To meet the growing needs of modern businesses, foreign investors are inclined to form a joint-stock company (JSC) due to its flexible structure, stability, and limited liability of the shareholders. A joint-stock company is a legal entity formed by three or more founding shareholders. Individuals or organizations can be shareholders in the entity, and they each own shares that are split into equal units to form the company’s charter capital.
This also grants each shareholder in Vietnam’s joint-stock company accountability for the obligations and liabilities of the firm based on the amount of capital contributed.
Similar to a limited liability company, a JSC can be registered in two different ways:
- A wholly foreign-invested company; or
- A joint venture company.
Note that setting up a JSC comes with its share of challenges and could become time-consuming and tedious. In this case, having regional company registration professionals like Cekindo, well-versed in the region’s market and updated on all requirements can be a saving grace.
In this article, we will discuss the multifaceted aspects of setting up a JSC in Vietnam.
Conditions For Setting Up a Joint-stock Company in Vietnam
A minimum of three shareholders is required to form a JSC in Vietnam. A JSC has the authority to issue shares and share certificates.
The nationality of the shareholders, or someone in a management role or higher, is not regarded while forming a JSC. They speak on behalf of the company. However, to operate a joint-stock business in Vietnam, at least one of the legal representatives must live full-time in the country.
The sum must be sufficient to meet the company’s expenses, such as office rent, salaries, and operating costs. We recommend at least 25,000 USD for a basic FDI LLC, but this is subject to change.
To start a JSC in Vietnam, one can register either a physical or a virtual address. For a hassle-free, remote company operation, we recommend a virtual office address. However, it may also depend on the business licensing requirements. If needed, Cekindo provides virtual office addresses.
A bank statement with an amount equal to or more than the charter capital planned for investment in Vietnam must be submitted. A legalized copy of the investor’s financial records from the last two years must also be submitted. Cekindo can assist with the establishment of business bank accounts, including offshore possibilities.
Conditions for Companies to be listed on a Stock Exchange
Vietnam’s conditioned charter capital for a JSC to be listed on the stock exchange is 120 billion VND.
Duration of operation
To be listed on the stock exchange, a company must have operated for at least 2 years in the form of a joint-stock company in Vietnam.
Another requirement for being listed on a stock market is that at least 20% of voting shares should be held by at least 300 non-major shareholders.
The last two years of operation must be profitable, with a return on capital of at least 5%. Any debt that has been past due for more than a year must be paid before submission for stock exchange listing. There should be no losses accumulated by the time the listing is registered. It’s also important to make sure the organization is compliant with Vietnamese law.
Documents Required for Registering a Vietnam JSC
Foreign investors that want to start a joint-stock company in Vietnam must first get an Enterprise Registration Certificate (ERC), which is required by Vietnamese legislation. The following papers should be provided with your ERC application:
- Application form for business registration;
- The company charter;
- List of JSC members, including all founding shareholders and shareholders who are foreign investors;
- Copies of identification proof – i.e., ID card, passports (for individual members);
- Copies of the establishment decision, business registration certificate, or other equivalent documents (for organizational members), and identification documents of the authorized representative;
- Copies of registration documents of the organizations which have been legalized by the consular (for foreign organizations);
- Investment Registration Certificate (for foreign investors).
Lastly, the high level of flexibility in the transfer of shares is what attracts international investors to a JSC. Shares in a joint-stock company in Vietnam can be freely transferred following the Law on Enterprise. An exception of transferring ordinary shares of founding shareholders to non-shareholders of the JSC unless the General Meeting of Shareholders approves differently.
Besides, unlike some other business forms that are barred from dealing with bonds, a joint-stock company in Vietnam is permitted to issue bonds, convertible bonds, and other bonds as defined by Vietnamese legislation and the firm’s charter.
How Can Cekindo Help?
Company incorporation in Vietnam consists of multiple procedures that are time-consuming. Having company registration professionals, like Cekindo, by your side can save you a great deal of time and provide you with a hassle-free experience. Cekindo provides a wide spectrum of ancillary services related to company registration, such as legal consultancy, license and document acquisition, tax and accounting, and HR services.
Start by filling out the form below and talking to one of our professional counselors.