Change business type – Sustainable growth strategy
The transformation from a limited liability company to a joint stock company is a strategic step to help enterprises expand their scale, attract investors and improve their competitiveness in the market. This transformation not only provides high flexibility in raising capital, but also creates a solid foundation for the long-term development of the business.
However, in order for the transition to take place smoothly and in accordance with the law, businesses need to master the current legal regulations and fully implement the necessary procedures. Let’s explore with Navi in detail the process, conditions and benefits of the transition from a limited liability company to a joint stock company, to implement it effectively and safely!
1. Conditions for converting a limited liability company into a joint stock company
– Currently, transforming the type of enterprise is a plan to reorganize the legal structure to better suit the scale of operation, governance model and development orientation in each stage of the enterprise. In other words, corporate transformation is when a business organization continues to operate in a different legal form than the original one.
– In the process of transformation, the enterprise inherits all legal rights and obligations, including economic interests, financial obligations, ongoing contracts, and unfinished debts and taxes. However, all these transformations need to comply with the provisions of the current Law on Enterprises.
– Conditions needed to convert from a limited liability company to a joint stock company
In order to convert from a limited liability company (one or two members or more) to a joint stock company, the enterprise needs to meet the following basic conditions:
► Current valid business registration certificate and tax identification number.
► Internal Consensus:
* For limited liability companies with two or more members: There must be a meeting minutes and a decision of the Members’ Council agreeing to the conversion.
* For one-member limited liability company: There must be a decision of the company owner on the conversion of type.
► Legal information and documents of the founding shareholders (for joint-stock companies formed after conversion).
► The legal representative of the new company needs to have a valid document (ID card, passport or equivalent legal document).
► Full set of conversion records, including:
* Application for business registration in the form.
* Charter of a joint stock company.
* List of founding shareholders.
* Decisions and minutes of meetings of the former company.
* Documents related to capital contribution or capital transfer (if any).
* Valid copies of identity documents of shareholders and representatives.
2. Forms of transfer from limited liability companies to joint-stock companies
Pursuant to Article 202, Clause 2 of the Law on Enterprises No. 59/2020/QH14, limited liability companies (LLCs) may be converted into joint stock companies by one of the following methods:
► The forms of conversion are prescribed by law
+ Convert without mobilizing other organizations and individuals to contribute capital
* Existing members in the limited liability company make the transition to the shareholding model without the participation of external investors.
* All contributed capital will be converted into corresponding shares.
+ Transformation by mobilizing more organizations and individuals to contribute capital
* Enterprises expand their ownership structure by attracting new shareholders to contribute capital.
* This is a method to increase charter capital and expand the network of investment relationships.
+ Conversion by selling all or part of the contributed capital
* The members of the limited liability company shall transfer the contributed capital to other organizations and individuals.
* The transferee will become a shareholder in the newly established joint stock company.
+ Combine the above methods or apply other suitable methods
* Enterprises can flexibly combine methods such as both selling contributed capital and mobilizing new investors…
* Or apply another method, as long as it complies with the provisions of the current law.
► Important note when choosing a conversion method
+ Each method will have its own legal and procedural nature, affecting the time, cost and way of reorganizing the ownership structure in the company.
+ Business owners should carefully consider their financial situation, business strategy and long-term development goals before choosing the right option.
+ To ensure an effective and legal transition, it is recommended to consult a professional corporate lawyer or a reputable legal consultant.
► If you need, I can continue to help you build the next section like:
+ Process of conversion procedures according to each method
+ Compare the advantages and disadvantages of each conversion form
+ Attached forms and documents for each type
3. Procedure for transferring from a limited liability company to a joint stock company
Procedures for conversion from a limited liability company to a joint stock company
Transforming the type of business is the process of business restructuring to better suit the size, business goals or development orientation. For a limited liability company, the procedure for converting to a joint stock company will consist of 2 main steps:
► Step 1: Complete the procedures to increase or decrease the charter capital (if any)
The increase or decrease in charter capital is usually made before or concurrently with the transformation of the type of enterprise, depending on the specific conversion method.
+ Case 1: Limited company with two or more members
Within 10 days from the date of completion of the increase/decrease in charter capital, the enterprise needs to submit the dossier to the Department of Planning and Investment.
Dossiers include:
* Notice of change in charter capital (specify name of company, business code, address, old and new capital, reason for adjustment, legal representative to sign).
* Resolutions and meeting minutes of the Members’ Council on capital increase/decrease.
