Cases to consider when choosing a joint-stock company type when starting a business

The question of whether to choose a joint-stock company type when starting a business is of interest to entrepreneurs. This type of business can also raise capital by issuing shares. Therefore, to understand why to choose the type of joint-stock company to start a business as well as the advantages and disadvantages of this type, you can follow the following content.

Choosing the Type of enterprises

Consolidating the type of enterprise;

There are various types of enterprises which people usually see, but according to the regulations of the 2020 Enterprise Law, there are five main types of enterprise:

• Sole proprietorship
• Partnerships
• A single-member limited liability companies
• A multi-member limited liability companies
• Joint stock companies

These type of enterprises are all managed and operated under the laws of Vietnam. However, the differences among these types stem from factors such as the number of employees, liability regime, management structure, and capital mobilization of the company.

Compilation of various types of enterprises

Advantages and Disadvantages of the Joint-stock Company Model

Advantages

• Have the status of a juridical person
• Shareholders are only liable within the scope of their contributed capital
• No restriction on the number of members
• Flexible capital structure, easy to mobilize large capital

Disadvantages

• Difficult to manage due to a large number of members
• Limited business protection and financial confidentiality as the company must disclose and report to shareholders

Advantages and disadvantages of the joint-stock company form

Cases to Consider Choosing the Joint-stock Company Type When Establishing a Business

In reality, each type of enterprise has its own characteristics, advantages, and disadvantages. Therefore, the choice type of enterprise depends on various factors including business objectives, scale, field of activity, and financial resources. According to the characteristics of joint-stock companies as per Article 111 of the 2020 Enterprise Law, a joint-stock company must satisfy the following conditions::

• The charter capital is divided into units of equal value called shares;
• Shareholders of the joint stock companies can be organizations and individuals; the minimum number of shareholders is 03 and there is no limit on the maximum number of shareholders;
• 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;
• Shareholders may transfer their shares to other persons except for the cases specified by law

Based on these criteria, entrepreneurs should consider choosing the joint-stock company type based on:

• Number of members
• Investment scale
• Capital mobilization capacity
• Intention to IPO and list on the stock exchange

Joint-stock Company Establishment Consultation

From the information we have provided to address your inquiries, our company also offers the following services to assist you and your business:

• Guiding the drafting of applications, documents, relevant materials, and carrying out procedures for establishing a joint-stock company.
• Advising on and resolving queries regarding the establishment of a joint-stock company according to legal regulations.
• Providing consultation and support for any issues that arise after the company is established.
• Advising on matters related to internal business operations, organizational structure and model, methods of operation and management, relationships among management positions, rights and obligations of members, shareholders, share ratios and capital contribution methods, and other related matters.

Therefore, based on the aforementioned content, it can be seen that choosing the joint-stock company type would be a reasonable option for startups looking to do business and seeking investment from other investors, which will be easier. We hope we have addressed your concerns. Additionally, if you are interested in our company establishment services, please contact Long Phan via the hotline number 0906.735.386 for assistance. Thank you.