Comparison between a multiple member limited liability company and a joint stock company under Enterprise Law 2020

Below is a table providing comparison between a multiple member limited liability company (Multiple LLC) and a joint stock company (JSC) under the Enterprise Law 2020 in some key areas. This post is written by Nguyen Quang Vu and edited by Ha Kieu Anh.

	Multiple LLC	JSC
Legal nature	An LLC is a company in which: §  Members may be organizations or individuals; an LLC may have between two and 50 members; §  Members are liable for the debts and other property obligations of the LLC within the amount of capital that they have contributed to the LLC, unless in the case members fail to contribute or fully contribute capital as promised; and §  The capital contribution of each member can be assigned only in cases stipulated by law and/or subject to conditions stipulated by law.	A JSC is a company in which: §  The charter capital is divided by shares; §  Shareholders may be organizations or individuals; the minimum number of shareholders is three; there is no maximum; §  Shareholders are liable for the debts and other property obligations of the JSC up to the amount of capital contributed to the JSC; and §  Shareholders may freely assign their shares to other persons, except in the cases stipulated by law.
Legal entity status	An LLC will have legal entity status from the date of issuance of the enterprise registration certificate (ERC).	A JSC will have legal entity status from the date of issuance of the ERC.
Issuance of shares	An LLC cannot issue shares.	A JSC can issue the following classes of shares: §  Ordinary shares §  Preference shares, which are divided into the following classes: - Voting preference shares; - Dividend preference shares; - Redeemable preference shares; and - Other preference shares stipulated in the charter and securities regulations.
Charter capital	An LLC has "charter capital", which is the value of assets that the members have contributed or undertake to contribute at the time of incorporation of the LLC.	A JSC has "charter capital", which is the aggregate par value of the shares that the shareholders have contributed or undertake to contribute at the time of incorporation of the JSC.
Assets to be contributed as capital	Capital contribution can be made in the form of Vietnamese currency, freely convertible foreign currency, gold, value of land use rights, value of intellectual property rights, technology, technical know how, and or other assets which can be valued in Vietnamese Dong	Vietnamese Dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technology, technical know-how, or other assets stipulated in the charter of the company.
Capital contribution	Within 90 days from the date of incorporation, all members must contribute the amount of charter capital which they commit to contribute at the time of incorporation except in certain circumstances. The details of capital contribution of each member are recorded in both the register of members and the ERC. Accordingly, ownership of capital contribution is subject to changes to ERC.	§  Founding shareholders must together register to subscribe for at least 20% of the number of ordinary shares "which may be offered for sale" and must pay in full for the shares "registered for subscription" within 90 days from the date of issuance of the ERC of the JSC. §  Upon full payment of its capital contribution, the JSC will issue each shareholder a share certificate, unless the shares are held in uncertificated form. The shareholder registry maintained by the JSC is the ultimate authority on the ownership of the shares in the JSC.
Redemption of shares	§  A member is entitled to demand the LLC to redeem its share of capital contribution if such member votes against a decision of the Members’ Council (MC) on (a) amendment of the provisions of the charter relating to the rights and obligations of members and of the MC, (b) re-organization of the LLC, or (c) other cases stipulated in the charter of the LLC. §  If the LLC does not redeem the share of capital contribution, the member may assign its share of capital contribution to third party.	§  A shareholder is entitled to demand the JSC to redeem its shares if such shareholder votes against a decision on (a) re-organization of the JSC, or (b) amendment of the charter relating to the rights and obligations of shareholders. §  If the JSC does not redeem the share of capital contribution within 90 days from the date it receives the notice of the shareholder on redemption of shares, the shareholder may sell the shares to third parties.
Capital assignment/ Share transfer	§  Unless in some certain special cases (e.g., redemption, gift, payment of debt), a member wishing to assign part or all of its share of capital contribution must first offer to sell such share of capital contribution to all other members in proportion to their shares of capital contribution in the LLC on the same terms. §  A member may assign its share of capital contribution to a third party only if the other members of the LLC do not purchase or do not purchase in full within 30 days from the offering date.	§  Shares may be freely assigned, except in the cases set out below. The seller remains the owner of the transferred shares until the name of the buyer is registered in the register of shareholders. §  Within a period of 3 years from the date of issuance of the ERC of the JSC, ordinary shares of founding shareholders can be assigned only to other founding shareholders, or to other persons only if approved by the General Shareholders Meeting (GSM). After expiry of 3 years period from the establishment of the JSC, ordinary shares may be assigned freely.
Management	A LLC must have: §  a Members’ Council (MC) consisting of all members; §  a Chairman of the Members’ Council; and §  a Director or General Director appointed by the Members’ Council.	A JSC must have: §  a General Shareholder Meeting (GSM) consisting of all shareholders who have the right to vote; §  a board of management (BOM) consisting of between 3 to 11 persons appointed by the GSM. In some certain cases, at least 20% board members must be independent board members; §  a Chairman of the BOM appointed either by the GSM or BOM; §  a Director or General Director appointed by the BOM; and §  An Inspection Board unless in certain circumstance an Inspection Board is not required or replaced by the audit committee of the Board.
Quorum rules	§  A meeting of the MC is quorate if those representing at least 65% of the charter capital are in attendance; if a quorum is not met at the first meeting, a second meeting is quorate if attended by those representing at least 50% of the charter capital; if the quorum is still not met, a third meeting is deemed to be quorate however many people attend.	§  A meeting of the GSM is quorate if those representing at least 50% of the total shares are in attendance; if a quorum is not met at the first meeting, a second meeting is quorate if attended by those representing at least 33% of the total shares; if the quorum is still not met, a third meeting is deemed to be quorate however many people attend.
Approval thresholds	§  There is no unanimous approval requirement under the Enterprise Law, except for accepting capital contribution by outside investors through an increase of charter capital (unless the charter of the company provides otherwise). §  The decisions of the MC shall be approved at a meeting by a number of votes representing at least 65% of the aggregate capital of attending members or at least 75% if such decisions are related to certain key corporate issues.	§  There is no unanimous approval requirement under the Enterprise Law.  §  The decisions of the GSM shall be approved at a meeting by a number of shareholders representing more than 50% of the total voting shares of all attending shareholders or at least 65% if such decisions are related to certain key corporate issues. §  The decisions of the Board will be approved by a simple majority, unless otherwise provided by the Charter. The Chairman has a casting vote.