MINISTRY OF JUSTICE

HANOI LAW UNIVERSITY

THE END OF COURSE ESSAY

Fullname : Nguyễn Thu Trang

Student code : 453536

Class : 4535 – N06.

Hà Nội, 2022
TOPIC: Describe one type of enterprises in your jurisdiction by referring to:

- its features,

- its advantages and disadvantages,

- documents needed to complete the formation process.

And whenever relevant, compare and contrast your enterprise type with a UK business
entity.
INTRODUCTION
Thesedays, with the improvement of technological and the increase in scale of
operations, the traditional forms of organization could not meet the requirements of
business. . Under these circumstances the company form of organization developed as
the most suitable alternative. And the type of joint stock company is an example. The
following article focuses on researching issues about this type of business and
comparing it with a UK business entity.
BODY
I. Defination of “joint stock company”
There is no specific definition for this type of business. The Enterprise Law 2020
only points out the necessary characteristics. Accordingly, however, JSC may be
defined as a type of enterprise with legal status, whose charter capital is divided into
shares (equal parts), by many members contributing capital through the purchase of
shares and limited liability in the contributed capital. This type of business has many
similarities with a public limited company (PLC) in the UK - a company which has
shares that can be purchased by the public and which has allotted share capital with a
nominal value of at least £50,000.
II. Features of joint-stock company
According to Article 111 of the Enterprises Law 2020, a joint-stock company has
the following features:
First, the charter capital is divided into units of equal value called shares. A joint-
stock company’s charter capital is the total face value of the shares sold. The initially
registered charter capital of a joint-stock company is the total face value of subscribed
shares and shall be written in the company's charter. The law does not limit the
percentage of equity that each member can buy at maximum, but members can reach
an agreement in the charter to limit the maximum number of shares that a member can
buy.
In the Vietnamese legal system, the minimum amount of charter capital is
regulated depending on the industry. In contrast, under the UK law, to set up a public
limited liability company, you need at least ₤50k capital and also have to pay
registration costs. You must also ensure that at least 25 percent of that is paid up,
which means you will have to invest at least £12,500 of your own funds before starting.
This shows that the Vietnamese law is more flexible than the UK law.
Second, the minimum number of shareholders is 03. On the other hand, in UK,
the minimum number of shareholders is 02. And the maximum number is not limited.
Shareholders can be organizations or individuals (Vietnamese or foreign nationality
with enterprises with foreign investment elements according to the Investment Law)
not falling into the cases specified in Clauses 2 and 3, Article 17 of the Law on
Enterprises 2020.
Third, a joint-stock company has a legal status from the date of being granted the
business registration certificate.
Forth, the joint-stock company is responsible for the company's debts to the
extent of the company's assets. Shareholders have only limited liability for the
company's debts and other property obligations to the extent of the contributed capital.
Due to a limited liability regime, JSCs as well as PLCs are favored by business people.
Fifth, on the free to transfer contributed capital. The capital contribution (shares)
of the members is expressed in the form of shares. Shares issued by a company are a
commodity. Shares are freely transferable, except the case specified in Clause 3,
Article 120 of Enterprises Law 2020 and the company's charter provide for restriction
on share transfer. Where the company's charter provides for restrictions on share
transfer, these provisions will only take effect when it is clearly stated in the shares of
the respective shares.1
Sixth, JSC as well as PLC have the ability to raise capital strongly through
issuing securities such as stocks and bonds to the public in accordance with the law on
securities.
III. The advantages of joint stock company
There are many advantages which the company form of business organisation
enjoys over other forms of business organisation. The main advantages of JSC are:
First, the biggest advantage of forming a joint stock company (JSC) as well as
public limited company (PLC) is that it grants the ability to raise capital by issuing
public shares. A listing on a public stock exchange attracts interest from hedge funds,
mutual funds, and professional traders as well as individual investors. That tends to
lead to increased access to capital for investment in the company than a private limited
company can amass.
Second, limited liability: in case of a company, the liability of its members is
limited to the extent of the value of shares held by them. Private property of members
cannot be attached for debts of the company. This advantages attracts many people to
invest their savings in the company and it encourages the owner to take more risk.
Third, professinal management: JSCs and PLCs are also headed by a board of
directors (or simply Board), manage the affairs of the company and are accountable to
all the members. These are elected from the shareholders by the shareholders during
the annual general meeting. So members elect capable persons having sound financial,
legal and business knowledge to the board so that they can manage the company
efficiently They act as the representatives of the shareholders in the management of the
company.
The Board of Directors appoints 1 member of the Board of Directors or hires
another person to act as the executive director of the company's day-to-day business. If

