Restructuring an one-member limited company into a joint-stock company

Reference situation:

A one-member limited liability company was established in 2015 with its charter capital of VND 5 billion and specializes in the importation of medical equipment. The owner of the company would like to mobilize further capital to expand the business of the company. Then two investors would like to contribute their capital to the company to extend the charter capital of the company to VND 8 billion to transform the model of the company into a joint-stock company. The company would like to consult lawyers about the necessary procedures to do this.

Legal grounds:

  1. Law on Enterprise 2014;
  2. Decree No. 78/2015/NĐ-CP;
  3. Circular No. 02/2019/TT-BKHĐT.

Our legal advice:

Under clause 2 and clause 3 of Article 87 of Law on Enterprise 2014, the change of charter capital of a company will be carried out as follows:

“2. A one-member limited liability company increases its charter capital by way of the company owner making an additional investment or raising additional capital contributed by other persons. The owner shall decide on the form of increase and the amount of increase of charter capital.

3. Where the charter capital is increased by way of raising additional capital contributed by other persons, the company must organize management in one of the two following forms:

b) [The company shall be organized in the form of] a joint-stock company in accordance with article 196 of this Law.;

The number of members (owners) of the company will be changed after the contribution of the two investors and the company needs to transform its company model into a joint-stock company.

Within 10 days from the date on which the company completes increasing its charter capital, the company needs to change its enterprise registration.

Click here to refer to the detailed procedures for a company transformation.

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