Limited liability companies (LLCs) and joint stock companies (JSCs) are the two most common entity types in Vietnam (Enterprise Law 2020, No. 59/2020/QH14, as amended by Law 76/2025/QH15). Both have legal personality, limited liability up to contributed capital, and the right to issue bonds (Articles 46 and 111).
The core difference lies in ownership structure: LLCs cap membership at 50 with conditional share transfer, while JSCs allow unlimited shareholders with freely transferable shares. Ownership structure determines fundraising capacity, operating costs, and long-term growth strategy.
This article compares the two entity types across key criteria — if you have already chosen your entity type, see the detailed business setup guide for FDI.
Detailed LLC vs. JSC Comparison
| Criteria | LLC | Joint Stock Company |
|---|---|---|
| Members/Shareholders | 1–50 members | ≥3 shareholders, no upper limit |
| Capital | Capital contributions | Shares (par value per company charter) |
| Transfer | Priority to existing members (Art. 52) | Freely transferable, except founding shareholders for first 3 years (Art. 120) |
| Stock issuance | Not allowed | Allowed — public fundraising |
| Exchange listing | Not allowed | Allowed once conditions are met |
| Supervisory Board | Required if >11 members | Required, or replaceable with independent BOD members |
| ESOP | No mechanism | Available — key talent retention tool |
| Audit | Not mandatory (except FDI) | Mandatory for public companies |
Comparison based on Enterprise Law 2020 (59/2020/QH14, as amended by Law 76/2025/QH15, effective 01/07/2025). Article references follow the original law — some provisions may have been adjusted by the amendment.
When to Choose an LLC
An LLC suits the following scenarios:
Family businesses and SMEs — lean governance, low compliance costs, no need for external fundraising. Faster decisions since there is no General Meeting of Shareholders (GMS) to convene.
FDI investors wanting ownership control. The conditional transfer mechanism prevents hostile takeovers — capital contributions must be offered to existing members before being sold externally (Article 52, Enterprise Law 2020). Charter capital rules are also more flexible compared to JSCs.
Joint ventures with a small number of partners — better information confidentiality, no obligation to publicly disclose financial statements unlike public companies.
Early-stage startups — setup cost ~VND 1 million, simple structure. Convert to a JSC when fundraising is needed, with the enterprise registration number preserved.
When to Choose a JSC
A JSC suits the following scenarios:
Large capital raises needed — issue shares to the public (Article 123, Enterprise Law 2020), with no limit on the number of investors. Real estate, large-scale manufacturing, and technology businesses typically choose this structure.
IPO planned — setting up as a JSC from the start avoids the cost and time of conversion later.
Attracting senior talent. ESOP programs (employee stock options, Article 125) are only feasible with JSCs — a critical competitive tool in the technology and finance sectors.
Clear exit strategy — JSC shares have high liquidity, making it easier for founders to divest by selling shares on the market.
Management Structure
LLC
- Single-member LLC: Owner → Company President → Director. A controller is mandatory if the owner is an organization.
- Multi-member LLC: Members’ Council → Chairperson → Director. Supervisory Board is mandatory if >11 members.
Major decisions require ≥65% of capital contributions to approve (Article 59, Enterprise Law 2020). This threshold matters when structuring capital ratios — holding 35% means having veto power.
Joint Stock Company
- General Meeting of Shareholders → Board of Directors → Director/CEO
- Supervisory Board is mandatory, or may be replaced with independent BOD members + Audit Committee
JSCs structurally separate ownership (shareholders) from management (executive team) — more professional governance but more complex.
Setup and Ongoing Costs
| Item | LLC | JSC |
|---|---|---|
| Registration fee | ||
| ERC issuance time | 3–5 working days | 3–5 working days |
| Annual compliance | VND 20–100 million (~$780–3,900) | VND 100–800 million (~$3,900–31,200) |
| Financial audit | Not mandatory* | Mandatory (public JSCs) |
| BOD/Supervisory Board remuneration | None | VND 200–500 million/year (~$7,800–19,500) |
*FDI enterprises must have annual financial statements audited regardless of entity type (Independent Audit Law 2011, Decree 17/2012/ND-CP and subsequent amendments).
Cost estimates are market-based and vary by company size and industry.
JSC ongoing costs are significantly higher — businesses should plan resources carefully before choosing an entity type.
LLC-to-JSC Conversion Process
Many businesses start as an LLC and convert to a JSC as they grow (Articles 202–205, Enterprise Law 2020). The process:
- Members’ Council decision — approve the conversion plan (shareholder structure, capital-to-share conversion ratio)
- Prepare documentation — new JSC charter, founding shareholder list, conversion resolution
- File at Business Registration Office — 3–5 working days, receive new Enterprise Registration Certificate
- Post-conversion procedures — notify tax authorities, banks, and business partners. Open a new DICA capital account if legal entity information needs updating
The enterprise registration number is preserved, and all rights and obligations are fully inherited. Assess tax implications before converting — particularly personal income tax when capital contributions convert to shares.
Indochina Link Vietnam provides company formation advisory including entity type selection, charter drafting, and registration at the Department of Finance (formerly DPI). If you are choosing between an LLC and JSC, contact us for analysis based on your specific business plan.
Disclaimer: Information based on Enterprise Law 2020 (59/2020/QH14) as amended by Law 76/2025/QH15, updated as of March 2026. Consult a legal professional before making your decision.
