What is a Joint Stock Company? Advantages, Disadvantages, and Essential Information

1. What is a joint-stock company?

A joint-stock company (JSC) is a type of business with legal entity status, established and operating under the provisions of Article 111 of the 2020 Law on Enterprises. Its charter capital is divided into equal parts called shares, which are owned by shareholders. Shareholders can be organizations or individuals and have limited liability within the scope of the capital they have contributed to the business.

A JSC has the right to issue shares, bonds, and other types of securities to raise capital from the public—something that private enterprises or limited liability companies are not allowed to do. This is a significant advantage that helps the business scale up quickly, especially in capital-intensive sectors such as technology, industrial manufacturing, finance, etc.

1.1. Number of members in a joint-stock company

According to Clause 1, Article 111 of the 2020 Law on Enterprises:

• A joint-stock company must have a minimum of 3 founding shareholders.
• There is no limit on the maximum number of shareholders (it can be thousands or even millions if the company is listed on the stock exchange).

This facilitates capital mobilization from multiple sources and does not restrict the scale of development. With a diverse shareholder model, major decisions are typically made through the General Meeting of Shareholders—the highest decision-making body in a joint-stock company.

1.2. Charter capital in a joint-stock company

The initial charter capital of a joint-stock company is the total par value of all shares that have been subscribed for and recorded in the company’s charter. This capital can be increased at any time through methods such as:

• Issuing additional ordinary or preference shares
• Raising capital from existing or new shareholders
• Listing on the stock market

For example: A joint-stock company initially has 3 shareholders contributing a total of 10 billion VND, divided into 1 million ordinary shares with a par value of 10,000 VND/share. After some time, if the company issues an additional 500,000 shares with the same par value, the charter capital will increase to 15 billion VND.

You can refer to the detailed guide on how to increase the charter capital of a joint-stock company in compliance with regulations right here. Increasing charter capital is necessary to enhance credibility, expand scale, strengthen financial capacity, and brings many other benefits to a joint-stock company.

1.3. Organizational structure in a joint-stock company

According to Articles 134 and 137 of the 2020 Law on Enterprises, a joint-stock company can be organized under one of the following two models:

Model with a Board of Supervisors (typically applied to companies where no single organizational shareholder holds >50% of the capital):

• General Meeting of Shareholders
• Board of Directors
• Board of Supervisors
• Director or General Director

Model without a Board of Supervisors (applied when an organization holds >50% of the shares):

• General Meeting of Shareholders
• Board of Directors
• Audit Committee under the Board of Directors
• Director or General Director

<p data-start="One of the most outstanding advantages of a joint-stock company is its flexible capital mobilization capability through issuing stocks, bonds, or increasing charter capital without directly affecting control. The business can expand its scale rapidly while maintaining stability in its management structure.

Next is high transparency: joint-stock companies, especially public companies, are required to publicly disclose periodic financial reports and comply with audit regulations. This helps increase credibility with shareholders, investors, and business partners.

A clear power-sharing mechanism is also a strength. The separation of ownership and management helps the company operate more professionally, making it easier to attract high-quality personnel to join the executive and management teams.

Typical examples:

• Vingroup (VIC): Has grown strongly thanks to its ability to mobilize large amounts of capital from the stock market to invest in sectors such as technology, electric vehicles, and real estate.
• FPT Corporation: Leverages the advantages of its shareholding structure to expand international investment, build a professional leadership team, and continuously improve its business model.

You can learn more about stocks and how to profit from them in our article about what stocks are here.

2.2. Disadvantages of a joint-stock company

Besides the aforementioned advantages, a joint-stock company also faces quite a few challenges. First is the complex organizational structure, which requires a clear internal control, audit, and governance system. Therefore, management and operational costs are often higher than other types of enterprises.

Second, conflicts of interest among shareholders are a common issue. With a large number of shareholders, reaching a consensus on strategic decisions is not always easy. This can slow down development progress or lead to internal conflicts.

Third, if the company is listed on the stock exchange, it will be subject to market fluctuations and pressure from public shareholders. This sometimes forces the management to make short-term decisions to please shareholders instead of focusing on long-term strategy.

Typical examples:

• Yahoo: Faced difficulties in maintaining a long-term strategy due to pressure from shareholders and the stock market, leading to a loss of development direction.
• WeWork: Initially grew rapidly thanks to a venture capital model but failed to properly control its shareholder structure and governance, leading to a severe crisis in 2019.

