Most joint-stock companies today operate in multiple sectors. As they grow and expand, business owners often seek to add new areas of operation. So, what are the regulations for adding business activities for a joint-stock company? Refer to the detailed information provided by Viet My Accounting in the article below.

1. What is a Joint-Stock Company?

According to Clause 1, Article 111 of the Vietnam Enterprise Law 2020, a joint-stock company is a type of enterprise defined by the following criteria:

• Charter Capital: Divided into equal portions called shares.
• Shareholders: Individuals or organizations owning shares. A joint-stock company requires at least three shareholders with no upper limit. Shareholders are only liable for debts and other financial obligations within the scope of their contributed capital.
• Dividends: Profits distributed to shareholders based on the shares they own.
• Capital Raising: Ability to issue shares as a means of mobilizing funds.
• Legal Entity Status: Meets the requirements under Article 74 of the Civil Code 2015. Once granted a Business Registration Certificate, the company is officially recognized as a legal entity.

Characteristics and Advantages of a Joint-Stock Company

A joint-stock company operates with charter capital divided equally into shares. Shareholders acquire shares as their contribution to the company’s capital, granting them ownership rights. When the company earns profits, dividends are distributed equally among the shares. Shareholders bear liabilities only within the scope of their contributed capital.

This business model allows companies to mobilize significant capital through share issuance, which supports business expansion and operations. Shareholders, in turn, benefit from annual dividends, making this structure a popular investment method that fosters corporate growth.

As a result, joint-stock companies offer several notable advantages:

• Limited Liability: Shareholders are only liable for the company’s debts within their contributed capital, reducing risks.
• Large-Scale Operations: Unlimited maximum number of shareholders facilitates business expansion.
• High Capital Raising Capacity: Issuing shares is a standout advantage compared to other business types, enabling broad participation by individuals through stock purchases.
• Effective Management: Separation between ownership and management ensures higher operational efficiency.

Common Disadvantages:

• Complex Management: A large number of shareholders can complicate governance, especially if conflicting shareholder groups arise.
• Limited Confidentiality: Mandatory disclosure of financial and operational information to shareholders may increase risks of sensitive data leaks, intensifying competition.

Conclusion

A joint-stock company is a highly versatile business model, combining robust capital-raising capabilities with operational independence. Despite its complex governance structure, its ability to attract investment and support large-scale operations makes it a preferred choice for many enterprises. Understanding its benefits and limitations is essential for effective management and sustained growth.

2. Documents for Adding Business Activities for a Joint-Stock Company

For a joint-stock company, the following documents are required to add new business activities:

– 1 Notification of Change in Business Activities in the prescribed legal format.

– 1 Decision and a copy of the minutes from the General Meeting of Shareholders detailing the changes to the company’s charter.
(This is a key difference in the documents required for a joint-stock company compared to other business types due to the large shareholder structure.)

Reaching consensus among shareholders is a complex process, especially when there is a large number of shareholders, making it challenging to make quick decisions. However, this can also be advantageous as shareholders collaborate to make well-informed decisions, potentially leading to higher profits when adding new business activities. Thus, the pros and cons of a joint-stock company compared to other business forms are evident.

– 1 Copy of the following documents:

• Investment certificate,
• Tax registration certificate,
• Supplementary document updating company registration information (if the company has been issued any of these documents or equivalent documents).

– 1 Power of Attorney (if a person or organization authorizes another organization to carry out the process), along with a copy of one of the authorized person’s identification documents (if applicable).

In conclusion, the process of adding business activities in a joint-stock company is similar to other business types, with minor differences in the documents related to the standard industry code. Therefore, preparing the required documents is not time-consuming, but agreeing on the industry code can be the most challenging part .

3. Procedure for Adding Business Activities for a Joint-Stock Company in 2024

Adding new business activities is a procedure carried out when a company wants to expand its business operations and add one or more new business activities to its business registration certificate.

It can be seen that changing business activities differs conceptually from adding business activities, but in essence, the procedures involved are quite similar in terms of the working process and document preparation. The process for adding business activities for a joint-stock company follows these steps:

Step 1: Prepare Documents for Adding Business Activities

Before preparing the documents to add new business activities for a joint-stock company, it is essential to identify the business activities needed for expansion. When adding new business activities, ensure the correct industry codes are chosen in accordance with legal regulations to avoid mistakes.

This preparation should account for all factors related to business operations to ensure smooth business activities. Additionally, joint-stock companies typically have specialized teams to handle this procedure or can outsource to a professional service provider.

Step 2: Prepare the Documents for Adding Business Activities

The documents for adding business activities in a joint-stock company must be prepared as outlined above by ACCOUNTING VIET MY.

Step 3: Submit the Documents to the Department of Planning and Investment

Once the documents are prepared, they must be submitted online through the national portal for review. During the review process, the documents will be assessed online, which makes it easier to check whether the content of the application is valid before submitting the hard copy. This process also saves time and reduces costs for the company.

Step 4: Verify the Validity of the Documents

Within 3 business days after receiving the documents, the business registration department will assess the content of the documents according to legal requirements. This means that within 3 business days, the company will receive a response regarding the validity of the documents.

Once the documents are confirmed as valid, the company must submit the hard copy in person to the relevant authority. If the documents are not valid, the company will need to revise and resubmit them for reassessment. Therefore, if the application is invalid, the person in charge must prepare and submit the corrected documents for review.

Step 5: Receive the Updated Business Registration Certificate with the New Business Activities

After completing all procedures, the company will receive an updated business registration certificate with the newly added business activities. To expedite the process, the company can hire a professional service provider to handle the procedure on its behalf.

4. Important Considerations When Adding Business Activities for a Joint-Stock Company

When adding new business activities, a joint-stock company should carefully consider and avoid the following important points:

• Before adding a business activity, the company must thoroughly check if there are any specific conditions attached to that activity. If so, it must refer to the relevant legal provisions and regulations for that particular business field.
• If the company intends to add a business activity to level 4 in the business classification list, it must ensure that the business activity code is correctly assigned according to the Vietnamese economic sector system as per legal requirements.
• For business activities that require conditions, the company must prepare all necessary documents for that specific activity to ensure compliance and avoid administrative penalties.
• The process for adding business activities must be carried out with the business registration authority, specifically the business registration office at the Department of Planning and Investment.

Thus, it can be seen that when adding business activities for a joint-stock company, the process is similar to other types of businesses, with only slight differences in the paperwork that needs to be prepared and the agreement among shareholders before carrying out the procedure.

The above is an overview provided by ACCOUNTING VIET MY regarding the regulations for adding business activities for a joint-stock company in 2024. Feel free to contact LAW AND ACCOUNTING VIET MY  if you have any further questions about the procedures, steps, or documents required before adding business activities to the business registration of your joint-stock company.

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