Differences Between Limited Liability Company and Joint Stock Company

 

How to distinguish differences Between Limited Liability Company and Joint Stock Company

Vietnam Law allows the establishment company in Vietnam in various forms. It is an important step in investment process.

Investors could choose different forms depending on the needs and capacity on the ability to raise capital and sharing the risk in business as well as the management and operating costs. Each form will have its own organizational structure, operating mechanism, rights and obligations specified under Law on Enterprise 2014.

Currently, Limited Liability Company (“LTD”) and Joint Stock Company (“JSC”) are two popular enterprise forms operating in Vietnam.

So, what are the differences Between Limited Liability Company and Joint Stock Company?

I. Organizational Structure:

Differences Between Limited Liability Company and Joint Stock Company are as following:

Number of members/shareholders:

LTD

-Single member LTD: Having only one member (member can be an organization or an individual);

-Multi members LTD: Having at least 2 members and not exceed 50 members (member can be an organization or an individual).

JSC

Joint Stock Company has at least 3 shareholders and not limit the maximum number.

Management structures

LTD

-Single member LTD

Single member LTD owner by an organization shall be organized under two models: Company president, Director/General director and Supervisor; (OR) Members Council, Director/General director and Supervisor.

Single member LTD owner by an individual shall be organized as follows:  Company president, Director/General director.

-Multi members LTD

Multi members shall be organized by: LTD Council members, Chairman of the Members Council and Director/General director;

Multi members LTD having 11 members or more shall establish the Board of Supervisors.

JSC

JSC can be organized under two models: General Meeting of Shareholders, Board of Directors, Board of Supervisors and Director/General director; (OR) General Meeting of Shareholders, Board of Directors (Board of Internal Supervisors under Board of Directors) and Director/General director.

II. Capital Contribution: 

Differences Between Limited Liability Company and Joint Stock Company are as following:

Raising capital

LTD

-Single member LTD: Owner increases charter capital

-Multi members LTD: Members increase their charter capital, or increasing the number of capital contributors

JSC

Different from LTD, JSC can raise its capital by various methods as follows: Selling shares to existing shareholders; Selling shares individually to non-shareholders; Issuing shares on the stock market.

Transfer of contributed capital

LTD

-Single member LTD: Owner transfers a part of contributed capital to other persons and this could lead to changes of the type of business or other procedures if all capital is transferred (for instance in a M&A deal).

-Multi members LTD: Offer the stakes to other members in proportion to their stakes in the company under the same conditions;  The stakes could only be transferred to other persons if the members do not buy or do not buy completely within 30 days from the offering date.

JSC

The shareholders of JSC are free for transfer their contributed capital after 03 years from the establishment.

Having said that, LTD is a type of enterprise that the capital contribution is not the only link between the members of the company but they are also linked together by relationship. They may be acquaintances and trust each other to jointly contribute capital to establish an enterprise. Therefore, the management of the LTD is as complicated as JSC. With the larger the number of shareholders, the level of capital mobilization, voting power to decide on issues of the company based on the ratio of capital contribution of each shareholder, the management and operation of the JSC is more complex.

The ability to raise capital of a JSC is higher than a LTD. Because, JSC can issue shares to the public in the form of securities. When the stocks are listed on stock exchange, the information of company’s business operations must be public and more transparent.

The procedure to set up a company in form of an LTD or a JSC has not much differences.

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Digital Transformation in Vietnam: A Remarkable Leap Towards Innovation and Intellectual Property Protection in 2025

 Digital transformation in Vietnam and its journey towards becoming an innovation-driven economy has seen remarkable progress, marked by significant advancements in digital transformation, intellectual property (IP)protection, and e-commerce regulation.

As a developing nation, Vietnam has consistently improved its business environment to attract foreign investors to establish companies in Vietnam. From its rise in the Global Innovation Index 2024 to the implementation of Resolution No. 57 on science and technology development, Vietnam is proving itself as a dynamic and competitive player in the global economy.

With a booming digital economy and a rapidly expanding e-commerce market, the country has also taken bold steps in strengthening copyright laws and curbing the proliferation of counterfeit goods. These initiatives not only enhance business confidence but also position Vietnam as a strategic investment destination for companies seeking a secure and digitally advanced environment.

This article provides a comprehensive overview of key developments shaping digital transformation in Vietnam and its impact on foreign businesses, technology companies, and e-commerce players.

