Question: I want to start a business but I don’t know what type of business is suitable. Currently, I am planning to establish a business that having more than 2 capital contributing members? Thanks.
Answer:
Hi, thank you for your trust and your question to lawyers of DTD law firm. Your question is answered by lawyers of DTD.
Legal grounds: Law on Enterprises 2014
According to Law on Enterprises 2014, you have two choses to establish a business, there are Joint – stock company and limited liablity company. We will provide you with the advantages and disadvantages of them
Firstly, Joint-stock company
*Advantages:
- The most specific charateristic of a joint stock company is that there is no limit to the amount of capital contribution, which makes it flexible in capital contribution.
- Shareholder of joint stock companies is organization or individuals, the minimum number of shareholders is three and unlimited.
- Liability regime is limited liability, shareholder has limited responsibility contribution
- Joint – stock company has the right to issue shares to the market, this is an effective way to mobilize capital contribution.
- It is relatively easy for shareholder to transfer of capital contribution company
*Disadvantages:
- The management and administration of joint stock company will face may difficulties due to the large number of shareholders. In addition, shareholders who have a lot of capital contribution shall have the right to dominate the company’s operation.
Secondly, limited liability company
- The number of the company must not exceed 50 members, because the members of the company have a relationship with each other, the management and administration are easier than joint – stock company.
- The company is only responsible for the activities of the company within the capital contributed to the company, causing little risks for the contributors.
- The transfer of the contributed capital of is tighter so it is easier to control the activities of the company.
*Disadvantages:
- Capital mobilization is more limited than a joint – stock company, moreover due to the limited liability regime which can take a risk with the company’s partner.
