Converting from a limited liability company to a joint stock company: Instructions and notes

Converting from a limited liability company to a joint stock company is a business restructuring process, bringing many practical benefits. This conversion decision needs to be carefully considered, based on the development strategy and long-term goals of the business. To better understand the process, procedures, and important notes when converting, let’s learn more in detail in the following article.

Benefits of converting from LLC to shares

Converting from a limited liability company to a joint stock company brings many practical benefits to businesses, including:

• Attract investment capital: Joint stock companies have the ability to issue shares to mobilize capital from many different sources, helping to expand business scale and invest in large projects.
• Optimize internal management: Joint stock company model with clear organizational structure, decentralization and transparent responsibilities, helping to improve the efficiency of business management and operation.
• Adapt to changing business environment: The joint stock company type is more flexible in changing capital structure, attracting talent and expanding business activities, helping businesses adapt quickly to market changes.

Methods of converting from a limited liability company to a joint stock company

According to Article 202 of the Law on Enterprise 2020, there are methods of converting a limited liability company to a joint stock company as follows:

• 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.

Depending on the strategy and actual situation, businesses can choose the appropriate conversion method. The choice of conversion method directly affects the capital structure and management of the company later.

Procedures for converting from a limited liability company to a joint stock company

To convert into a joint stock company, businesses need to prepare documents and carry out registration procedures at the competent authority.

Conversion registration dossier

Pursuant to Clause 4, Article 26 of Decree 01/2021/ND-CP, the registration dossier to convert a limited liability company to a joint stock company includes:

1. Application for business registration.
2. Company charter.
3. List of founding shareholders and list of shareholders who are foreign investors.
4. Copies of the following documents:

• Legal documents of the individual for the legal representative of the enterprise;
• Legal documents of founding shareholders, shareholders who are foreign investors who are individuals or organizations;
• Legal documents of individuals for authorized representatives of founding shareholders, shareholders who are foreign investors who are organizations and documents appointing authorized representatives;
• For shareholders who are foreign organizations, copies of the organization’s legal documents must be consular legalized.

5. Resolutions and decisions of the company owner for one-member LLCs or resolutions, decisions and copies of meeting minutes of the Board of Members for LLCs with two or more members.
6. Transfer contract or documents proving transfer completion in case of capital contribution transfer; Donation contract in case of donation of capital contribution; Copy of document certifying the legal inheritance rights of the heir in case of inheritance according to the provisions of law.
7. Documents confirming capital contribution of new members and shareholders.
8. Document from the Investment Registration Authority approving capital contribution, stock purchase, capital contribution purchase by foreign investors, economic organizations with foreign investment capital in cases where capital contribution registration procedures, stock purchase, capital contribution purchase must be carried out according to the provisions of the Law on Investment 2020.

Conversion registration procedures

To convert from a limited liability company to a joint stock company, you need to take the following steps:

Step 1: Submit application

Submit the application at the Business Registration Office where the enterprise is headquartered through one of the following methods:

• Direct;
• Through postal service.

After receiving the business registration application, the Business Registration Office issues a Receipt of receipt of the application to the applicant.

Step 2: Appraise documents and issue certificates

• The Business Registration Office issues the Business Registration Certificate within 03 working days from the date of receipt of valid documents.
• In case the dossier is not valid or the business name requested to be registered does not comply with regulations, the Business Registration Office will notify in writing the content that needs to be amended or supplemented to the business founder or enterprise within 03 working days from the date of receipt of the dossier.
• In case of refusal to register a business, the Business Registration Office will notify the business founder in writing and clearly state the reason.

Tasks to do after converting a limited liability company to a joint stock company

After converting into a joint stock company, the enterprise needs to perform the following tasks:

• Re-engrave the seal.
• Remake company signs and hang them at headquarters, branches, representative offices, and business locations.
• Update digital signature information, customs accounts, electronic tax accounts, social insurance, and bank account information.
• Change information on assets owned by the business.
• Change business license information for branches, representative offices, and business locations.
• Inform customers and partners about the conversion of business type.

Consulting services and guidance on converting from a limited liability company to a joint stock company

Long Phan Consulting Company provides comprehensive and professional consulting services and guidance on converting from a limited liability company to a joint stock company. Our Services include:

• Review and evaluate the legal status of the business before converting;
• Consulting on conversion methods;
• Consulting and analyzing customers’ conditions and needs to choose an appropriate conversion plan;
• Consulting and drafting all necessary documents for the conversion process;
• Consulting and guidance on conversion registration;
• Representing customers to carry out conversion procedures;
• Consulting and supporting businesses to carry out tasks and procedures after conversion;
• Consulting and providing optimal solutions for businesses to operate effectively after conversion;
• Consulting and answering other related issues.

Frequently asked questions about converting from a limited liability company to a joint stock company

Below are common questions when converting from a limited liability company to a joint stock company, helping businesses clearly understand the process, procedures and related legal issues.

What is the minimum charter capital required when converting to a joint stock company?

There is no minimum charter capital when converting from a limited liability company to a joint stock company. However, charter capital needs to be appropriate to the company’s business scale and industry.

After conversion, will the company’s tax code change?

The company’s tax code does not change when converting the business type.

Does converting to shares affect the limited company’s existing contracts?

Are not. All contracts and transactions of the LLC before conversion are still legally valid and continue to be implemented by the joint stock company.

Is it possible to convert back from a joint stock company to a limited liability company?

Have. The reverse conversion from a joint stock company to a limited liability company is possible according to the provisions of the current Law on Enterprise.

What should be done with sublicenses when converting to a joint stock company?

The company needs to carry out procedures to change information on the sublicense to suit the type of joint stock company.

Changes in organizational structure when converting to a joint stock company?

The company’s organizational structure changed markedly. Specifically, it is necessary to have a General Meeting of Shareholders, a Board of Directors, a Director (General Director) and a Supervisory Board (if any).

How do the responsibilities of members change after the LLC is converted into a joint stock company?

The liability of members of a limited liability company is converted into the liability of shareholders of a joint stock company, limited to the number of shares owned.

Converting from a limited liability company to a joint stock company is an important strategic decision, bringing many development opportunities for the business. However, this process requires careful preparation and compliance with legal regulations. If you need advice or support on procedures for converting business types, please contact Long Phan via the hotline: 0906735386 for detailed advice.