Guidelines for Converting a Limited Liability Company into a Joint Stock Company

Converting a Limited Liability Company into a Joint Stock Company is a strategic business move. This method is attracting significant interest from many investors looking to expand their operations and increase their ability to raise capital in the market. To carry out the conversion, it is necessary to prepare the required conditions, processes, procedures, and costs for the transformation. In the article below, Long Phan will provide you with information on converting from an LLC to a Joint Stock Company.

Converting a Limited Liability Company into a Joint Stock Company

Conditions for Converting a Limited Liability Company into a Joint Stock Company

Based on the provisions of Clause 4, Article 26 of Decree No. 01/2021/ND-CP on enterprise registration, effective from January 4, 2021, the following conditions must be met for converting a business type from an LLC to a Joint Stock Company:

• The decision to convert the LLC to a Joint Stock Company must be unanimously agreed upon by all members of the LLC.
• All tax obligations must be fulfilled before converting the business type.
• The most recent annual financial report must be prepared and published before the conversion.
• An LLC involved in any ongoing disputes is not permitted to convert its business type.
• An LLC undertaking an investment project may only convert its business type after the completion of the project.

Forms of Conversion from a Limited Liability Company to a Joint-Stock Company

According to Clause 2, Article 202 of the Law on Enterprises 2020, Converting a Limited Liability Company into a Joint Stock Company can be done in the following ways:

• Conversion to a Joint-Stock Company without raising additional capital from other organizations or individuals, and without selling capital contributions to other organizations or individuals;
• Conversion to a Joint-Stock Company by raising additional capital from other organizations or individuals;
• Conversion to a Joint-Stock Company by selling all or part of the capital contributions to one or several other organizations or individuals;
• A combination of the methods specified in points a, b, and c of this clause and other methods.

The conversion of enterprises must comply with the methods stipulated above to ensure that the conversion is carried out in accordance with the law.

Procedures for Converting a Limited Liability Company into a Joint Stock Company

Required Documents:

According to Clause 4, Article 26 of Decree 01/2021/ND-CP, the conversion dossier includes:

• Application for Enterprise Registration.
• Company Charter after conversion, in accordance with Article 24 of the Law on Enterprises 2020.
• List of Members for an LLC with two or more members; List of Founding Shareholders and List of Foreign Investors for a joint-stock company.
• Copies of the following documents:
• Legal documents of the individual representing the company according to the law.
• Legal documents of the individual members of the company, founding shareholders, and foreign investors who are individuals.
• Legal documents of the organization for members, founding shareholders, and foreign investors who are organizations.
• Legal documents of the individual representing the authorized members, founding shareholders, and foreign investors who are organizations, along with the authorization document.
• For foreign organizational members or shareholders, the legal documents of the organization must be consular legalized.
• Decision of the Company Owner or the Decision and Valid Copy of the Minutes of the Members’ Council Meeting regarding the company’s conversion.
• Capital Transfer Agreement or documents proving the completion of the capital transfer or investment contribution agreement.
• Document Confirming Capital Contribution from new members or shareholders.
• Document from the Investment Registration Authority approving the capital contribution, purchase of shares, or purchase of capital contributions by foreign investors or economic organizations with foreign investment in cases where the registration procedure for capital contribution, share purchase, or capital contribution purchase is required under the Law on Investment.

Procedure for Converting a Limited Liability Company

Procedures for Converting a Limited Liability Company into a Joint Stock Company

To successfully convert an LLC into a Joint-Stock Company, the following steps must be taken:

Step 1: Prepare the documents

• The business needs to prepare and draft the necessary documents as mentioned.

Step 2: Submit the conversion application to a Joint-Stock Company

• Submit the application to the Business Registration Office of the Department of Planning and Investment where the company is registered.
• According to Clause 3, Article 202 of the Law on Enterprises 2020, when converting, the company must register the conversion with the Business Registration Office within 10 days from the completion date of the conversion.

Step 3: Receive the results

• Within 3 working days from the date of receiving the conversion application, the Business Registration Office will reissue the Enterprise Registration Certificate and update the company’s legal status in the National Business Registration Database.

Executing Agency

The agency responsible for carrying out the conversion is the Business Registration Office where the limited liability company is headquartered.

This content is stipulated in Clause 1, Article 32 of Decree 01/2021/ND-CP.

Consulting Services for Converting a Limited Liability Company into a Joint Stock Company

With a team of highly experienced experts, Long Phan provides clients with consulting services to support the conversion of business types, including the following services:

• Review and detailed assessment of the company’s current situation.
• Examination and evaluation of contracts, agreements, and related issues.
• Planning, determining the timeline, budget, and specific steps for converting from a Limited Liability Company to a Joint-Stock Company.
• Preparation of documents and execution of procedures with competent authorities, advising on updates and adjustments to management systems, internal regulations, contracts, and other internal documents, etc.
• Advising on the establishment of a new organizational structure suitable for the company’s framework.
• Assistance in resolving disputes or issues arising during the conversion process.

Long Phan Consulting Services is committed to delivering the best satisfaction to our clients when choosing our business conversion services.

Consulting on business type conversion

Converting a Limited Liability Company into a Joint Stock Company will help the business expand its operations in the market. The above article provides comprehensive information about Converting a Limited Liability Company into a Joint Stock Company that we would like to share with you. If you need consultation support regarding procedures or wish to use our services for changing the type of business entity, please contact Long Phan at the hotline: 0906.735.386. Thank you.