-and-a-joint-stock-company-in-vietnam.html

Conditions for Business in Accounting Services of an Enterprise

  Legal Based:

• Law on Accounting 2015;

• Circular 297/2016/TT-BTC on granting, management and usage of certificates of eligible for providing accounting services.

1. Form of business

a. An accounting firm may be established in the form as follows:

• A multi-member limited liability company;

• A partnership;

• A private enterprise.

The accounting firm must not contribute capital to establishment of another accounting firm, except for contribution of capital together with a foreign accounting firm to establishment of an accounting firm in Vietnam.

b. A foreign accounting firm is allowed to provide accounting services in Vietnam as follow manners:

• Contributing capital together with an existing accounting firm in Vietnam to establish an accounting firm;

• Establishing branches of the foreign accounting firm;

• Provide accounting services across the border as prescribed by the Goverment.

2. Conditions for granting Certificate of eligibility to provide accounting services

a. For a multi-member limited liability company

• Having an Enterprise Registration Certificate, Investment Registration Certificate or an equivalent document as prescribed by law;

• Having at least two capital contributors (members) are accounting practitioners;

• The legal representative, director or general director of the company is an accounting practitioner;

• Ensuring the proportion of capital contribution by accounting practitioners over 50%; Ensuring the maximum proportion of captital contribution of organization members equal to 35% of charter of an accounting firm.

b. For a partnership

• Having an Enterprise Registration Certificate, Investment Registration Certificate or an equivalent document as prescribed by law;

• Having at least two general partners are accounting practitioners;

• The legal representative, Director or General Director of the partnership is an accounting practitioner.

c. For a private enterprise

• Having an Enterprise Registration Certificate, Investment Registration Certificate or an equivalent document as prescribed by law;

• Having at least two accounting practitioners in the enterprise;

• The owner of the private company, who holds the position of Director, is an accounting practitioner.

d. A branch in Vietnam of a foreign accounting firm

• The foreign accounting firm is permitted to provide accounting services according to regulations of law of its home country;

• Having at least two accounting practitioners, including the Director or General Director of the branch;

• The Director or General Director of the branch does not concurrently hold the position of manager or executive officer of another enterprise in Vietnam;

• The foreign accounting firm has submitted a document to the Ministry of Finance that it is responsible for every obligations and commitments of the branch in Vietnam.

3. Granting Certificate of eligibility for business in accounting services

a. Preparation of Dossier

• An application form for the Certificate of eligibility to provide accounting services;

• Copies of the Certificate of Enterprise Registration, Investment Registration Certificate, or an equivalent document;

• Copies of Certificates of Accounting Practice Registration of accounting practitioners;

• Employment contracts between the accounting firm and accounting practitioners;

• Documents proving capital contribution (for limited liability companies);

• The company’s charter (for partnerships and limited liability companies);

• A written commitment to take responsibility by the foreign firm; documents proving the foreign firm is permitted to provide accounting services (for branches in Vietnam of foreign accounting firms).

b. Order and procedure

• Enterprises submit dossier to Ministry of Finance;

• Within 15 days form the day of receiving valid dossier. Ministry of Finance shall issue the Certificate of eligibility to provide accounting services to enterprises;

• In case need to clarify the matters related to the dossier. Ministry of Finance shall request enterprises to explain and then granting Certificate to enterprise within 15 days form the day of receiving the valid additional document.

Enterprise establishment service in Vietnam

 ANT Lawyers provides enterprise establishment consulting service for domestic and foreign customers as the following services:

• To consult to establish Joint Stock Company;

• To consult to establish One member Limited liability company;

• To consult to establish Limited liability Company with Two or more members;

• To consult to establish Partnership company;

• To consult to establish Private enterprises;

• To consult to establish Sole trader;

• To consult to establish foreign invested company;

• To consult to establish the parent company, corporations.

Customers procedures established in the ANT Lawyers will enjoy some preferential services such as:

1. Contents of enterprise establishment consulting service:

• To consult legal regulation related to the establishment, operation and management of enterprises;

• To consult to set up personnel structure of the company;

• To consult to select types of enterprises;

• To consult to choose the name of company (lookup and select the appropriate name as the request of customers);

• To consult about the head office of the enterprise;

• To consult on capital, legal capital, investment capital;

• To consult on business lines (lines requires legal capital , professional certification or other conditions);

• To draft legal dossiers for setting up the company (Request for business registration, charter, founders list and other documents as prescribed by law);

• To consult for business on tax issues, financial obligations after the enterprise have been established and the process of production and business activities;

2. Our tasks in the enterprise establishment services:

ANTLawyers will on behalf of clients to perform the following tasks:

• Drafting and preparation the enterprise establishment dossier as regulations;

• To apply the dossier for business and tax codes registration in the Department of Planning and Investment;

• To monitor progress and inform regularly results to clients;

• To obtain the Investment Certificate from the DPI;

• Filing and registration the seal for Company at the Police Department;

• To obtain the seal and the certificate of the seal for the Company at the Police Department;

• To guide the customers to follow procedures in the relevant state authority (as needed);

3. Documents required to provide by clients:

Information requested form of business;

• A copy of ID / passport of members / founding shareholder who is individual (notarized);

• A copy of business registration / establishment decisions of members / founding shareholders who is organization.