3. Differentiating types of shares in a company

In a joint-stock company, shares are the primary form of capital contribution and are divided into several types, each with different rights and obligations. According to the 2020 Law on Enterprises, there are 4 main types of shares:

• Ordinary shares: This is a mandatory type of share in a joint-stock company. Shareholders owning this type of share have voting rights, the right to receive dividends, and the right to transfer shares.
• Voting preference shares: Shareholders owning these shares have more votes than ordinary shareholders. This type of share is usually only applicable to founding shareholders for a certain period.
• Dividend preference shares: Shareholders receive higher or more stable annual dividends compared to ordinary shares. However, this type of share does not have voting rights.
• Redeemable preference shares: Shareholders have the right to request the company to redeem their capital under conditions specified in the charter or by agreement. They do not have voting rights except in some special cases.

To understand each type of share in more detail, you can refer to the in-depth analysis article here on what shares are. This article will help you better understand the types of shares, their rights, risks, obligations of ownership, and most importantly, smart investment strategies.

4. Which industries are suitable for a joint-stock company

A joint-stock company is particularly suitable for industries that require large capital mobilization, have high growth rates, and demand a professional governance structure and operational transparency. The most typical industries include:

• Technology industry: The technology industry changes rapidly and requires large capital for research, product development, and market expansion. A joint-stock company, with its ability to mobilize capital from shareholders, is an ideal model for tech businesses like FPT, VNG, or tech startups seeking funding.
• Real estate industry: Real estate is a sector that requires large capital, has long investment cycles, and needs trust from investors. The joint-stock company model helps mobilize long-term capital through stocks and bonds, making it very suitable for businesses like Vingroup, Novaland.
• E-commerce: E-commerce companies like Tiki, Shopee often need capital to build logistics systems, technology platforms, and marketing. The joint-stock form helps expand financial resources and enhances transparency in development strategy.
• B2B and B2C businesses: Both B2B (businesses providing products/services to other businesses) and B2C (providing to consumers) companies can leverage the advantages of a joint-stock company to build trust with customers, suppliers, and strategic partners.
• Startups and innovative enterprises: Startups are often encouraged to be established as joint-stock companies due to the flexibility in transferring shares, calling for investment, and scaling up. This is the most suitable legal form to attract angel investors and venture capital funds.

5. When to establish a joint-stock company

Establishing a joint-stock company is a strategic decision that requires careful consideration based on development goals, capital raising capabilities, market expansion needs, and the specific nature of the business sector. Below are suitable times when a business should consider choosing the joint-stock company model.

• When the business needs to raise large-scale capital:

If a business is in the phase of market expansion, investing in factories, infrastructure, technology, or new products that require significant capital, the joint-stock company model is ideal. With the ability to issue stocks and bonds, the business can access capital from the public or investors more easily than other business models. For example: In 2016, VinFast Joint Stock Company (a member of Vingroup) was established with a charter capital of over 7,000 billion VND to invest in building a car manufacturing plant in Hai Phong. Thanks to the joint-stock model, VinFast easily raised capital from domestic and international markets.

• When there are multiple shareholders contributing capital and participating in governance:

If a business is founded by multiple like-minded investors and shareholders, the joint-stock company model helps clearly define rights, responsibilities, and ownership ratios. This not only creates operational transparency but also helps the business attract more strategic investors. For example: FPT was established with the participation of many individual and institutional shareholders and has grown rapidly thanks to its transparent equitization structure, attracting further investment and high-quality personnel.

• When aiming to list on the stock exchange:

Listing shares on the stock exchange is a significant step to enhance prestige, brand image, and long-term capital raising capabilities. Only joint-stock companies are eligible for listing on stock exchanges such as HOSE, HNX, or UPCOM. Listing not only helps businesses access vast capital from investors but also increases the liquidity of shares, making it easier for shareholders to transfer and reinvest.

• When planning to scale beyond family management:

Businesses operating as household businesses or limited liability companies may face difficulties in scaling up their governance as revenue, number of employees, branches, or markets grow rapidly. In such cases, converting to a joint-stock company helps establish a more professional, decentralized, and transparent governance system.

