Limited Liability Company and Joint Stock Company both have limited liability attribute. The owners of those legal entity are liable for the debts and other financial obligations to the extent of capital contributed to the company.
In this article, We present some mainly differences between LLC and JSC for consideration before setting up a business in Vietnam.
The similarities:
- The limited liability characteristic: Members/Shareholders are only liable for company’s financial obligations to the extent of their capital contributions. There’s a clear separation between company’s assets and members/shareholders’s properties. Any loss experienced by members/shareholders can not exceed the amount which they have already contributed.
- The company has the right to issue bonds in order to mobilize capital.
The differences:
| Items | Limited Liability Company
(LLC) |
Joint Stock Company
(JSC) |
| Number of founders | 1 to 50 members | At least 3 shareholders |
| Corporate structure |
Single-member LLC: If owned by individual:
If owned by organization: Option 1:
Option 2:
Multi-member LLC:
|
Option 1:
Option 2:
|
| Issuance of shares and Raising capital | LLC cannot issue shares |
JSC can issue ordinary share and preference shares. The shares can be listed on the stock exchange |
| Assignment of capital |
Single-member LLC: The owner can assign part or full of capital to other person or organization. In case of assignment part of capital, this lead to a changing of type of corporate. Multi-member LLC: A member can assign capital to persons that not being members if the other members do not buy within 30-day period from the offering date. |
During the first 3-year period after the establishment, founding shareholders can freely assign shares to other founding shareholders, but may be assigned to persons not being founding shareholders only if approved by the General Meeting of Shareholders. After the 3-year period, this restriction shall be lifted. |
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