Converting Enterprise Types in Vietnam: What You Need to Know

Converting the type of enterprise is a form of enterprise reorganization. So, what is enterprise type conversion? What are the current cases of enterprise type conversion? Let’s explore the details with VN Law Firm in this article!

1. What is Enterprise Type Conversion?

Enterprise type conversion (also known as changing the enterprise type) is a form of reorganizing the structure, converting from one type of enterprise to another to better suit the enterprise’s scale and development orientation.

2. Cases of Enterprise Type Conversion

The cases for converting enterprise types are stipulated from Article 202 to Article 205 of the Law on Enterprises of Vietnam 2020, as follows:

2.1. Converting a Limited Liability Company (LLC) into a Joint-Stock Company

State-owned enterprises converting into joint-stock companies shall comply with relevant laws.

A Limited Liability Company can convert into a Joint-Stock Company by the following methods:

• Converting into a joint-stock company without raising additional capital from other organizations or individuals, and without selling capital contributions to other organizations or individuals.
• Converting into a joint-stock company by raising additional capital from other organizations or individuals.
• Converting into a joint-stock company by selling all or part of the capital contribution to one or more other organizations or individuals.
• Combining the above and other methods.
• The company must register the conversion within 10 days from the date of completion of the conversion.

2.2. Converting a Joint-Stock Company into a Single-Member Limited Liability Company

A Joint-Stock Company can convert into a Single-Member Limited Liability Company by the following methods:

• One shareholder receives the transfer of all corresponding shares from all remaining shareholders.
• An organization or individual who is not a shareholder receives the transfer of all shares from all shareholders of the company.
• The company has only 01 remaining shareholder.

Within 15 days from the date the company has only one remaining shareholder or completes the share transfer by the methods mentioned above, the company must submit the conversion dossier to the business registration authority where the enterprise is registered.

2.3. Converting a Joint-Stock Company into a Two-or-More-Member Limited Liability Company

A Joint-Stock Company can convert into a Two-or-More-Member Limited Liability Company by the following methods:

• Converting into a two-or-more-member LLC without raising additional capital or transferring shares to other organizations or individuals.
• Converting into a two-or-more-member LLC while simultaneously raising additional capital from other organizations or individuals.
• Converting into a two-or-more-member LLC while simultaneously transferring all or part of the shares to other organizations or individuals.
• The company has only 02 remaining shareholders.
• Combining the above and other methods.

The company must register the conversion within 10 days from the date of completion of the conversion.

2.4. Converting a Private Enterprise into an LLC, Joint-Stock Company, or Partnership

A Private Enterprise can convert into an LLC, Joint-Stock Company, or Partnership if it meets all of the following conditions:

• The converted enterprise must meet the conditions for being granted a Business Registration Certificate:
  • The registered business lines are not prohibited from investment or business.
  • The name of the enterprise is set in accordance with Articles 37, 38, 39, and 41 of the Law on Enterprises of Vietnam 2020.
  • The enterprise registration dossier is valid.
  • The enterprise registration fee is fully paid in accordance with the law on fees and charges.
• The owner of the private enterprise makes a written commitment to be personally liable with all of their assets for all outstanding debts and commits to fully pay the debts when they fall due.
• The owner of the private enterprise has a written agreement with the parties to the unliquidated contracts that the converted company will take over and continue to perform those contracts.
• The owner of the private enterprise makes a written commitment or has a written agreement with other contributing members on taking over and using the private enterprise’s existing employees.

Note:

• For cases where an LLC converts into a joint-stock company, or a joint-stock company converts into a single-member LLC or a two-or-more-member LLC, the converted company automatically inherits all legal rights and benefits and is responsible for all debts, including tax debts, labor contracts, and other obligations of the converted company.
• For the conversion of a private enterprise into an LLC, joint-stock company, or partnership, the converted company automatically inherits the rights and obligations of the private enterprise from the date it is granted the Business Registration Certificate. The owner of the private enterprise is personally liable with all of their assets for all debts incurred before the date the converted company is granted the Business Registration Certificate.

3. Enterprise and Company Conversion Services at VN Law Firm

Our enterprise and company conversion services at VN Law Firm help clients save a significant amount of time and effort. When you come to VN Law Firm, you will receive enterprise and company conversion services including:

• Consulting on the process and procedures for converting the enterprise or company type.
• Advising clients on preparing the necessary documents.
• Drafting and submitting the dossier for converting the enterprise or company type to the Business Registration Office on behalf of the client.
• Monitoring the dossier and supplementing or correcting it (if necessary) as requested by the officer.
• Carrying out the procedure to publish enterprise registration information on the Information Portal.
• Handing over the business license.
• Guiding clients on important post-conversion procedures to be aware of.