It can be said that a joint stock company is the type of enterprise with the most business advantages and is also the type of enterprise that can become stronger through not limiting the number of shareholders participating and can become a public company trading capital on the stock market.
I. Basic characteristics of a joint stock company
– Number of shareholders: Minimum of 03 shareholders, no maximum limit.
– Regarding the ability to mobilize capital: issue bonds and shares;
– It is the only type of enterprise in Vietnam that can participate in the stock market.
II. Procedures for establishing a joint stock company
– Receiving information, consulting on company establishment;
– Drafting documents;
– Submitting documents and paying information disclosure fees;
– Completing procedures after company establishment.
III. Advantages and disadvantages of joint stock companies
– Easy to raise capital through offering shares, bonds and participating in the stock market;
– Joint stock companies only require a minimum of 03 shareholders upon establishment, with no limit on the number of shareholders participating.
– Limited liability for debts and other financial obligations within the scope of purchased shares or the liability regime of a joint stock company is limited liability, shareholders are only responsible for debts and other financial obligations of the company within the scope of contributed capital, so the risk level of shareholders is not high;
– The ability to operate a joint stock company is very broad, in most fields and industries;
– Easy transfer within the company without having to go through notification procedures at the Department of Planning and Investment. Notification of changes to information of founding shareholders is only carried out in 2 cases: “in case the founding shareholder has not paid or only paid a part of the registered shares to buy”. Thus, it can be seen that according to this new regulation, when founding shareholders have contributed enough capital as prescribed, they will be recorded “forever” during the operation of the joint stock company with information on the initial capital contribution including transfer, donation or inheritance. This is an advantage but also a disadvantage when the transfer of shares by founding shareholders will be recorded in the company’s internal records, similar to the previous common shareholders. This will cause more risks for founding shareholders because they will need to keep records of their share transfer to exempt themselves from liability if any risks occur.
– It is difficult to manage shareholders participating in the company because the free transfer does not require procedures with the Department of Planning and Investment;
– In a joint stock company, when a shareholder wants to transfer shares, when performing the personal income tax declaration procedure, the tax rate will be 0.1% even if the transfer is not profitable (applied in the form of securities transfer);
– The cumbersome management apparatus makes it difficult to provide timely business directions in response to market changes due to the lack of restrictions on the maximum number of shareholders and the free transfer of shares.
– The responsibility of the Board of Directors of a joint stock company is quite large, related to internal procedures in the operation of a joint stock company.
– Some special industries related to reputation and professional responsibility will not be allowed to establish a joint stock company such as: auditing services, accounting services, law, etc.
– After the founding shareholders transfer capital, shareholders who buy shares of the company will not have their names on the business registration system but will only be recorded in the internal records and shareholder books of the enterprise.
The above are the issues of establishing a joint stock company. If you need more detailed advice, please contact VNNA for detailed advice and instructions.