Vietnam’s Rise in the Global Innovation Index 2024

Vietnam’s commitment to fostering innovation and intellectual property protection is reflected in its steady rise in the Global Innovation Index (GII) 2024, published by the World Intellectual Property Organization (WIPO) in September 2024. The country moved up two places to 46th out of 132 economies, solidifying its position as one of the most innovation-driven developing nations showcasing progress of digital transformation in Vietnam.

Why Vietnam’s GII Ranking Matters for Foreign Investors

The GII evaluates economies based on key indicators such as:

- Research and development (R&D) investment

- University-industry collaboration

- Technology exports

- Intellectual property filings

- Digital transformation and knowledge-based industries

Vietnam has made substantial improvements in these areas, particularly in technology and science-driven sectors. The country’s rising innovation capabilities signal a more favorable business climate for foreign companies looking to invest in digital infrastructure, AI, fintech, and smart manufacturing.

Resolution No. 57: A Game Changer for Vietnam’s Science, Technology, and Digital Transformation

To reinforce its commitment to technology-driven economic growth, Vietnam’s government issued Resolution No. 57-NQ/TW in June 2024. This policy focuses on accelerating digital transformation in Vietnam, enhancing science and technology development, and strengthening intellectual property rights.

Key Objectives of Resolution No. 57:

- Encouraging R&D and innovation by offering tax incentives and grants for technology startups, AI research, and green energy solutions.

- Strengthening the role of science and technology enterprises in economic development.

- Integrating digital transformation into public and private sectors, including blockchain, cloud computing, and IoT (Internet of Things).

- Creating an investor-friendly legal framework to attract foreign direct investment (FDI) in high-tech industries.

By aligning with global digital transformation trends, Vietnam aims to become a regional leader in technological innovation. This policy presents immense opportunities for foreign businesses specializing in AI, big data, cyber security, and automation.

Copyright Protection in Vietnam’s Digital Economy

As digital transformation in Vietnam accelerates, concerns about copyright infringement and IP violations have grown, especially in the e-commerce and media industries. To strengthen copyright protection, the Vietnamese government has introduced stricter IP laws and enforcement mechanisms.

Key Measures to Enhance Copyright Protection:

- Amendments to Vietnam’s Intellectual Property Law, effective January 2025, include stricter penalties for online copyright violations.

- New regulations requiring digital platforms to implement stronger anti-piracy measures.

- Increased cooperation with global organizations like WIPO and ASEAN IP authorities to combat IP theft.

- Expansion of Vietnam’s IP enforcement teams to monitor online infringement cases.

For foreign companies in the digital content, entertainment, and software industries, these initiatives offer greater security in protecting copyrighted works, patents, and trademarks.

Counterfeit Goods: A Persistent Challenge in Vietnam’s E-Commerce Market

Vietnam’s e-commerce market, valued at over $26 billion in 2024, has become one of the fastest-growing digital economies in Southeast Asia. However, this growth has also led to an alarming increase in counterfeit goods, particularly on major online platforms like Shopee, Lazada, and TikTok Shop.

1.The Scope of Counterfeit Goods in Vietnam:

Reports indicate that fake luxury goods, pharmaceuticals, cosmetics, and electronics are widely available on social media marketplaces and e-commerce websites. This poses a significant threat to consumer safety and brand reputation, particularly for foreign businesses expanding into Vietnam’s online retail sector.

2.Government Efforts to Curb Counterfeit Products:

To address this issue, Vietnam’s Ministry of Industry and Trade (MoIT) has:

- Implemented stricter regulations requiring e-commerce platforms to verify sellers’ identities.

- Increased fines and criminal charges for selling counterfeit goods online.

- Strengthened cross-border cooperation with international brands to take down counterfeit listings.

- Launched public awareness campaigns to educate consumers about the risks of fake products.

For foreign companies operating in Vietnam, brand protection strategies such as trademark registration, digital monitoring, and legal action are essential to safeguard business interests.

Digital Transformation in Vietnam: A Gateway for Foreign Businesses

The ambitious initiatives of digital transformation in Vietnam have positioned the country as a leading investment destination for global technology firms and startups. The government’s focus on enhancing digital infrastructure, cybersecurity, and artificial intelligence (AI) presents lucrative business opportunities.

Key Investment Sectors Enjoying digital transformation in Vietnam for Foreign Businesses:

1. Fintech and Digital Banking – With cashless transactions growing by 35% annually, Vietnam is a high-potential market for fintech startups, mobile payment providers, and blockchain developers.