+ Case 2: One-member limited liability company
Businesses can choose one of two options:
(a) Capital increase before, conversion after
* Make a capital increase at the decision of the company owner, submit the dossier within 10 days after the capital increase.
Dossiers include:
* Notification of changes in charter capital;
* The owner’s decision to increase capital.
However, this option can cause problems if there are many people contributing capital but they are still single-member companies.
(b) Conversion before, capital increase after
* Applicable when the company wants to mobilize more shareholders and capital after converting to the share model.
Dossiers include:
* Notice of capital increase;
* Decision and Minutes of the General Meeting of Shareholders on capital increase.
Processing time: Within 03 working days, the Department of Planning and Investment will update new charter capital information.
► Step 2: Make a transformation of the type of company
After completing or concurrently with the capital adjustment step, the enterprise shall carry out the procedures for converting the type from a limited liability company to a joint stock company.
+ The conversion dossier includes:
* Application for business registration in the form.
* Charter of the Conversion Joint Stock Company.
* Decision and Minutes of the meeting of the Members’ Council or the owner (limited liability company) or the General Meeting of Shareholders (shareholder) on the conversion of the type.
* List of founding shareholders and shareholders who are foreign investors (if any).
* Copy of valid identification of the representative and shareholders (ID card/passport).
* Copy of business registration certificate or equivalent document.
* Power of attorney and legal documents of the authorized person (if any).
* Investment certificate of capital contribution (if there is a foreign investor).
* Capital contribution transfer contract or proof of capital contribution.
+ Processing time: Within 05 working days, the Department of Planning and Investment will re-issue the Business Registration Certificate according to the new type of company.
Important note:
+ Documents issued by foreign countries need to be notarized translated and consular legalized.
+ If there is no investment registration certificate of the foreign investor, additional documents must be submitted in accordance with Article 23, Clause 4 and Article 24, Clause 3, Decree 01/2021/ND-CP, such as:
* Assignment contract or proof of assignment/inheritance/capital contribution.
* Written approval of the Investment Registration Agency for foreign investors (if subject to permission).
– Transformation combined with change of business registration content
+ Enterprises can simultaneously implement:
+ Type conversion;
+ Change of representative;
+ Change the name of the company, headquarters, industry,…
– In this case, the person signing the dossier is:
+ Chairman of the Members’ Council (for a two-member limited liability company);
+ Chairman (one-member limited liability company);
+ Chairman of the Board of Directors (for joint-stock companies).
– Quick and comprehensive conversion support service
Business transformation requires complex and accurate legal documentation. Don’t waste your time on bureaucracy-let our professional legal services provide you with comprehensive support.
+ The cost is only from 1,000,000 VND
+ Complete the dossier – submit and process at the Department of Planning and Investment
+ Free consultation before & after conversion
4. Place to submit the conversion registration dossier
Pursuant to Article 32, Clause 1,2,3 of Decree 01/2021/ND-CP, the place to submit the dossier of registration for transfer from a limited liability company to a joint stock company is specified as follows:
– The person who submits an enterprise registration dossier as prescribed in this Decree submits the dossier at the Business Registration Office where the enterprise is headquartered.
– An enterprise registration dossier is received for entering information into the National Information System on enterprise registration when the following conditions are met:
a) Having sufficient documents as prescribed in this Decree;
b) The name of the enterprise has been filled in the Application for enterprise registration, the Application for registration of change of enterprise registration content, the Notice of change of enterprise registration content;
c) Having the contact address of the person submitting the business registration dossier;
d) Full payment of enterprise registration fees and charges as prescribed.
– After receiving the business registration dossier, the Business Registration Office gives a receipt of the dossier to the dossier applicant.
– After handing over the receipt of the dossier, the Business Registration Office shall enter all information in the enterprise registration dossier. They will then check the validity of the dossier, loading the digitized documents in the dossier into the National Information System.
– Business owners can stop carrying out business registration procedures, when the business registration dossier has not been approved in the National Information System on the previous business registration.
– If the business registration dossier has not been approved, the competent person who signs the document will send a written request to stop the implementation of the business registration procedures to the Business Registration Office – where the dossier was previously submitted.
– Normally, the Business Registration Office will consider and make a notice of stopping the implementation of business registration procedures for enterprises. In addition, cancel the registration dossier on the National Information System within 03 working days.
5. What is the cost of the conversion?
Converting the type of enterprise from a limited liability company to a joint stock company is an important legal procedure and should be carried out in accordance with regulations. During this process, the implementer will need to pay some fixed fees to state agencies as well as other costs incurred if using support services.
