BUSINESS TYPE CONVERSION is a form of restructuring the enterprise structure to suit the scale and development orientation of that enterprise. In case the enterprise no longer has the minimum number of members as prescribed by law, they are forced to convert to another type of enterprise if they do not want to be forced to dissolve.
Forms of enterprise type conversion
Converting a private enterprise into a partnership, limited liability company, joint stock company
• The converted enterprise must meet all the conditions of that type of enterprise;
• The owner of the private enterprise commits in writing to be personally responsible with all of his/her assets for all unpaid debts and commits to pay the full amount of debt when due;
• The private enterprise owner has a written agreement with the parties to the unliquidated contracts that the converted company will take over and continue to perform those contracts;
• The owner of a private enterprise commits in writing or has a written agreement with other capital contributors on the acceptance and use of the existing labor force of the private enterprise
Conversion from a single-member LLC to a LLC with two or more members (in case the owner of a single-member LLC transfers part of the charter capital to one or more individuals and accepts new capital contributors.
Conversion from a LLC with two or more members to a single-member LLC.
Conversion from an LLC to a joint-stock company and vice versa
In case of conversion of a joint-stock company into a single-member LLC
• One shareholder receives the transfer of all corresponding shares of all remaining shareholders;
• An organization or individual that is not a shareholder receives the transfer of all shares of all shareholders of the company;
• The company has only 01 shareholder left.
In case of conversion of a joint-stock company into a limited liability company with two or more members
• Converting into a limited liability company with two or more members without raising additional capital or transferring shares to other organizations or individuals;
• Converting into a limited liability company with two or more members and simultaneously raising additional capital from other organizations or individuals;
• Converting into a limited liability company with two or more members and simultaneously transferring all or part of the shares to other organizations or individuals;
• The company has only 02 shareholders left;
• Combining methods.
In case of converting from a limited liability company to a joint stock company
A limited liability company can be converted into a joint stock company through the following methods
• Converting into a joint stock company without raising additional capital from other organizations or individuals, without selling capital contributions to other organizations or individuals;
• Converting into a joint stock company by raising additional capital from other organizations or individuals;
• Converting into a joint stock company by selling all or part of the capital contribution to one or several other organizations or individuals; or
• Combining different methods to ensure the minimum number of shareholders of a joint stock company is three shareholders.
Converting from a single-member LLC that is an organization to a single-member LLC that is an individual (in case the organization transfers all of its charter capital to another individual).
Above are the procedures for establishing a company and some notes. If you need advice and need full support on the procedures for establishing a company, please contact VNNA for detailed advice and instructions.
