Establishing a Joint Stock Company (JSC) in Vietnam is a strategic move for foreign investors seeking dynamic opportunities in the market. A JSC, with its capacity to accommodate multiple shareholders and engage in diverse profit-generating activities, offers a platform for substantial growth and potential listing on the stock exchange. If you’re considering this business structure, here’s what you need to know.
Understanding the Joint Stock Company in Vietnam
A JSC, as defined by Vietnam’s Law on Enterprises 2020, is a legal entity characterized by its division of charter capital into shares among shareholders, with a minimum requirement of three shareholders. Unlike a Limited Liability Company, a JSC has the advantage of issuing shares publicly and listing them on the stock exchange, facilitating capital mobilization and fundraising endeavors. Let’s delve deeper into the intricacies of establishing a JSC in Vietnam.
Organizational Requirements for a Joint Stock Company
The organizational structure of a JSC is more elaborate compared to a Limited Liability Company, owing to its suitability for medium and large corporations. Here are the key components:
- General Shareholder Meeting: This assembly comprises all shareholders and convenes annually to address crucial company matters, including strategy and performance reports.
- Board of Directors (BOD): The governing body of a JSC, entrusted with decision-making powers on behalf of the company, except for those reserved for the General Shareholder Meeting.
- Board of Supervisors: Responsible for transparent oversight of the Board of Directors and company management, ensuring adherence to regulations and reporting to the General Shareholder Meeting.
- Chairman of the Board of Directors: Appointed from within the Board of Directors, this individual serves as the company’s legal representative and presides over shareholder meetings and BOD gatherings.
- Managing Director: Tasked with daily business operations, the Managing Director operates under the supervision of the Board of Directors and may assume the role of the company’s legal representative if specified.
Types of Shares and Capital-Raising Methods
JSCs issue two main types of shares: ordinary shares and preference shares. While ordinary shares are standard, preference shares come with specific rights outlined in the company’s charter. Capital can be raised through various methods, including:
- Transferring shares among shareholders
- Transferring shares to non-shareholders
- Listing shares on a public stock exchange, facilitating trading and fundraising opportunities.
Advantages and Limitations of a Joint Stock Company
Advantages:
- Limited liability for shareholders
- Share transferability without unanimous consent
- Anonymity in share trading post-public listing
Limitations:
- Complex establishment process and legal formalities
- Stringent regulatory compliance requirements
- Impersonal decision-making due to a multi-layered governance structure
Public Listing Considerations
While not mandatory initially, a public listing on the stock exchange becomes an option for JSC meeting specific criteria, such as minimum charter capital, operational duration, profitability, and debt status.
Requirements and Documents for Incorporation
Establishing a JSC entails fulfilling a range of requirements and submitting essential documents, including investment proposals, bank statements, shareholder details, immigration certificates, and more.
Our Recommendation
Navigating the intricacies of establishing a JSC in Vietnam demands expertise and strategic guidance. Warren B offers comprehensive market-entry solutions, legal advisory services, and consultancy to streamline your business setup process and ensure long-term productivity and efficiency. Get in touch with us today to embark on your journey of establishing a successful Joint Stock Company in Vietnam.
By following this comprehensive guide, you’re well-equipped to embark on the journey of establishing a Joint Stock Company in Vietnam. Contact Warren B today to kickstart your venture with confidence and clarity.