Reference situation:

Company B is a one-member limited liability company that was established by Mr. Nguyen Van B with its charter capital of VND 10 billion. Mr. B would like to mobilize capital to expand the business of the company. Because of the feasibility of the project, Mr. Hoang Van D and Mr. Pham Van K would like to contribute VND 3 billion to Company B.  the company’s form, at their request, should be transformed into a joint-stock company. Mr. B would like to consult lawyers about the necessary procedures to do this

Legal grounds:

• Law on Enterprise 2014;
• Decree No. 28/2015/ND-CP on Enterprise registration; and
• Circular No. 39/2014/TT-BTC on the guideline for the Government’s decree No. 51/2010/NĐ-CP and Decree No. 04/2014/ND-CP on sale/service invoices

1. Conditions of transforming a company

According to Article 196 of Law on Enterprise 2014, a one-member limited liability company may be transformed into a joint-stock company in one of the following manners:

• By raising additional capital contributed by other persons or other organizations;
• By selling part of or all of its capital contribution to other persons or other organizations; or
• By combination of the two methods above

Therefore, it is legal when company B transforms its form by raising additional capital contributed by Mr. D and Mr. K. Company B shall be organized in the form of a joint-stock company if the minimum quantity of the company shareholders is 03. After raising capital contribution, members of the company are Mr. B, Mr. D, and Mr. K. Therefore, Company B satisfies enough conditions to transform a one-member limited liability company into a joint-stock company.

2. Requisite procedures

2.1. Registration of transformation

Within 10 days after the transformation is completed, the company shall register the transformation with a business registration office.

• Components of the applications:

– An application proposal for enterprise registration;

– A charter of the joint-stock company;

– A decision of Mr. B on the transformation of the company;

– A list of founding shareholders; and

– Certificate of capital contribution

• Licensing authority: Business registration office (“BRO”)

• Processing time limit: Within 05 working days after receiving the valid applications

• Results: A certificate of enterprise registration.

2.2. Notification of change of the company’s seal sample

A seal must contain the enterprise’s name and the enterprise’s ID number. Therefore, when Company B transforms its form, its seal shall be changed. Before using a new seal, Company B must notify with BRO where it is located about the change.

• Company B will send a notification of the change of its seal sample to the BRO in order to post the change on National Business Registration Portal

• After receiving the notification, the BRO will grant a receipt to Company B and post the seal sample on National Business Registration Portal. At the same time, the BRO also grants Company B a notification that its seal design has been posted

2.3. Change of information of invoices

In case that Company B only changes its name but not its headquarter and/or tax bureau, the company can carry out the following activities to continuously use available published invoices which contain the former name of the company:

• Stamping new name and/or address next to the former name;
• Notifying about the adjustment of the former document on invoice publication

Conclusion:

We are catering to the legal service on the procedure for the transformation of a company. Please contact us via our email: Info@bizlawyer.vn or Hotline Call: (+84)86.888.1900 for timely advice and support.