In essence, a public company is a joint stock company. However, for the purpose of raising capital widely from the public, the conditions to become a public company are somehow stricter than those of a common joint stock company in order to ensure transparency and protect the rights and interests of the public, legitimate interests of the company’s shareholders.
The article below is for reference of the differences between a public company and a joint stock company (for distinction, hereinafter referred to as “common joint stock company”).
1. Overview on public company
Defined by the Law on Security 2019, a public company is a joint stock company in one of two cases:
– Case 1 – determined on the base of capital scale:
The company has contributed charter capital of VND 30 billion or more and has at least 10% of voting shares held by at least 100 investors who are not major shareholders.
– Case 2 – Determined on the basis of the initial public offering of securities:
The company has successfully conducted the initial public offering of shares through registration with the State Securities Commission in accordance with regulations.
2. In essence, a public company has all the characteristics of a joint stock company
– Charter capital is divided into equal parts called shares;
– Shareholders can be organizations or individuals; the minimum number of shareholders is 03 (if not specified otherwise by the Law on Securities) and there is no limit on the maximum number;
– Shareholders are only responsible for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise;
– Shareholders have the right to freely transfer their shares to others, unless specifically restricted by the Law.
Similar to a common joint stock company, a public company has the right to issue shares, bonds and other securities of the company.

>> PUBLIC COMPANY ADMINISTRATION https://linconlaw.vn/public-company-administration/
>> WORKING HOURS, REST PERIOD, HOW IS REGULATED? https://linconlaw.vn/working-hours-rest-period-how-is-regulated/
3. A public company has a number of outstanding features and is subject to somewhat more stringent compliance requirements than a common joint stock company
a. Purpose of establishment
One of the main purposes of establishing and/or registering a public company is to raise capital from the investment community and to trade shares publicly, centrally on the stock exchange. Widely raising capital is an effective way to increase financial resources on a large scale in short time, create a foundation for expansion, develop the company’s business or reduce debt, and at the same time generate profits for the company’s shareholders contributing capital. It should be emphasized that financial potential is a favorable condition for success from finding opportunities, participating in large and complex transactions, implementing projects. Therefore, currently the public company model is quite popular.
b. Scale
As mentioned in Section 1, public companies have a larger scale compared to common joint stock companies, when setting the minimum requirement for contributed charter capital (from 30 billion VND); the minimum number of shareholders (10% of voting shares held by at least 100 investors who are not major shareholders, while a common joint stock company requires 3 shareholders); or the company has succeeded in the initial public offering of shares.
c. Licensing and regulatory bodies
In addition to the Department of Planning and Investment of the province or city where the enterprise’s head office is located, a public company is also responsible for registration and is subject to the management of the State Securities Commission. Specifically:
– A joint stock company, when meeting the conditions of a public company, must submit the prescribed public company registration dossier to the State Securities Commission.
– Information on names, business contents and other information related to public companies shall be disclosed on the information disclosure media of the State Securities Commission.
e. Obligations to be noted
In addition to the obligations of an enterprise organized in the form of a joint stock company, a public company, in order to ensure transparency in its organization and operation, must strictly comply with the following obligations:
– Disclosure of information in accordance with the Law on Securities. Disclosure contents include: financial/annual/corporate governance situation report; general meeting of shareholders; repurchase shares of the company; transaction of conflict of interest; foreign ownership ratio…
– Comply with regulations on corporate governance (stricter than common joint stock companies due to the specificity of scale). For example: The company’s charter and internal regulations on public company governance comply with the form prescribed by law; Chairman of the Board of Directors must not concurrently be the Director/General Director;…
– To carry out the centralized registration of shares at the Vietnam Securities Depository and Clearing Corporation.
– Register to trade shares on the trading system for unlisted securities and/or register for listing for public companies formed by meeting the conditions on minimum capital size or minimum number of shareholders .
– List or register for trading on the securities trading system after the finish of the public offering for a public company formed by a successful initial public offering of shares.
Legal basis:
- Decree 155/2020/ND-CP guiding the Law on Securities promulgated on December 31st, 2020.
𝐋𝐈𝐍𝐂𝐎𝐍 𝐋𝐀𝐖 𝐅𝐈𝐑𝐌 – 𝐒𝐮𝐬𝐭𝐚𝐢𝐧𝐚𝐛𝐥𝐞 𝐜𝐨𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧
- In Hanoi: 4F Sudico Tower, Me Tri street, My Dinh 1 ward, Nam Tu Liem district, Hanoi city.
- In HCMC: 272 Do Phap Thuan, An Phu ward, Thu Duc city, Ho Chi Minh city.
- Website: http://linconlaw.vn/
- Email: Lawyer@linconlaw.vn
- Facebook: https://www.facebook.com/Linconlawfirmm
- Linkedln: linkedin.com/in/lincon-law-firm-100b96201
- Hotline: +84.987.733.358