What are the characteristics of a joint stock company?

- According to the provisions of Article 111 of the Enterprise Law 2020, regulations on joint stock companies are specifically as follows:

“1. A joint stock company is an enterprise in which:

a) Charter capital is divided into equal parts called shares;

b) Shareholders can be organizations or individuals; the minimum number of shareholders is 03 and there is no limit on the maximum number;

c) Shareholders are only responsible for the debts and other financial obligations of the enterprise within the scope of the capital contributed to the enterprise;

d) Shareholders have the right to freely transfer their shares to others, except in the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.

2. A joint stock company has legal status from the date of being granted the Certificate of Business Registration.

3. A joint stock company has the right to issue shares, bonds and other types of securities of the company".

- Clause 3, Article 120 of the Enterprise Law 2020 stipulates on Common shares of founding shareholders:

“3. Within 03 years from the date the company is granted the Certificate of Business Registration, the common shares of the founding shareholders may be freely transferred to other founding shareholders and may only be transferred to persons who are not founding shareholders if approved by the General Meeting of Shareholders. In this case, the founding shareholders intending to transfer common shares shall not have the right to vote on the transfer of such shares.

- Clause 1, Article 127 of the Enterprise Law 2020 stipulates on Share Transfer as follows::

1. Shares are freely transferable, except in the cases specified in Clause 3, Article 120 of this Law and the Company Charter which stipulates restrictions on the transfer of shares. In cases where the Company Charter stipulates restrictions on the transfer of shares, these provisions shall only be effective when clearly stated in the certificates of the respective shares.

2. Based on the above provisions, a joint stock company has the following specific characteristics:

- Must have at least 3 shareholders

- Flexible capital mobilization ability: Compared to other types of companies, joint stock companies have flexible capital mobilization ability because they are allowed to issue securities such as stocks, bonds, etc.

- Shareholders are free to transfer capital.

Specifically, a joint stock company is free to transfer its shares, without any transfer restrictions except in the following two cases:

+ Within 03 years from the date of issuance of the Certificate of Business Registration, founding shareholders transferring shares to persons other than founding shareholders must be approved by the General Meeting of Shareholders.

+ Shareholders owning voting preference shares are not allowed to transfer those shares to others.

- The company's profits can be paid out as dividends.