What are the advantages and disadvantages of a joint stock company?

A joint stock company is one of the types of businesses that many people apply in addition to a limited liability company or private enterprise. Each type of business has its own advantages and disadvantages. So what are the advantages and disadvantages of a joint stock company? Join Yes Office to learn more through the following information.

What is a joint stock company?

A joint stock company is known as a legal entity that is established and exists independently of the company owner. A joint stock company has limited liability, the company's capital is divided into equal parts and are called shares. Compared to other types of limited liability companies, joint stock companies are allowed to mobilize capital with the participation of investors.

Operating principles of joint stock companies

Joint companies are formed and exist based on capital contributions from members called shareholders. The charter capital of a joint stock company will be divided equally into parts called shares. Shareholders are the owners of those shares and shareholders will be issued a certificate of ownership of shares called shares. Only joint stock companies are allowed to issue shares. This type of company exists and thrives on the stock market. The operating structure of a joint stock company must be that the General Meeting of Shareholders is the highest body holding all authority. Next is the Board of Directors and Executive Board. For joint stock companies with more than 11 shareholders accounting for more than 50% of the company's shares, an additional Supervisory Board is required. See more:

• Distinguishing between limited liability company and joint stock company
• Conditions for establishing a joint stock company section

What are the advantages and disadvantages of a joint stock company?

Each type of company has its advantages and disadvantages different, learn about the advantages and disadvantages of joint stock companies as follows:

Advantages

Some advantages of this type of joint stock company:

• The liability of a joint stock company is limited liability. Shareholders only need to be responsible for the company's debts and assets as clearly defined within the scope of capital contribution. Therefore, the risk potential for shareholders is not too muchhigh.
• A joint stock company with a large scale of operations in any legal industry. Besides, the ability to expand the company's business scale is also easier thanks to raising capital from shares.
• Investors can transfer capital from one place to another from one business field to another thanks to the form method of buying, selling or transferring shares. 
• Thanks to the independence of management and ownership, the company's operations are more efficient many.

The above are some outstanding advantages of the joint stock company type. So what are the limitations?

Disadvantages

The disadvantages of this type of company are:

• This type of joint stock company is often subject to higher tax rates than other companies. In addition to the company being subject to taxes according to state regulations, shareholders are also subject to personal income tax.
• The initial cost of establishing a business will be quite expensive. poor.
• According to the structure, the company's business activities and business plans need to be disclosed to the general meeting of shareholders, so the ability to keep business secrets is not possible. high.
• The General Meeting of Shareholders is the body that holds the highest authority, so all decisions of the company need to be approved by the General Meeting of Shareholders. So the possibilities of changing the scope in the business field are not high.

Those are some limitations of the joint stock company type. You should refer to the regulations on this type of company in Vietnam if you intend to establish it. See more:

• What is the organizational structure
• Duties of the board of directors value
• Business establishment license Industry

Regulations on joint stock companies in Vietnam

In Vietnam, regulations on joint stock companies are also clearly stated in the Enterprise Law.

Company definition 

Article 77 of the 2005 Enterprise Law stipulates as follows: The joint stock company is:

• The company's charter capital is divided into small and equal parts.
• The company's shareholders can be individuals people, organizations. 
• Minimum number of shareholders and 3 and no maximum number limit.
• Shareholders are only responsible for the company's assets and liabilities within the amount of capital contributed.
• Share Shareholders have the right to freely transfer their shares to others as clearly stated in the Enterprise Law.
• The company has legal status from the date of issuance of the Business Registration Certificate.
• The company has the right to issue shares to raise capital.

Regulations on types of shares

Article 78 of the Enterprise Law regulates types of shares as follows:

1. The company has common shares with owners who are common shareholders.
2. The company has preference shares with people Owners are preferred shareholders. And preference shares include the following types:

• Symbolic preference shares resolution.
• Dividend preference shares.
• Redeemable preference shares.
• Preference shares other.

All specific information about preferred shares is clearly stated in the Company Charter and Enterprise Law. If you need more advice about joint stock companies, you can contact Yes Office directly to answer questions about establishing a business. In addition, if you want to establish a company, you need the following preparation steps:

•  You complete the procedure to register a company with the Department of Planning and Investment.  
•  You need an address to register as a company headquarters. This must be a home or virtual office address, it cannot be a general addressresidence.
•  After establishing the company, you need to periodically declare taxes to the General Department of Taxation (quarterly), for whether your company generates revenue or not.
• You need to invest in marketing, to find new customers and develop a sustainable business. You need a brand identity (name, logo, color, symbol, slogan...) and supporting digital marketing solutions (setting up a website, running Google, Facebook ads, SEO, investing in Content Marketing, Email Marketing...).

Yes Office virtual office service always accompanies you to solve the above problems.

• When completing company registration procedures, Yes Office helps you complete the procedures The state is cumbersome and complicated. You just need to pay us the correct amount as the business registration fee with the General Department of Taxation (there is a red invoice from the Tax Department if you need to compare). As for the service fee, we would like to give it to you.
• You don't need to rent a large space, you just need to rent a virtual office to establish a company. The cost of renting a virtual office is very reasonable (from only 530,000 VND / month). Yes Office is located in a prime location, right on Nguyen Hue flower street, district 1, with the address 68 being a feng shui number.
• Yes Office always has tax experts with many years of experience to provide FREE consultation. FEES for your fledgling company. When you rent a virtual office at Yes Office and also use our tax services, every tax declaration process becomes even more convenient.  
• We have many years of experience in designing SEO-standard websites, building brand identities, and implementing effective digital marketing activities through Google and Facebook channels, bringing great economic efficiency to businesses.

Please contact us immediately for free consultation via hotline: 0942 688 339.