– Mandatory fees according to state regulations
| Fee | Details | Reference fee |
| Filing fee | Filed at the Business Registration Office | ~ 200,000 VND |
| Fees for re-carving seals | Change new seal → change type | ~ 450,000 VND |
| New stamp template publication fee | Submit at the Business Registration Portal | ~ 300,000 VND |
– The total normal state expenses are about 950,000 VND, excluding other expenses if you need to change more business registration contents (such as name, head office address, industry…).
– Cost of using support services (if any)
If you do not have time to prepare your own documents or want to avoid errors that affect the progress of your work, the use of a package business conversion service is an optimal choice.
+ Service costs usually range from 1,000,000 – 2,000,000 VND (depending on the service package and the provider).
+ Reputable services will support you:
* Advising on the optimal conversion process & plan;
* Preparing, submitting and processing dossiers;
* Working directly with the Department of Planning and Investment;
* Receive results and hand them over.
– Note when choosing a conversion service
+ Avoid using services that are unusually cheap or do not have transparent information – because the risk of bouncing, late processing or legal wrongdoing is very high.
+ Select units with practical experience, clear implementation time commitments, and provide full service contracts.
– Conversion cost summary
| Item | Estimated cost |
| State fees | 950,000 VND |
| Support Services (if applicable) | From 1,000,000 VND |
| Total | ~ 1,950,000 – 3,000,000 VND |
6. Time for processing conversion registration dossiers
The time limit for processing registration dossiers to be transferred from a limited liability company to a joint stock company is the time period during which the business registration agency will consider whether the information about your business meets the legal conditions when it wants to register for conversion.
Pursuant to Article 202, Clause 3 of the Law on Enterprises No. 59/2020/QH14 on the transformation of a limited liability company into a joint stock company stated as follows:
“ The company must register the conversion of the company with the Business Registration Agency within 10 days from the date of completion of the conversion. Within 03 working days from the date of receipt of the conversion dossier, the business registration agency shall re-issue the enterprise registration certificate and update the legal status of the company on the national database on enterprise registration.”
Based on that, within 03 working days (from the date of receipt of the conversion dossier), the business registration agency shall re-issue the enterprise registration certificate. The legal status of the company will then be updated, on the National Database of Business Registration.
7. Notes when converting a limited liability company to a joint stock company
The conversion of a limited liability company to shares if it does not follow the right process, it will take a lot of time as well as cost for your business. In addition, the conditions for the establishment of a joint-stock company also have different regulations compared to that of a limited liability company. The following are 5 basic notes when converting a limited liability company to shares.
– Thoroughly learn the conditions needed for conversion including tax code, business registration certificate, legal documents, consent of the Members’ Council…
– Consider information on the necessary documents when registering to convert the business such as the company charter, business registration application, copies of necessary documents, list of converted members, documents proving the completion of the conversion.
– Conducting research on common methods of transformation such as converting without raising more capital and raising more capital from individuals and investment organizations.
– View information about the location of the conversion dossier, the time to process the conversion dossier and the costs that the enterprise must pay when converting.
– Let’s learn some services about the conversion of prestigious and cheap enterprises so that you can switch from a limited liability company to a joint stock company as quickly as possible.
8. Some questions around the transition
► What are the advantages from switching from a limited liability company to a shareholding?
Each type of enterprise will have its own characteristics, nature and scale of operation. Below is a statistical table of outstanding advantages when converting from limited liability companies to shares.
| Criteria | Joint stock company | Co., Ltd. 2 members | One-member limited liability company |
| Number of members | The minimum number of members is 3 people, there is no limit to the maximum number. | The number of members allowed is from 2 to 50 people, this is an organization or individual. | Number of members who are an organization/an individual as the owner. |
| Responsible for the company | Shareholders are responsible for debts as well as other property obligations of the company within the amount of capital previously contributed. | The members must be responsible for the debts as well as other property obligations of the company within the amount of capital previously contributed. | Organizations and individuals will be responsible for debts as well as other property obligations of the company within the amount of contributed charter capital. |
| Charter capital | Charter capital is divided into equal parts in the company. | Calculated as a percentage of capital contributed to the company. | Charter capital of the company contributed capital to the company. |
| Issuance of shares | The law gives the company the right to issue shares. | The law does not allow the company to issue shares. | The law does not allow the company to issue shares. |
| Organizational structures | Enterprises can choose one of the following two models. Model 1: General Meeting of Shareholders, Board of Management, Director/General Director. Model 2: General Meeting of Shareholders, Board of Management, Supervisory Board, Director/General Director. | The Members’ Council, the Chairman of the Members’ Council and the Director/General Director. | Enterprises owned by individuals choose one of the following two models:Model 1: Chairman of the company and Director/General Director. Model 2: Members’ Council and Director/General Director. |
| Capital transfer | Transfer of capital within 03 years (from the date of issuance of the Enterprise Registration Certificate). In addition, ordinary shares of founding shareholders are freely transferred to other founding shareholders. However, only transfer to persons other than founding shareholders (if approved by the General Meeting of Shareholders). | It is mandatory to conditionally and preferentially transfer to a member of the company. | The issue of capital transfer shall be decided by the owner himself/herself on the mobilization of capital of the company. |
► Who is the representative after the conversion?