• When aiming for transparency and professional governance:

Businesses in the finance, technology, healthcare, and real estate sectors are often subject to high requirements for financial transparency, audited reports, and management systems. The joint-stock company model, with its regulations on periodic financial reporting and clear internal control mechanisms, is suitable for businesses that need to increase their credibility and trust with partners, customers, and investors. In summary, a joint-stock company is a suitable choice for businesses in the growth phase, needing large capital, aiming for professionalization, and having long-term development plans. Choosing the right time to establish the company not only optimizes operational efficiency but also creates a solid foundation for sustainable development.

6. How to establish a joint-stock company

Establishing a joint-stock company is a crucial process that requires thorough preparation and full compliance with legal regulations. This is the initial step for a business to set up a transparent organizational structure, be flexible in raising capital, and easily expand its operations. Choosing the appropriate joint-stock company model will create a solid foundation for the company’s long-term development.

Typically, this process includes basic steps such as preparing legal documents, registering with state agencies, making a company seal, opening a bank account, and fulfilling initial tax obligations. Each step requires care and accuracy to avoid future legal risks.

To learn about the specific steps and important notes when establishing a joint-stock company, you can read the article (Article is being updated) on the 1Office Blog. There, you will find practical guidance, templates, and support solutions from the 1Office management platform to make the process of establishing a joint-stock company simpler, faster, and more efficient.

7. In which cases should a joint-stock company be dissolved

The dissolution of a joint-stock company is a significant decision, often accompanied by various strategic, financial, or legal factors. Below are common cases that lead a business to decide on dissolution:

• The operating period specified in the company’s charter has ended without a decision to extend it:

This is a common reason why many businesses are forced to dissolve. When a business reaches the end of its operating period as initially registered in its charter, if there are no changes or updates, the company cannot legally continue its operations.

• By a resolution of the General Meeting of Shareholders:

The General Meeting of Shareholders has the right to decide to terminate the company’s operations if it deems that continuing operations is no longer effective, does not meet business objectives, or if they wish to switch to a more suitable operating model.

• The company no longer has the minimum number of shareholders:

According to the Law on Enterprises 2020, if a joint-stock company does not have a minimum of 3 shareholders for a continuous period of 6 months, it must either change its business type or be dissolved.

• Revocation of the Certificate of Business Registration:

In cases where a company seriously violates legal regulations (such as failing to declare taxes, engaging in illegal activities, fraud, etc.), state authorities may revoke its Certificate of Business Registration. In such instances, the company is required to dissolve as stipulated by law.

• Inability to pay debts:

When a company becomes insolvent for an extended period and is unable to recover its operations or restructure, dissolution becomes a necessary solution to ensure its responsibilities to shareholders and related parties are met.

• Merger, consolidation, or division:

During a corporate restructuring process, if a company is merged or consolidated into another enterprise, or divided as part of a business strategy, the original company may have to undergo dissolution procedures.

All the above cases require the company to carry out a systematic dissolution process in strict compliance with legal regulations, including asset liquidation, tax finalization, closing social insurance books, and fulfilling other obligations to state authorities. Proactively identifying situations that require dissolution and preparing thoroughly will help the business avoid legal risks and protect the interests of shareholders and company personnel.

8. How to dissolve a joint-stock company

The dissolution of a joint-stock company is a significant process that requires full compliance with legal regulations to ensure the rights of shareholders, employees, and related parties. This is not just about terminating the legal existence of the business, but also about summarizing all business activities, finances, and legal obligations before the company exits the market.

The dissolution of a company can stem from various reasons, such as the end of its operational term, a decision by the General Meeting of Shareholders, no longer meeting the minimum number of shareholders, insolvency, or the revocation of its business license. When proceeding with dissolution, the business needs to take steps such as liquidating assets, completing financial obligations to the state, employees, and partners, and terminating its tax code as required.

See detailed instructions in the article: How to dissolve a joint-stock company (Article is being updated)

9. Challenges in managing a joint-stock company

Managing a joint-stock company often faces many challenges due to its specific organizational structure and scale of operations. These difficulties arise not only from internal factors like decentralized power and a lack of cohesion between departments but also from external factors such as market fluctuations and increasing demands for financial transparency.

One of the typical challenges is the separation of powers between the Board of Directors (BOD) and the Board of Management. In many joint-stock companies, the CEO is the direct operator but is subject to supervision and approval from the BOD. If there is a lack of consensus, decision-making will be delayed, affecting the growth rate and ability to respond to the market.

Financial control difficulties are also a serious issue, especially for CFOs in a corporate environment with many shareholders and different types of shares. Ensuring transparency, proper auditing, and fair profit distribution is a complex task and can easily lead to disputes without an effective financial management system.