2. Artificial Intelligence (AI) and Automation – Resolution No. 57 prioritizes AI development, creating demand for AI-driven solutions in healthcare, logistics, and smart cities.

3. E-commerce and Logistics – Vietnam’s e-commerce boom has increased demand for digital payment solutions, supply chain optimization, and warehouse automation.

4. Cybersecurity and Data Protection – As businesses transition to cloud-based operations, investment in cybersecurity services, fraud detection, and AI-driven risk management is essential.

Why Foreign Investors Should Consider Initiatives of Digital Transformation in Vietnam

1.Strong Economic Growth and FDI-Friendly Policies

Vietnam’s GDP is expected to grow by 6.5% in 2025, making it one of the most resilient economies in Asia. The government’s pro-business reforms include:

- Tax incentives for technology firms

- Favorable regulations for foreign ownership

- Trade agreements such as CPTPP, RCEP, and EU-Vietnam FTA

2.Skilled Workforce and Competitive Labor Costs

Vietnam boasts a young, tech-savvy workforce, with highly skilled engineers in AI, data science, and software development. Compared to neighboring countries, Vietnam offers lower operational costs, making it an attractive location for setting up R&D centers.

3.Strategic Location for Regional Expansion

Vietnam serves as a gateway to ASEAN markets, providing seamless access to Singapore, Thailand, Indonesia, and China. For foreign tech firms and e-commerce companies, Vietnam is an ideal hub for regional expansion.

Conclusion: Digital Transformation in Vietnam, The Future is Bright

The progress of digital transformation in Vietnam, intellectual property protection, and e-commerce regulation demonstrates its commitment to creating a world-class business environment. With the implementation of Resolution No. 57, stronger copyright enforcement, and a crackdown on counterfeit goods, Vietnam is evolving into a secure and innovation-driven economy.

For foreign investors and businesses looking to expand in Southeast Asia, Vietnam presents unmatched opportunities in technology, e-commerce, and high-growth digital sectors. By leveraging Vietnam’s pro-innovation policies and initiatives of digital transformation in Vietnam, companies can capitalize on the country’s dynamic growth and investment potential.

Final Thought

As Vietnam continues to enhance its intellectual property framework and digital infrastructure, foreign businesses must stay informed and engage with local experts to navigate the evolving legal landscape effectively. Investing in digital transformation in Vietnam journey today will ensure long-term success in one of the most promising markets in Asia.

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How to Set up a Joint-Stock Company in Vietnam?

 Joint-stock company is a type of enterprise recognized by Vietnam law, besides other types being limited liability company, partnership and private enterprise. A joint-stock company has legal status from the date of issuance of the Certificate of Business Registration by Vietnam authority. It is not suitable for all investors to set up a joint-stock company in Vietnam. Therefore, it is important to consult with corporate lawyers in Vietnam to learn the advantage of different forms of companies to be set up in Vietnam for the efficient management and purpose of the owner.

Joint-stock company can issue shares

According to the definition of the Law on Enterprises, a joint-stock company is an enterprise whose charter capital is divided into equal parts called shares. Shareholders of a joint-stock company can be organizations or individuals, and the minimum number of shareholders of the company is 03 people.

There is no limit on the maximum number of shareholders, so it will be convenient for the company when it wishes to expand its business on a larger scale. In addition, shareholders will only be liable for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise.

This is an advantage of this type of business because the level of risk that shareholders have to bear. In particular, joint-stock companies have the right to issue shares, bonds and other securities to raise capital, which is a feature that other types of businesses do not have.

Procedure to set up a joint-stock company in Vietnam

The business owner can submit by himself or authorize another individual/organization or a law firm in Vietnam to submit a set of documents to the Business Registration Office where the head office is intended, including:

1.An application for enterprise registration;

2.The company’s charter;

3.List of founding shareholders and list of shareholders being foreign investors;

4.Copies of the following papers:

a) Legal papers of the individual for the legal representative of the enterprise;

b) Personal legal papers for company members, founding shareholders, shareholders being foreign investors who are individuals; Legal papers of the organization for members, founding shareholders, shareholders being foreign investors being organizations; Legal documents of individuals for authorized representatives of members, founding shareholders, shareholders being foreign investors being organizations and documents on appointment of authorized representatives.

