Analyzing pros and cons of 3 common company types in Vietnam

Criteria

Joint Stock Company

Single-member Limited Liability Company

Multiple-member Limited Liability Company

Quantity of members

Responsibilities of members or shareholder

Right to transfer capital

• Freely transfer common shares to other founding shareholders;
• Common shares may only be transferred to a person who is not a founding shareholder if approved by the General Meeting of Shareholders.

Shareholders owning voting preference shares shall not transfer such shares to other people, except in the case of transfer under a legally effective court’s decision or judgment or inheritance.

• Offering to the remaining members in proportion to their capital contribution in the company, with the same conditions for all members;
• Transfer with the same offer conditions for the remaining members to non-members if the remaining members of the company do not buy or do not buy all of them within 30 days from the date of offering.

Methods of increasing charter capital

• Issuing shares;
• Release bonds.

• Increase capital contribution of each member (additional contribution);
• Receiving capital contributions from new members.

Management structure

• General Meeting of Shareholders;
• Board of Management;
• Director or General director;
• Supervisory Board (In the case of a joint stock company with less than 11 shareholders and institutional shareholders holding less than 50% of the total shares of the company, it is not required to have a Supervisory Board).

• Company president;
• Director or General director.

If the owner is a company, the management structure must follow one of the following two models:

The first:

• Company president;
• Director or General Director.

The second:

• Members’ Council;
• Director or General director.

• Members’ Council;
• Chairman of the Members’ Council;
• Director or General director;
• Supervisory Board (It is optional).

Advantages

• The capital structure of a joint stock company is flexible, enabling many people to contribute capital to the company;
• Having the ability to raise capital through the issuance of shares to the public or offering shares, this is a distinctive feature of a joint stock company;
• The transfer of shares is relatively easy.

• The owner is responsible for the activities of the company within the amount of capital contributed to the company;
• The simplest organizational structure of three types;
• The owner has full authority to decide on all matters related to the operation of the company;
• Is entitled to issue bonds to raise capital.

• The members are only responsible for the activities of the company within the amount of capital contributed to the company;
• The number of members is not large, and the members usually know and trust each other;
• The transfer of capital is strictly regulated, thus limiting the infiltrating of outsiders into the company;
• Is entitled to issue bonds to raise capital.

Disadvantages

• The management and administration are complicated, there may be a division into groups that oppose each other in terms of interests;
• Founding shareholders may lose control of the company;
• The establishment and management of a joint stock company is more complicated because it is strictly bound by the provisions of law.

• Capital raising is limited because there is only one member and no right to issue shares.

• Capital raising is limited due to the lack of right to issue shares.