What is a Joint Stock Company?

Article 111 of the Enterprise Law 2020 stipulates the concept of Join Stock Company company as follows:

“Article 111. Joint-stock companies

1 .A joint-stock company is an enterprise in which:

a) The charter capital is divided into units of equal value called shares;

b) Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders;

a) A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the shareholder;

d) Shareholders may transfer their shares to other persons except for the cases specified in Clause 3 Article 120 and Clause 1 Article 127 of this Law.

2.A joint-stock company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.

3.A joint-stock company may issue shares, bonds, and other kinds of securities.”

Features of Joint Stock Company

1. Company member

The company must have at least 03 shareholders and there is no limit to the maximum number.

2.Capital

A joint-stock company is an enterprise in which the charter capital is divided into equal parts called shares. Under the provisions of the current corporate law, the Freedom of Industry and Organizations shall decide on the specific charter capital level when registering the establishment of the company, except the industry that the law requires the minimum capital level when registering.

3.Shareholder’s property liability

Shareholders are only liable for losses or debts that will not exceed the amount they have contributed. Apart from that, shareholders can transfer their ownership of shares to others without the consent of other shareholders. With the increasing funds, a joint-stock company in Vietnam shall hire their internal accountant as well.

The joint-stock company is a large-scale business with a large-scale enterprise because of flexible shares transfer and is capable of mobilizing large capital. Joint-stock companies are entitled to issue shares. The form of issuing shares is one of the most typical ways of raising the capital of a joint-stock company.

4.Inspection Committee

The general meeting will appoint the independent inspectors to this committee. These inspectors need to supervise the general director and the management board. When a company has less than 11 shareholders with none of them with more than 50% of shares, the inspection committee is not necessary.

Please don’t hesitate to contact us if you require any further information!