4. Client’s benefits after establishment:

• To be consulted and offered free the activating annual tax dossier, records and procedures for billing the enterprise;

• To consult the necessary tasks of the new enterprise;

• To consult human resources management , provide free labor contracts and the forms of management personnel;

• To consult the procedures for salary scale registration, the social insurance registration of company;

• To consult on tax matters, tax refund, tax credit;

Some Notable Changes in Vietnam Enterprise Law from Jul 2015

  There have been a number of significant changes to the Vietnam law on enterprise to improve the business efficiency. Under this law, limited liability companies and joint stock companies may have one or more than one atlaw representative, of which at least one at-law representative resides in Vietnam. An enterprise shall ensure that at least one at-law representative resides in Vietnam. In case an enterprise has only one atlaw representative, such person must reside in Vietnam and shall, upon leaving Vietnam, authorize in writing another person to exercise the rights and perform the obligations of the at-law representative.

From July 01, 2015, enterprises may decide on the appearance, quantity and content of seal and before using a seal, an enterprise shall notify the seal specimen to the business registration agency for publicly posting on the national enterprise registration portal. These are significant contents as prescribed under the Law No. 68/2014/QH13 on Enterprises approved by the National Assembly on November 16, 2014. Another significant point is regulation on omission of business sectors in enterprise registration certificate. From July 01, 2015, enterprise name and identification number, head office address of the enterprise; charter capital and information of the at-law representative of the enterprise, information of the general partners for partnerships; of the enterprise owner for private enterprises… The at-law representative of an enterprise shall register the changes in the contents of the enterprise registration certificate within 10 working days after making the changes. After being granted an enterprise registration certificate, an enterprise shall publicly announce the enterprise registration on the National Enterprise Registration Portal within 30 days. This Law takes effect on July 1, 2015 and replaces the Law No. 60/2005/QH11 on Enterprises and June 20, 2013 Law No. 37/2013/QH13 amending and Supplementing Article 170 of the Law on Enterprises.

Differences Between Limited Liability Company and Joint Stock Company

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

Vietnam Law allows the establishment of a 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 shres 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.

Enterprise establishment service in Vietnam

  ANT Lawyers provides enterprise establishment consulting service for domestic and foreign customers as the following services:

• To consult to establish Joint Stock Company;

• To consult to establish One member Limited liability company;
• To consult to establish Limited liability Company with Two or more members;

• To consult to establish Partnership company;

• To consult to establish Private enterprises;

• To consult to establish Sole trader;
• To consult to establish foreign invested company;

• To consult to establish the parent company, corporations.

Customers procedures established in the ANT Lawyers will enjoy some preferential services such as:

1. Contents of enterprise establishment consulting service:

• To consult legal regulation related to the establishment, operation and management of enterprises;

• To consult to set up personnel structure of the company;

• To consult to select types of enterprises;
• To consult to choose the name of company (lookup and select the appropriate name as the request of customers);

• To consult about the head office of the enterprise;

• To consult on capital, legal capital, investment capital;

• To consult on business lines (lines requires legal capital , professional certification or other conditions);

• To draft legal dossiers for setting up the company (Request for business registration, charter, founders list and other documents as prescribed by law);
• To consult for business on tax issues, financial obligations after the enterprise have been established and the process of production and business activities;

2. Our tasks in the enterprise establishment services:

ANTLawyers will on behalf of clients to perform the following tasks:

• Drafting and preparation the enterprise establishment dossier as regulations;

• To apply the dossier for business and tax codes registration in the Department of Planning and Investment;

• To monitor progress and inform regularly results to clients;

• To obtain the Investment Certificate from the DPI;

• Filing and registration the seal for Company at the Police Department;

• To obtain the seal and the certificate of the seal for the Company at the Police Department;

• To guide the customers to follow procedures in the relevant state authority (as needed);

3. Documents required to provide by clients:

• Information requested form of business;

• A copy of ID / passport of members / founding shareholder who is individual (notarized);

• A copy of business registration / establishment decisions of members / founding shareholders who is organization.

4. Client’s benefits after establishment:

• To be consulted and offered free the activating annual tax dossier, records and procedures for billing the enterprise;

• To consult the necessary tasks of the new enterprise;

• To consult human resources management , provide free labor contracts and the forms of management personnel;

• To consult the procedures for salary scale registration, the social insurance registration of company;

• To consult on tax matters, tax refund, tax credit;