Corporate reorganization
A two-member LLC has operated stably for many years and now wants to raise capital from new investors and prepare for a future listing. The problem: the LLC structure limits member count (maximum 50) and capital contribution transfers are far less flexible than shares. The solution is not dissolving and forming a new company — but converting the company type under Article 202 of the Law on Enterprises 2020: the LLC “transforms” into a joint stock company, keeping all assets, obligations, contracts, and employees, changing only the outer legal “frame”.
Why convert instead of dissolving and forming a new company?
Company type conversion is a form of corporate reorganization (Article 4(31) of the Law on Enterprises 2020). The core difference from dissolving and forming a new company lies in continuity: under Article 202(4), the converted company automatically inherits all lawful rights and interests and is responsible for debts (including tax debts), labor contracts, and other obligations of the converted company.
- No liquidation: no need to pay off all debts or liquidate contracts as in dissolution.
- Relationships preserved: counterparty contracts, labor contracts, and sub-licenses principally remain valid.
- Tax code preserved: the converted company keeps its enterprise code — only the company-type information changes on the Business Registration Certificate.
- Time saved: administrative procedures are much lighter than closing one company and opening a new one.
Four conversion methods under Article 202
Under Article 202(2) of the Law on Enterprises 2020, an LLC may convert into a joint stock company by these methods:
| Method | Content | When to use |
|---|---|---|
| a) Pure conversion | No mobilizing other organizations or individuals to contribute capital; no selling capital contributions to others | Only changing the legal “shell”; old members become shareholders with corresponding ownership ratios |
| b) Raising additional capital | Converting simultaneously with mobilizing other organizations/individuals to contribute capital | Converting and raising new capital in one procedure |
| c) Selling capital contributions | Selling all or part of capital contributions to one or more other organizations/individuals | A member wants to exit (partly or fully) on the conversion occasion |
| d) Combined | Combining the above and other methods | Complex deals: raising new capital while a member exits |
Note: state-owned enterprise conversion into a joint stock company follows relevant laws (Article 202(1)), not directly the above methods.
The shareholder question: how many are needed?
A joint stock company principally needs at least 3 shareholders. But two important points companies often misunderstand:
- No mandatory “founding shareholders”: under Article 120(1), a joint stock company converted from an LLC does not necessarily need founding shareholders. In this case, the company charter in the business registration dossier must be signed by the legal representative or the ordinary shareholders of that company.
- How capital contributions become shares: the total par value of shares of the post-conversion joint stock company corresponds to the LLC’s charter capital before conversion; each member’s capital contribution converts into a corresponding number of shares per ownership ratio.
Procedure steps
Step 1 — Conversion decision
The Members’ Council (for multi-member LLCs) or the company owner (for single-member LLCs) approves the conversion decision, determining the conversion method, the plan for converting capital contributions into shares, the shareholder list, and the new joint stock company’s charter.
Step 2 — Completing the conversion
Carrying out internal work per the chosen method: signing capital contribution transfer contracts (if a member exits), receiving new capital contributions (if raising), approving the joint stock company charter, and establishing the shareholder register.
Step 3 — Conversion registration
Under Article 202(3): the company must register the conversion with the business registration authority within 10 days of completing the conversion. Within 3 working days of receiving the conversion dossier, the business registration authority re-issues the Business Registration Certificate and updates the company’s legal status on the National Business Registration Database.
Post-conversion to-do list
- Seal and digital signature: update company-type information.
- E-invoices: update seller information on the invoice system.
- Bank accounts: notify the type change and update customer files.
- Sub-licenses: review LLC-attached licenses — some may need information adjustment.
- Key contracts: check type-change/conversion clauses; notify major counterparties.
- Employees: labor contracts are inherited by the converted company; update employer information with social insurance authorities.
- Tax: new-project CIT incentives (Articles 13, 14) do not apply to company-type conversion (Article 18(1) of the Law on CIT 67/2025/QH15) — each incentive type and its post-conversion conditions must be re-assessed.
Common risks
- Missing the 10-day conversion registration deadline: a hard statutory deadline from the conversion completion date — clearly determine the “completion date” to count the deadline.
- Valuation disputes when a member exits: capital contribution transfer prices need clear agreement or independent valuation.
- Sloppy joint stock company charter: many companies use model charters, skipping key JSC mechanisms (share pre-emption rights, GMS voting mechanisms, BOD).
- Forgetting post-conversion updates: invoices, banks, social insurance — each missed task can disrupt operations.
How FLAT LAW FIRM supports conversions
We advise on conversion methods fitting fundraising/exit objectives; draft conversion decisions, capital contribution transfer contracts, and the joint stock company charter; organize valuation when needed; carry out conversion registration at the business registration authority; review tax consequences; and catalog post-conversion update tasks. See also M&A and corporate restructuring services.
Frequently asked questions
Does converting an LLC into a JSC require dissolving the old company?
No. Type conversion is a corporate reorganization form — the converted company automatically inherits all rights and obligations of the converted company, keeping its enterprise code. No asset liquidation or full debt settlement as in dissolution.
Can a single-member LLC convert into a joint stock company?
Yes. The company owner decides the conversion. If it is a pure conversion (no new capital, no contribution sale), the post-conversion joint stock company will need at least 3 shareholders — so the owner needs to mobilize more or sell part of the capital contribution to meet the minimum shareholder requirement, unless the law provides otherwise for specific cases.
Are founding shareholders mandatory in a conversion?
No. Under Article 120(1) of the Law on Enterprises 2020, a joint stock company converted from an LLC does not necessarily need founding shareholders. The charter in the business registration dossier must be signed by the legal representative or the ordinary shareholders.
What is the conversion registration deadline?
Within 10 days of completing the conversion, the company must register the conversion with the business registration authority. Within 3 working days of receiving a valid dossier, the authority re-issues the Business Registration Certificate.
Are tax incentives kept after conversion?
No. Under Article 18(1) of the Law on CIT 67/2025/QH15, CIT incentives do not apply to company-type conversion.
Useful links
You should talk to a lawyer if:
- You want to convert an LLC into a JSC for fundraising or listing preparation.
- A member wants to exit on the conversion occasion.
- You are unsure how to convert capital contributions into shares and build a JSC charter.
- You worry about registration deadlines and post-conversion update tasks.
Talk to a FLAT LAW FIRM lawyer
Send information about your current LLC and post-conversion objectives — we will propose a conversion method, roadmap, and task list.
Send a legal consultation requestWebsite content is for general information only and does not replace legal advice for specific matters.
Legal regulations, state agency competence, and administrative procedures may change over time, by locality, and by file. You should consult a lawyer before making decisions or transactions.