Who represents the joint stock company? Pursuant to Article 50, Clause 2 of Decree 01/2021/ND-CP, the registration of change of representatives of limited liability companies and joint stock companies when they want to convert from limited liability companies to shares is as follows:
“ The person who signs the notice of change of legal representative is one of the following individuals:
a) Chairman of the Members’ Council or Chairman of the company for one-member limited liability company;
b) Chairperson of the Members’ Council for a limited liability company with two or more members. In case the Chairman of the Members’ Council is the legal representative, the signatory shall be the newly elected Chairman of the Members’ Council;
c) Chairman of the Board of Management for joint-stock companies. In case the Chairman of the Board of Management is the legal representative, the signatory shall be the Chairman of the Board of Management who shall be elected by the Board of Management.”
If the Chairman of the Board of Management or the Chairman of the Board of Members is absent or unable to exercise his/her rights and obligations, the person who signs the change notice is the person authorized by the Chairman of the Board of Management, the Chairman of the Board of Members.
If no member is authorized or the Chairman of the Board of Management or the Chairman of the Board of Members is in cases such as disappearance, imprisonment, escape from the place of residence…, the person signing the change notice is the person who is temporarily elected as the Chairman of the Board of Management.
► Is it necessary to engrave the seal?
When you want to convert from a limited liability company to a share, you must engrave the seal. However, the company’s seal must also comply with the provisions of the law. Pursuant to Article 43, Clause 1.2 of the Law on Enterprises No. 59/2020/QH14, it is clearly stated as follows:
“- The seal includes the seal made at the establishment engraved with the seal or seal in the form of a digital signature in accordance with the law on electronic transactions.
– The enterprise decides on the type, quantity, form and content of the seal of the enterprise, its branches, representative offices and other units of the enterprise.”
Seal retention must comply with the provisions of the regulations issued by enterprises, representative offices, branches or other units of enterprises bearing the seal. In addition, businesses must use seals in transactions in accordance with the law.
In fact, the company’s seal often shows 3 main contents such as the company name, address, and tax code of the company. In addition, the law stipulates the naming as follows: Type of business + Own name.
► Is it necessary to update the business location name information when converting?
For cases such as the company changes the company address or other contents, where such information is engraved on the seal, it is required that the company engraves the new seal to suit the type of conversion.
Furthermore, the company name is required to have the company type attached. Therefore, when converting from a limited liability company to a share, the name of the company as well as the place of business will have to change. At this time, businesses must update their information.
Note: The updating of information on the name of the business location after the conversion must comply with the provisions of the law. If any enterprise violates the regulations, it will be strictly sanctioned by law.
► Is it possible to change the content of the company registration when converting?
Normally, when the company conducts the conversion procedure from a limited liability company to a shareholding company, it is impossible to avoid errors such as wanting to change some business contents, accounting… In these cases, the law allows the company to have the right to change the registration contents.
Depending on the specific case, the law will have different solutions. Normally, the law will facilitate to change the content within a certain period of time, if the company does not comply with that time, it will not be allowed to change.
Note: In case the company registers to convert its type of operation and at the same time registers to change its legal representative, the person signing the dossier is the Chairman of the Members’ Council for the limited liability company and the Chairman of the Board of Management for the joint-stock company.
Transitioning from a limited liability company to a shareholding company is the right choice if your business is moving towards professionalism and sustainable development. Changing the type of business is not only an administrative procedure, but also a strategic turning point that needs to be carefully prepared. If you have any further questions, do not hesitate to contact Navi for specific advice.
See also:
► Add more shareholders and capital contributors
► Change of legal representative service
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