1
https://luatdoanhtri.vn/vietnam-joint-stock-company, accessed on 7/6/2022.
in the UK, the formation of a PLC requires a minimum of two directors, in Vietnam, 1
director is just required for a JSC.
IV. The disadvantages of joint stock company
In spite of many advantages of the company form of business organisation (JSC
under Vietnamese Law or PLC under the UK Law), it also suffers from some
limitations. First of all, the formation or registration of JSC and PL also involves a
complicated procedure. A number of legal documents and formalities have to be
completed before a company can start its business. There are more complex accounting
and reporting requirements. It also requires the services of specialists such as Chartered
Accountants, Company Secretaries, etc. Therefore, cost of formation of a company is
very high.2 Besides, this type of business has many stakeholders like the shareholders,
the promoters, the board of directors, the employees, the debenture holders etc. All
these stakeholders look out for their benefit and it often leads to a conflict of interest.
Finally, the limited liability regime is both an advantage and a disadvantage. If the
advantage is that investors will be more willing to invest in large risk areas, the
downside is that it is easy to cause risks to customers and creditors. This is the special
similarity between JSCs and PLCs.
V. A dossier for setting up a joint-stock company .
Pursuant to Article 22 of the Law on Enterprise 2020, a dossier for setting up a
joint-stock company includes the following documents3: (1) An application form for
business registration (form in Appendix I-4 of Circular No.01/2021/TT-BKHĐT); (2)
Company charter: List of founding shareholders and foreign shareholders. List of
authorized representatives of foreign shareholders being organizations; List of
founding shareholders of joint-stock companies (the form prescribed in Appendix I-7
Circular No. 01/2021 / TT-BKHDT); List of shareholders being foreign investors (the
form prescribed in Appendix I-8 Circular No. 01/2021 / TT-BKHDT); List of

2
https://www.academia.edu/7902008/Joint_Stock_Company?sm=b, accessed on 7/6/2022
3
https://vietanlaw.com/a-dossier-for-setting-up-a-joint-stock-company-in-vietnam/, accessed on 7/6/2022
authorized representatives for institutional shareholders (the form prescribed in
Appendix I-10 of Circular No.01/2021 / TT-BKHDT); (3)Valid copies of the
following papers: One of the personal identification documents specified in Article 10
of the Decree No.01/2021 / ND-CP of the case where the founder of an enterprise is an
individual (including identity card or Passport); Establishment decision or business
registration certificate or other equivalent documents, one of the personal identification
papers specified in Article 11 of Decree No.01/2021/ND-CP of the authorized
representative and authorization documents in accordance with the case the founder of
an enterprise is an organization; Investment registration certificate in the case where an
enterprise is established or participated in establishment by a foreign investor or a
foreign-invested business organization in accordance with the Law on Investment
and legal documents guiding implementation; (4) Power of attorney in case clients
authorize another individual or organization to carry out business registration
procedures.
CONCLUSION
In general, a joint-stock company, as well as a public limited company, is still
found to be suitable where the volume of business is large and huge financial resources
are needed. However, being of two completely different legal systems, it is
unavoidable that there are distinctions between the PLCs and JSCs in the UK
and Vietnam.
 REFERENCES
1. https://luatdoanhtri.vn/vietnam-joint-stock-company, accessed on 7/6/2022
2. https://www.academia.edu/7902008/Joint_Stock_Company?sm=b, accessed
on 7/6/2022
3. https://vietanlaw.com/a-dossier-for-setting-up-a-joint-stock-company-in-
vietnam/, accessed on 7/6/2022