Compare types of businesses
Currently, in Vietnam, there are many types of companies operating under the Enterprise Law 2020. This article of TASCO will help customers compare the above types of businesses.
1. Owner:
🔰 One member limited liability company has only one owner who is an individual or an organization
🔰 A limited liability company with 2 or more members may have many co-owners (can be individuals or organizations), with a minimum of 2 and a maximum of 50 co-owners;
🔰 The owner of a joint stock company is a shareholder of the company (can be an individual or an organization), with a minimum of 3 and no limit on the maximum number of shareholders;
🔰 The owner of a partnership is an individual and is called a partnership member. A partnership has at least 2 members who are common owners of the company;
🔰 A private enterprise with only one owner, an individual, is called a sole proprietorship. The owner of a private enterprise cannot concurrently be the owner of a business household or a partnership member of a partnership.
2. Number of members:
🔗 A one-member limited liability company has only one member (an individual or an organization) contributing capital to establish the business;
🔗 Limited liability company with 2 or more members established by a minimum of 2 and a maximum of 50 members (who are individuals or organizations);
🔗 Joint Stock Company: Shareholders participating in capital contribution can be individuals or organizations; the minimum number of shareholders is 3 and there is no limit on the number;
🔗 Partnership: There are at least 2 partnerships that are individuals and in addition may have more capital contributors. Thus, a partnership is not limited to the maximum number of members contributing capital to the company;
🔗 Private enterprise: There is only one individual contributing capital member, called the owner of a private enterprise.
3. Legal status:
✅ Among the above 5 types of enterprises, only private enterprises do not have legal status.
4. Charter capital:
✔ One-member limited liability company: The total value of assets the owner commits to contribute to the company's charter.
✔ Limited liability companies with 2 or more members: The total value of assets committed by the members to contribute to the company's charter.
✔ Joint Stock Company: The member's contributed capital is divided into equal parts.
✔ Partnership: Total value of assets committed by members to contribute to the company's charter.
✔ Private enterprise: Entire property of the owner.
5. Ability to raise capital:
📌 One member limited liability company:
➥ A one-member limited liability company can only raise more capital from the company owner or by transferring capital to another individual or organization;
➥ If transferring a part of contributed capital, it is compulsory to change the type of enterprise.
📌 Limited liability company with 2 members:
➥ Can raise capital from new members (maximum 50 members);
➥ Part of the contributed capital can be transferred to other individuals or organizations.
📌 Joint stock company:
➥ A joint-stock company is the only type of company that is allowed to issue shares, and offer to sell all kinds of stocks and bonds to the public through the stock exchange;
➥ There is no limit on the number of shareholders contributing capital, so the number of shareholders can be increased according to demand;
➥ The procedure for transferring shares is simple and fast.
📌 Partnerships:
➥ Raise capital from existing members of the company or can raise from new members and there is no limit to the maximum number of members;
➥ Partnership members can also transfer their capital to others.
📌 Private enterprise: Only raising capital from the owner of the business, but not issuing any securities, nor selling the contributed capital to other individuals or organizations. Therefore, it is not possible to raise capital from outside.
6. Right to decide:
✨For one-member limited liability companies and private enterprises:
➥ The company owner/private business owner has full decision-making power over all business activities of the enterprise quickly and decisively.
✨ For limited liability companies with 2 or more members:
➥ The ultimate decision-making power belongs to the members' council. Decisions related to the company's organizational structure and management, business strategies, and investment projects... all must be approved by the members' council. The director/general director only has the power to run the company's daily business operations, and report to and be responsible to the Members' Council for the performance of assigned tasks.
✨ For joint stock companies:
➥ The General Meeting of Shareholders is the most powerful department. However, the new board of directors is the body that directly manages and operates the company. Therefore, most of the decisions related to the organizational structure and management of the company, the business... are decided by the board of directors.
✨ For partnership companies:
➥ The Members' Council has the right to decide on all business activities of the company. But in reality, all decisions must be approved by a majority of the general partners (with a ratio of ¾ or ⅔ of the general partners) to be approved.
7. Organizational structure:
🔅 One-member limited liability companies and private enterprises have the simplest and most compact organizational structure. Most of the direct owners are directors and below are functional departments.
🔅 Limited liability companies with 2 or more members and partnerships have a fairly simple organizational structure. Most of the members are familiar, so the management and operation of the company are not too complicated.
🔅 Joint stock company is the type of enterprise with the most complicated organizational structure, especially in joint stock companies that have been listed on the stock exchange, the number of shareholders is very large, and new and old shareholders are constantly coming in and out, so the management also faces many difficulties.
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