VIETNAM Law and Practice Contributed by: Ngoc Luong Trinh, Tung Nguyen, Hanh Vo, Esko Cate, Nguyen Dang, Khanh Le, Hoang Nguyen and Truc Ta, VILAF
Joint Stock Company A JSC is a form of company which can issue shares in different classes and must have at least three share - holders. There is no statutory maximum number of shareholders. If a JSC has more than 100 voting shareholders or has made an “initial public offering” via mass media, it may become a “public company” and therefore be subject to higher disclosure and other requirements under securities regulations. Similar to an LLC, a JSC also offers shareholders limited liability to the extent of their contributed capital. There is no general statutory minimum charter capi - tal, subject to sector-specific requirements. Shares in a JSC are generally more freely transferable than capital interests in an LLC (except for certain limita - tions on founding shareholders for the first three years or restrictions on the company’s charter agreed by shareholders). This form is best suited for businesses with multiple investors and/or that need greater flexibility to raise additional capital, as well as companies intending to become public or listed. 3.2 Incorporation Process The incorporation process may vary depending on whether the proposed company is domestically owned or foreign-invested. For a domestic company initially incorporated by Viet - namese investors, incorporation generally requires an application for an Enterprise Registration Certificate (ERC) submitted to the competent business registra - tion authority. The statutory processing timeline is three business days from submission of a valid appli - cation. For a foreign-owned company initially incorporated by the foreign investor and/or foreign equivalent inves - tor, such investor will generally first need to obtain an Investment Registration Certificate (IRC) for the “investment project,” followed by an ERC for the company implementing such investment project or vice versa . In practice, a straightforward domestic company may be established within one to two weeks, while
investment project and application dossier to align with Vietnam’s foreign investment conditions and regulatory requirements. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity Vietnam’s Law on Enterprises recognises four prin - cipal forms of enterprise: limited liability companies, joint stock companies, partnerships and private enter - prises. In practice, the two most prevalent corporate forms are the limited liability company (LLC), which can be owned by between one and 50 members and the joint-stock company (JSC), which must have at least three shareholders but is not subject to any limi - tation on the number of its shareholders. Limited Liability Company An LLC may be established as either a single-member LLC or a multiple-member LLC. A single-member LLC has one owner, which may be an individual or an organisation. A multiple-member LLC has two to 50 members. An LLC is a form of company that cannot issue shares but issues equity interests in its charter capital to its “members,” who have an interest in and limited liability for the charter capital pro rata to their capital contributions. There is no general statutory minimum charter capital, although minimum capital requirements may apply in certain regulated sectors, eg, banking, insurance or securities. Transfers of capital interests in an LLC are more restricted than transfers of shares in a JSC. In a mul - tiple-member LLC, existing members generally have statutory preemptive rights before a capital interest may be transferred to a third party. An LLC is typically suitable for circumstances where the parties prefer a simple company form with a limited number of investors and tighter control over changes in ownership (eg, wholly owned subsidiaries, greenfield projects, holding companies and closely held joint ventures).
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