What Is the Difference Between LLC and JSC in Vietnam?
When establishing a company in Vietnam, one of the key decisions is choosing the appropriate legal structure. Two of the most common options are the Limited Liability Company (LLC) and the Joint-Stock Company (JSC). Each offers distinct features, advantages, and regulatory requirements, making it crucial for entrepreneurs and investors to understand the differences.
1. Ownership and Shareholders
LLC (Limited Liability Company):
- May have a single member or several, up to a maximum of 50 members.
- Members suffer no further liability beyond their capital contribution.
- Ideal for small to medium-sized enterprises and family-owned businesses.
JSC (Joint-Stock Company):
- Must have at least three shareholders with no upper limit.
- Shareholders have limited liability to the shares they hold.
- JSCs can issue shares and, if they meet certain conditions, may have their shares listed on the stock market, making them suitable for business expansion or going public.
2. Capital Structure
- LLC: Capital is divided based on members’ contributions; cannot issue shares.
- JSC: Capital is divided into shares, which can be transferred or sold, providing flexibility for raising funds.
3. Management Structure
- LLC: Managed directly by members or an appointed director. Governance is simpler compared to JSCs, though it still requires standard compliance, such as tax and annual reporting.
- JSC: Managed by a board of directors, a general director, and a supervisory board. It has more complex governance, including shareholder meetings and statutory reporting.
4. Suitability and Use Cases
- LLC: Is often the right choice for small or family-run businesses, or companies with only a handful of investors.
- JSC: Is a good match for big ventures, businesses in need of a massive capital infusion, or companies planning to issue IPOs.
Between LLC and JSC, the choice that makes more sense is dictated by factors such as your company size, plans for investment, and long-term goals. LLCs are good enough for small businesses as they provide simplicity and limited liability, however, JSCs pave the way for more capital and growth options for larger businesses.
Professional advisory services, such as OneIBC Vietnam, can guide investors and entrepreneurs through the legal, financial, and regulatory aspects of setting up an LLC or JSC in Vietnam, ensuring compliance and strategic alignment with your business objectives.
