Converting a Joint Stock Company into an LLC in Vietnam

Two Conversion Paths

Unlike the reverse direction (LLC → joint stock company, governed by a single article), converting a joint stock company into an LLC is split by the Law on Enterprises 2020 into two separate articles, depending on the number of owners after conversion:

Conversion into a Single-Member LLC (Article 203)

Under Clause 1 of Article 203, a joint stock company may convert into a single-member LLC through one of the following:

• One shareholder receives transfer of all shares corresponding to all remaining shareholders — an existing shareholder takes over everything;
• An organization or individual that is not a shareholder receives transfer of all shares of all shareholders — an outside investor acquires 100%;
• The company is left with only 01 shareholder — through share transfers, share buybacks, inheritance, etc., leading to concentrated ownership.

Special pricing requirement: under Clause 2 of Article 203, the transfer or capital contribution must be made at market price, determined by the asset method, the discounted cash flow method or another method. This rule protects minority shareholders — the acquirer cannot force a low price when buying out the remaining shareholders.

Deadline: within 15 days from the date the company is left with a single shareholder or completes the share transfer, the company submits the conversion dossier to the Business Registration Authority where the enterprise is registered. Within 03 working days from receipt of the dossier, the Business Registration Authority issues the Enterprise Registration Certificate and updates the legal status on the National Database.

Conversion into a Multi-Member LLC (Article 204)

Under Clause 1 of Article 204, a joint stock company may convert into a multi-member LLC through the following:

• Conversion without raising additional capital or transferring shares to other organizations or individuals — the existing shareholders (02 to 50 persons) directly become members;
• Conversion combined with raising additional capital from other organizations or individuals;
• Conversion combined with transferring all or part of the shares to other organizations or individuals contributing capital;
• The company is left with only 02 shareholders — a common real-world case: after buy-and-sell transactions the company has only 02 shareholders and wants to switch to the LLC model for simplicity;
• A combination of the above methods.

Deadline: the company must register the conversion within 10 days from the date the conversion is completed; the Business Registration Authority re-issues the Certificate within 03 working days.

Common Ground: Continuity Is Guaranteed

Both articles affirm the succession principle: the converted company automatically inherits all lawful rights and interests and assumes all debts (including tax debts), labor contracts and other obligations of the converted company. No liquidation is required, and creditors’ consent is not needed for the conversion — but in practice the company should notify major creditors and partners.

Governance Changes to Note

• Organizational structure: from GMS/Board of Directors/Board of Controllers to a Members’ Council / company President (depending on the model). The Charter must be rebuilt to fit the LLC form.
• Capital transfer: after conversion, transfers of contributed capital are subject to LLC restrictions (preemptive rights of the remaining members) — less flexible than share transfers. Investors should weigh this carefully before converting.
• Members’ register: replaces the shareholders’ register with a members’ register.
• Legal representative: review and re-register if there is any change.

Post-Conversion Action Items

• Update the seal, digital signature, e-invoices and bank accounts.
• Review sub-licenses tied to the joint stock company form.
• Notify partners and major creditors of the change in company type.
• Update employer information with the social insurance authority (labor contracts are inherited).
• Tax: CIT incentives for new investment projects (Articles 13 and 14) do not apply to a change of company type (Clause 1, Article 18 of the Law on Corporate Income Tax 67/2025/QH15) — each incentive and its eligibility conditions must be reassessed.

When Should a JSC Convert into an LLC?

• Concentrated ownership: only 01–02 shareholders remain, making the joint stock model unnecessary.
• Simplified governance: lower compliance costs (no need to organize an annual GMS with complex procedures, no Board of Controllers in many cases).
• Transfer control: owners want to restrict capital from “leaking” outside — the LLC preemptive-purchase mechanism serves this goal better.
• Preparing for a transaction: an investor acquiring 100% often wants to convert to a single-member LLC for centralized management.

Common Risks

• Squeezing out minority shareholders: when taking over to convert into a single-member LLC, the transfer price must comply with Clause 2 of Article 203 — violations can trigger lawsuits by minority shareholders.
• Missing the filing deadline: 15 days (Article 203) or 10 days (Article 204) — the starting point must be determined precisely.
• Thin LLC Charter: moving from a JSC Charter to an LLC Charter without redesigning governance, profit distribution and deadlock-resolution mechanisms among members.
• Forgetting updates: invoices, banking, social insurance — similar to the reverse conversion.

How FLAT LAW FIRM Supports Conversions

We advise on the choice between a single-member and a multi-member LLC; design share-acquisition transactions compliant with the pricing rules (Article 203); draft share transfer agreements and the LLC Charter; handle the conversion registration; review tax consequences; and prepare the post-conversion update checklist. See also our M&A and corporate restructuring services.

Frequently Asked Questions

Useful Links

You Should Talk to a Lawyer If:

• Your joint stock company has only 01–02 shareholders and you want to switch to the LLC model.
• You are preparing to acquire all shares to convert into a single-member LLC.
• You are unsure how to value shares under Article 203 when buying out minority shareholders.
• You need to redesign the Charter and governance mechanisms after conversion.