Setting up a joint stock company in Vietnam (JSC) can be convenient for those who prefer a business structure of limited liability that protects them from significant financial loss and are interested in larger-scale projects or investments.
In this guide, we’ll look at the corporate structure of a joint stock company in Vietnam, the requirements for setting one up, and the differences between this type of legal entity and a standard foreign-owned LLC.
What is A Joint Stock Company in Vietnam?
Corporate Structure of A Joint Stock Company
A joint stock company (JSC) is best suited for medium to large-sized ventures or incorporations as it is slightly more complex than a Limited Liability Company (LLC). The breakdown of roles and responsibilities of a joint stock company is as follows:
- General Meeting: The highest decision-making body of the company. Has an Annual General Meeting where an annual report of the company’s performance and strategy is presented.
- Management Board: A body of members elected during the General Meeting to jointly oversee the company’s activities.
- Inspection Committee: A committee of independent inspectors appointed during the General Meeting to supervise the Management Board and General Director. Only needed when the number of shareholders exceeds 11 or when corporate shareholders hold over 50% of the total shares in the company.
- Chairman of the Management Board: Organizes the work of the Management Board to call and head meetings once each quarter.
- General Director: The legal representative of the company in charge of day-to-day activities. Must be an employee of the company and reside in Vietnam.
Differences Between A Joint Stock Company (JSC) vs a Limited Liability Company (LLC)
A Joint Stock Company and a Limited Liability Company are two distinct business entities with different characteristics that cater to different business needs. While both legal entities are common for foreign companies, it is important to consider the key differences when determining the best legal structure for your business:
| Differences | Joint Stock Company (JSC) | Limited Liability Company (LLC) |
| Legal Structure and Ownership | Defined by its share capital Shares are owned by at least 3 shareholders No upper limit on shareholders | Can be established with one or more members, but cannot exceed 50 members Members’ liability limited to their respective capital contributions |
| Capital Raising Capabilities | Can raise capital by issuing shares to the public or private investors, including common and preferred shares | Cannot issue shares publicly Capital can only be increased through additional contributions from existing members or new members joining the company |
| Management Structure | More complex governance due to the amount of stakeholders involved Usually has a Board of Directors and a General Meeting | Managed by its members or appointed managers A simpler governance structure without a board formation unless required |
| Reporting and Disclosure Obligations | Stringent reporting requirements with Annual General Meetings, detailed finance disclosures, and compliance with governance standards | Fewer reporting obligations Not required to hold Annual General Meetings or disclose financial statements unless specified |
| Transferability of Ownership | Shareholders can transfer their shares freely after three years of establishment | More restrictive, members must offer their shares to other existing members before transferring them to outsiders. |
Emerhub can provide advice and guide you on which entity would be more suited for your business based on your planned activities through our company registration service.
Requirements For Setting Up A Joint Stock Company in Vietnam
Since a JSC business structure is typically used by major corporations, the requirements imposed by the government tend to be more strict. So, to successfully set up a JSC in Vietnam, you have to ensure that your business meets the following legal requirements:
- A minimum of three shareholders, with no maximum limit
- The company has to be recognized as a separate legal entity
- A minimum charter capital requirement deposited in a bank account which varies according to your industry
- Company name must include Công ty cổ phần (Joint Stock Company) or abbreviated to Công ty CP.
- Any foreign national appointed as director must obtain a work permit and meet experience requirements
- Must declare and include information on the Beneficial Owner (BO) of the Joint Stock Company during the establishment process.
In terms of documents, Emerhub’s team of experts can assist you with procuring and compiling the following as required to set up your joint stock company:
- Business Registration Application
- Company Charter
- List of Founding Shareholders
- Identification Documents
- Investment Registration Certificate
- Proof of Bank Deposit
- Lease Agreement or Land Use Rights Certificate
How to Register for A Joint Stock Company in Vietnam
- Get an Investment Registration Certificate (IRC): This is a requirement if there are foreign investors in the company. Our team will handle the application for you by registering at the local Department of Planning and Investment.
- Obtain a Business Registration Certificate (BRC): This is mandatory for all businesses in Vietnam. Emerhub offers company registration services in Vietnam so you don’t have to go through the complex process on your own. We’ll review the necessary documents and liaise with the Business Registration Office on your behalf.
- Get A Tax Code: Obtainable from the General Department of Taxation (GDT). To keep track of all your company taxes and invoicing. You can navigate here for more details on taxes in Vietnam.
- Open A Corporate Bank Account: This is essential to keep track of your financial flow. At Emerhub, we offer a service to help you with the process and advise you on the best corporate bank account plans catered to your business needs.
- Obtain A Company Seal: A traditional mark of authority used to stamp documents for legal confirmation and approval. The company seal can be created at a licensed engraving facility.
- Hold A Board Meeting: Essential to streamline your company’s processes, elect executives, and enact company bylaws for all to follow. Annual meetings are required to be held each year to update everyone on the company’s progress.
Interested in setting up a joint stock company in Vietnam? Fill out the form below to get in touch with one of Emerhub’s local consultants. We’ll advise you on the process and provide you with all the necessary information for you to get started.
