What is a joint stock company?
According to the Enterprise Law 2020, a joint stock company is a type of company with charter capital divided into many equal parts called shares. Company members are called shareholders with a minimum number of 3 and no limit on the maximum number. Shareholders may be individuals or organizations and shareholders are solely responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise.
Characteristics of Joint Stock Company
Company members:
A member of a joint stock company is called a shareholder, who owns at least one share of a joint stock company, a shareholder who may be an individual or organization. The minimum number of shareholders of the company is 3 and there is no limit to the maximum number of shareholders.
Property liability:
The Joint Stock Company is responsible by its own assets for the debts and obligations of the company. Because when making capital contributions, shareholders transfer their owned assets to the company name. Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise.
Legal status:
The joint stock company has legal status from the date of issuance of the Business Registration Certificate.
Capital mobilization:
Joint Stock Company is raised capital through the issuance of stocks and bonds.
Charter capital:
The charter capital of the joint stock company is divided into many equal parts called shares, the purchase of shares is the way to contribute capital to the joint stock company. There are four types of shares: common shares, voting preference shares, dividend preference shares, refundable preferred shares.
Share transfer:
In principle, shareholders are free to transfer their shares. However, there are still cases of transfer restrictions:
- Transfer restrictions in accordance with the company’s charter and such restrictions must be clearly stated on the respective shares.
- Shares of founding shareholders may only be transferred to other founding shareholders within the first 3 years after establishment, if transferred to non-founding shareholders, they must be approved by the General Meeting of Shareholders.
- Voting preferred shares are not transferred.
The transfer of shares is carried out relatively flexibly, which can be done through a transfer contract or transaction on the stock market.
Organizational structure:
The organizational structure of the joint stock company includes the General Meeting of Shareholders, the Board of Directors, the Director or General Director, the Supervisory Board (if the joint stock company has more than eleven shareholders who are individuals or whose shareholders are organizations that own more than 50% of the total shares). The Chairman of the Board of Directors or the Director or General Director is the legal representative of the company.
Considerations when establishing a joint stock company
Naming the company:
According to the Enterprise Law 2020, the company name includes “JOINT STOCK COMPANY” or “Joint Stock Company” plus a private name chosen by the enterprise, be it a Vietnamese or foreign name with a Latin script. It should be noted that when naming the public is not coinciding with or confusingly with the name of the registered company.
Documents to prepare:
In order to establish a joint stock company, investors need to prepare the following documents:
- An application form for enterprise registration.
- Company charter.
- List of founding shareholders; The list of shareholders is foreign investors.
- Copies of the following documents:
- Legal papers of individuals for founding shareholders and shareholders who are foreign investors who are individuals and legal representatives
- Legal papers of organizations for shareholders are organizations and documents for sending authorized representatives; legal papers of individuals for authorized representatives of founding shareholders and shareholders who are foreign investors as organizations. (For shareholders who are foreign organizations, copies of legal papers of the organization must be consularly legalized)
- Investment registration certificates for foreign investors in accordance with the Law on Investment.
See also: Order and procedures for establishment of joint stock company according to the latest regulations
Agency settlement:
Business Registration Department – Department of Planning & Investment in the province or city where the enterprise is headquartered.
The above are our answers about the joint stock company, if there is a need to establish a company or any questions that need to be answered, please contact our services immediately.
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