HOW TO CONVERT A JOINT-STOCK COMPANY INTO A LIMITED LIABILITY COMPANY WITH ONE MEMBER

Enterprises operating under a joint-stock company type can choose to convert this existing type to a limited liability company with one member. Pursuant to clause 1 Article 203 of the Law on Enterprises 2020, there are the following ways:

1. A shareholder receives all shares of the other shareholders;

The transfer or receipt of shares in this way shall be made at market value or a value determined by asset-based method or discounted cash flow method or another method.

2. A organization or individual other than a shareholder receives all shares of all shareholders;

3. Only 01 shareholder remains in the company.

Within 15 days from the occurrence of any of the events specified above, an application for conversion shall be submitted to the business registration authority where the enterprise is registered. Within 03 working days from the receipt of the application, the business registration authority shall issue the Enterprise Registration Certificate and update the company’s status to the national enterprise registration database.

When the conversion is completed, the limited liability company obviously inherits all lawful rights and interests, debts including tax debts, employment contract and other obligations of the joint stock company.

Regarding the statutory procedure, the enterprise would like to convert must follow the process:

Step 1: The enterprise submits the application dossier at the Business Registration Authorities, Department of Planning and Investment where the head office is located.

The application dossier shall include:

Application form for enterprise registration.

The company’s charter.

Copies of the following documents:

a) Legal documents of the enterprise’s legal representative;

b) Legal documents of the company’s owner that is an individual; Legal documents of the company’s owner that is an organization (except for the State); Legal documents of the authorized representative and letter of appointment of authorized representative.

If the company’s owner is a foreign organization, copies of legal documents of that organization must be legalized;

4. The resolution and the minutes of the General Meeting of Shareholders of the joint-stock company on the conversion from company;

5. The contract for transfer of shares/stakes or documents proving completion of such transfer; the contract for donation of shares/stakes (if applicable);

6. Documents certifying the capital contribution by new member (if applicable);

7. A written approval given by the investment registration authority for capital contribution or purchase of shares/stakes by foreign investors/foreign-invested business entities in case procedures for registration of capital contribution or purchase of shares/stakes must be followed in accordance with the Law on Investment (if applicable).

Step 2: The Business Registration Authority checks the validity of documents and handles them; issues receipt to the enterprise.

Step 3: Based on the time on the receipt, the enterprise obtains the result of the settlement at the Business Registration Authority.

The time- limit for handling: 05 - 07 working days from the date of getting the full and valid documents.

After the joint stock company is converted into a limited liability company, it is necessary to carry out other relevant procedures such as re-engraving the seal and announcing the seal sample, announcing and updating the name change on the relevant legal documents, and updating to business partners. Branches, representative offices and business locations of the above enterprises (if any) shall register for changes in operational registration contents.

ADK & Co Vietnam Lawyers Law Firm