For members and shareholders being foreign organizations, copies of legal papers of the organization must be notarized and consularly legalized in Vietnam;

c) Investment registration certificate, in case the enterprise is established or participated in the establishment by a foreign investor or a foreign-invested economic organization in accordance with the provisions of the Investment Law and other legal documents; implementation manual.

How long it takes to set up a joint-stock company in Vietnam?

The processing time will be 03 working days from the date the Business Registration Office receives the valid application.

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How to Set up Trading Company in Vietnam? 6 Things Lawyers Could Help

 Investment in setting up trading company in Vietnam is considered as investment in conditional investment areas.

How to Set up Trading Company in Vietnam under Vietnam Laws?

Once an underdeveloped country, in the last two decades Vietnam has shown an incredible growth in the world economic scene, especially in the criteria of investment attraction. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam, foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firms throughout the process shall mostly be needed.

The Legal Basis for a Foreign Company to Set up Trading Company in Vietnam

The legal basis for a foreign company to set up a company in Vietnam is stated in the Enterprise Law of Vietnam:

Can Foreigners Set up Trading Company in Vietnam?

Foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions.  

Foreign investors may invest in the form of 100% foreign- owned capital to establish limited liability companies, joint-stock companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.

What Type of Documents to Submit to Set up Trading Company in Vietnam?

The foreign investor shall mostly needs to fulfill the investment registration procedures at provincial-level state agencies in charge of investment in order to be granted the investment certificates, in accordance with Vietnam law in investment.

The dossier required for the investment registration shall comprise of an examination dossier, papers showing the capability to satisfy the conditions which the project is required by law to satisfy, for investment projects in conditional investment domains i.e. specific goods to be traded at HS code level, experience in trading area, how the trading procedures would be carried out, potential customers in Vietnam.

Investment Capital Required to Set up Trading Company in Vietnam

In particular, for investment capital, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam.

In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor should explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.

How Vietnam Lawyers Could Help Foreign Investors to Set up Trading Company in Vietnam?

Vietnamese lawyers play a crucial role in assisting foreign investors to set up trading company in Vietnam throughout the establishment process, ensuring compliance with local laws and regulations.

1. Understanding Local Regulations

Vietnamese lawyers bring valuable expertise in navigating the intricacies of local regulations. They guide foreign investors through the legal requirements to set up trading company in Vietnam, cover aspects such as business licensing, permits, and compliance with industry-specific regulations. This nuanced understanding helps streamline the process and minimizes the risk of regulatory hurdles.

2. Legal Advice and Due Diligence

Before the investors set up trading company in Vietnam, the foreign investors must conduct thorough due diligence. Vietnamese lawyers provide essential legal advice, offering insights into the legal framework, potential risks, and compliance obligations. They assess the feasibility of the investment, helping investors make informed decisions about market entry strategies.

3. Documentation Assistance

To set up trading company in Vietnam involves a significant amount of documentation. Vietnamese lawyers assist foreign investors in preparing and submitting the required paperwork, ensuring accuracy and compliance with local standards. This includes drafting articles of association, obtaining necessary licenses, and addressing any legal formalities related to the establishment process.

4. Communication with Authorities

To set up trading company in Vietnam often requires interaction with various government authorities. Vietnamese lawyers act as intermediaries, facilitating communication between foreign investors and relevant regulatory bodies. This helps in expediting the approval process and ensures that all legal requirements are met in a timely manner.

5. Navigating Challenges

Foreign investors may encounter unforeseen challenges during the establishment process. Vietnamese lawyers are equipped to address these challenges, providing legal solutions and mitigating potential risks. Whether it’s overcoming regulatory hurdles or resolving legal disputes, their expertise contributes to a smoother and more secure entry into the Vietnamese market.

6. Compliance Management

Maintaining compliance with Vietnamese laws is essential for the long-term success of a trading company. Lawyers play an ongoing role in assisting foreign investors with compliance management, keeping them informed about changes in regulations and ensuring that the company operates within the legal framework.

Vietnamese lawyers play a pivotal role in assisting foreign investors in establishing trading companies in Vietnam. Their expertise in local regulations, legal advice, documentation assistance, and communication with authorities are invaluable assets for navigating the complexities of the Vietnamese business landscape. With the support of competent legal professionals, foreign investors can confidently navigate the establishment process, fostering successful and compliant entry into the dynamic Vietnamese market.

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