With the strong development of the economy, today it is common to set up a business. For investors who set up businesses to conduct business and production in order to protect their legitimate rights and interests. However, to create a business must go through many processes, especially choosing the type of business for the business is an extremely important factor. There are two common types of businesses in the market today: joint-stock companies and limited liability companies. So what are the characteristics of these two types of businesses? How to choose the right type for your business? In the following article, YNN GLOBAL will advise readers to clearly understand these two types.
1. What is a joint-stock company?
According to the provisions of Article 111 of the Enterprise Law 2020, a Joint Stock Company (JSC) is an enterprise in which the charter capital is divided into equal parts called shares.
2. What is a limited liability company?
According to the provisions of current Vietnamese law, a limited liability company (LLC) is a type of enterprise with legal status recognized by law. For a limited liability company, there is the separation of assets between the company and the company's owners. This is a type of "counterpart" company.
According to Clause 7, Article 4 of the Enterprise Law 2020, limited companies include two types: one-member limited liability companies and two-member limited liability companies.
3. Difference between the joint-stock company and a limited liability company
Element | Limited liability company (LLC) | Stock company (JSC) |
Members | Members are organizations or individuals, not exceeding 50 people (including one member limited liability companies and two or more member limited liability companies) | Shareholders are organizations and individuals, the minimum number is 3, the maximum number is not limited |
Regulations capital | For a one-member limited liability company: charter capital is the total value of assets committed to contribute by the owner and stated in the company's charter. For a two-member limited liability company: charter capital is the total value of assets committed by members to contribute as stated in the company's charter. | Divided into several parts equivalent to the capital contribution ratio of shareholders |
Ability to raise capital | The limited company increases its charter capital by increasing its ability to raise capital from members, new members, issue bonds, and cannot issue shares. | Issuance of shares, bonds and other securities. |
Transfer capital | For a one-member limited liability company: The owner has the full right to transfer and dispose of all or a part of the charter capital of the company. For a two-members limited liability company: may only be transferred to a person who is not a member of the company if the remaining members of the company do not purchase or purchase all the contributed capital. When transferring capital, members of a limited company do not have to pay personal income tax. | Founding shareholders are limited to transfer for a period of 3 years. When transferring shareholder capital, personal income tax must be paid. |
Organizational structure | It can be organized in the form of a one-member limited liability company or a two-members limited liability company or more. The organizational structure is quite simple. | Complex organizational structure. A joint-stock company has the right to choose a management organization, usually operating under one of the following two models:
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Related: Top 5 things to know about investment registration certificates
4. Should you establish an LLC or JSC?
Choose the right type of business, businesses will have to rely on many factors. But in terms of business, JSC is suitable for large-scale enterprises. With small and medium enterprises, few shareholders, less capital, ... will be more suitable for LLC. This will help simplify legal procedures, tax procedures,... in the process of business registration, establishment, and operation.
YNN GLOBAL, with many years of experience in the field of business establishment consulting services, has been trusted by many businesses, individuals and organizations. YNNGLOBAL ensures to bring to customers the fastest, most prestigious, and quality package service. With the motto of bringing benefits to customers, we are always ready to accompany customers. If you are in need or have questions about any type of business, please visit for a fast response.
Related: Things to know about enterprise registration certificates in Vietnam
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