Cases of changing the type of enterprise

Changing the type of enterprise is a form of reorganizing the enterprise structure to suit the scale and development orientation of that enterprise. Change procedures need to comply with legal regulations. In this article, Long Phan will help customers better understand cases of changing business types.

The importance of changing the type of enterprise

Changing the type of enterprise is an important decision for the company’s development. This helps businesses adapt to the changing business environment and optimize their organizational structure. Changing the type of enterprise can bring many benefits such as expanding scale, increasing the ability to mobilize capital and improving management efficiency.

Changing the type of enterprise brings many potential benefits. It can improve governance structures, increase capital mobilization and expand business opportunities. At the same time, this also helps businesses adapt better to changes in the market and legal regulations.

Common cases of changing the type of enterprise

Convert from limited liability company to joint stock company

Converting from a limited liability company to a joint stock company is a common trend when businesses want to expand their scale and raise capital. According to Article 202 of the  Law on Enterprises 2020, a limited liability company can be converted into a joint stock company in many different ways. These methods include:

• Convert into a joint stock company without mobilizing other organizations or individuals to contribute capital, and without selling capital contributions to other organizations or individuals.
• Convert into a joint stock company by mobilizing other organizations and individuals to contribute capital.
• Convert into a joint stock company by selling all or part of the capital contribution to one or several other organizations or individuals.
• Combine the above methods and other methods.

Converted from a joint stock company to a one-member limited liability company

Converting from a joint stock company to a single-member LLC will help simplify the management structure and increase control for the owner. Based on the content of Article 203 of the  Law on Enterprises 2020, a joint stock company can be converted into a single-member limited liability company through the following methods:

• One shareholder receives the transfer of all corresponding shares of all remaining shareholders;
• An organization or individual who is not a shareholder receives the transfer of all shares of all shareholders of the company;
• The company only has 1 shareholder left

It should be noted that the transfer or receipt of investment capital contributions according to the above methods must be carried out according to the market price, the price is determined according to the asset method, discounted cash flow method or other methods.

Convert from a joint stock company to a limited liability company with two or more members

Based on the content of Article 204 of the  Law on Enterprises 2020, a joint stock company can be converted into a limited liability company with two or more members through the following methods:

• Convert into a limited liability company with two or more members without raising additional shares or transferring shares to other organizations or individuals;
• Convert into a limited liability company with two or more members and mobilize other organizations and individuals to contribute capital;
• Convert into a limited liability company with two or more members and transfer all or part of the shares to other organizations or individuals to contribute capital;
• The company only has 02 remaining shareholders;
• Combine the above methods and other methods.

Changing the type of enterprise to a limited liability company, joint stock company, or partnership

Converting from a private enterprise to a limited liability company, joint stock company, or partnership is an important step in separating personal and business assets. At this time, businesses can increase their ability to mobilize capital, expand business scale, increase competitiveness and flexibility, and open up many development opportunities.

Based on the content of Article 205 of the Law on Enterprises 2020, private enterprises can be converted into limited liability companies, joint stock companies, and partnerships when they meet the following conditions:

• The converted enterprise must meet all conditions to be granted a Business Registration Certificate. The private enterprise owner commits in writing to take personal responsibility with all of his or her assets for all unpaid debts. and commit to pay the debt in full when due;
• The owner of the private enterprise has a written agreement with the parties to the unliquidated contract that the converted company will receive and continue to perform those contracts;
• The owner of a private enterprise commits in writing or has a written agreement with other capital contributing members on the reception and use of existing employees of the private enterprise.

After completing the conversion procedure, the new enterprise will inherit all rights and obligations of the previous private enterprise.

The transformation helps businesses enhance their competitiveness, creating a solid foundation for sustainable development in the future. However, choosing the appropriate form needs to be based on the specific industry, strategy and goals of each business.

Issues to keep in mind when changing the type of enterprise

Tax and accounting obligations

Changing the type of enterprise requires special attention to tax and accounting obligations. Enterprises need to perform tax finalization before conversion to ensure legal compliance. This includes submitting financial reports, finalizing corporate income tax and value added tax.

After conversion, the new enterprise inherits all tax obligations of the old enterprise. This requires updating information with tax authorities, including tax identification numbers and tax registration information. Businesses need to pay attention to changes in accounting and financial reporting regimes appropriate to the new type of business.

Rights and obligations of the owner

The rights and obligations of the owner change significantly when converting the type of business. In a limited liability company, the owner’s liability is limited to the capital contribution. When converting to a joint stock company, ownership is expressed through shares, with the right to vote and receive dividends.

Owners need to clearly understand the right to manage and operate the business after conversion. For converted private enterprises, the business owner is still personally responsible for debts incurred before conversion. Clearly defining new rights and obligations helps avoid conflicts and ensures smooth business operations.

Change business registration certificate

Changing the business registration certificate is an important step in the process of converting the business type. Enterprises must submit a change registration application to the Business Registration Authority within the prescribed time limit, usually 10 days from the date of completion of the conversion. The dossier includes documents such as the conversion decision, new charter and documents proving the transfer of assets and capital.

After receiving a new business registration certificate, businesses need to update information with other authorities. This includes tax authorities, social insurance and business partners. Timely notification helps businesses avoid legal risks and ensure business continuity.

Consulting services for changing the type of enterprise

At Long Phan, we provide consulting services for changing the type of enterprise, helping businesses easily transition. Work content in the service includes:

• Evaluate the business situation before making the conversion
• Consulting on choosing the type and conversion method appropriate to the situation and development strategy of the business
• Analyze the benefits and risks of the conversion
• Consulting and support in preparing complete documents
• On behalf of customers, carry out procedures for converting business types at competent state agencies
• Monitor the results of procedure implementation, receive and return results to customers

Using consulting services helps businesses save time, minimize legal risks and ensure a smooth transition.

Changing the type of enterprise is important for businesses to adapt to changes in the business environment. Change procedures need to comply with legal regulations and capital requirements, deadlines, and financial obligations as prescribed. If you have difficulty implementing procedures for converting your business type, please contact Long Phan immediately via hotline: 090.673.5386 for detailed advice and implementation support.