For CTOs, the challenge comes from investing in and applying technology to management and production. In a joint-stock company model, persuading the BOD to allocate a budget for digital transformation or technological innovation often takes a long time, as it requires demonstrating clear short-term investment efficiency.

As for the CMO (Chief Marketing Officer), the problem lies in maintaining the brand and customer loyalty while strictly adhering to the regulations and procedures of the joint-stock company. Every marketing campaign must go through an approval process, leading to a loss of flexibility and a slow response to market changes.

At the strategic level, issues such as disagreements between major shareholders, founding shareholders, and minority shareholders also affect the long-term development direction. Some companies are dominated by a group of major shareholders, leading to decisions that do not reflect the interests of the whole.

In addition, human resource management also faces difficulties as the company grows in scale. Chief Human Resources Officers (CHROs) must deal with building appropriate compensation policies and retaining talent in a context where the company is bound by regulations from the BOD and the General Meeting of Shareholders.

Specific situations such as mergers, restructuring, and capital raising also cause many internal conflicts if a systematic management system is lacking. Without effective management tools, strategic changes will face slow or non-consensual reactions from stakeholders, reducing overall operational efficiency.

The above issues demonstrate that managing a joint-stock company requires a transparent organizational system, specialized management tools, and close coordination between departments and leadership levels. This is also why joint-stock companies today are increasingly turning to comprehensive management platforms like 1Office to address these challenges.

10. How 1Office helps manage a joint-stock company more effectively

In a context where joint-stock companies face numerous challenges regarding organizational structure, operational transparency, and pressure from shareholders, applying digital management tools has become a vital factor. 1Office is a comprehensive management platform designed specifically for Vietnamese businesses, including joint-stock companies, helping to synchronize operational processes and enhance overall work efficiency.

• Optimize multi-level, multi-department human resource management:

A key characteristic of a joint-stock company is its hierarchical organizational structure with many independent departments. 1Office’s HRM solution helps automate timekeeping, approval, KPI evaluation, and employee ranking processes based on multiple criteria. This allows HR directors to easily monitor labor efficiency, build a fair and synchronized compensation system, and minimize conflicts between departments.

• Ensure transparency in financial and budget management:

Through 1Office’s accounting and cost control system, the CFO can manage cash flow, create budgets for each project or business unit, and integrate accounting data from multiple branches. Financial reports compliant with Vietnamese Accounting Standards (VAS) are automatically generated with high security, ensuring that periodic reports to shareholders are transparent and timely.

• Clear hierarchical approval system:

1Office supports the creation of multi-level approval workflows—an essential feature for joint-stock companies where all major decisions require consensus from the Board of Directors, CEO, or Supervisory Board. The system ensures that every document, plan, or contract goes through a standardized approval flow with an audit trail, helping to prevent risks of deviation and unclear accountability.

• Track projects and tasks in real-time:

With 1Office’s task and project management tools, the management board can monitor progress from the departmental to the individual level. Data is continuously updated in real-time, helping CEOs and project managers to promptly allocate resources, resolve bottlenecks, and report to senior management without waiting for manual consolidation.

• Enhance internal communication effectiveness:

Internal communication plays a crucial role in building consensus between shareholders and the management board. 1Office provides an internal newsfeed system, chatbot, meeting schedules, and task reminders to ensure all company members receive synchronized information. This is particularly useful for shareholder meetings, financial announcements, or internal policy changes.

• Digitize and store all corporate records:

1Office allows businesses to build an electronic document repository—a place to store all contracts, Board of Directors’ resolutions, legal documents, shareholder reports, and more. Thanks to strict access control and smart search capabilities, each department can only access the necessary documents, minimizing the risk of information leaks or data inaccuracies.

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• Simplify meeting and decision-making processes:

One of the unique features 1Office offers joint-stock companies is the ability to organize online meetings, shareholder meetings, vote on resolutions, or conduct internal polls through digital tools. Recording minutes, voting results, and verifying information are all done directly on the system, helping the company save time, increase efficiency, and maximize transparency.

• Drive sustainable digital transformation:

Beyond being just a management software, 1Office acts as a strategic digital transformation advisor for businesses. With an integrated suite of solutions including HRM, CRM, Workflow, and eOffice, the system helps joint-stock companies quickly transition to a 4.0 business model—agile, transparent, and sustainable.

In summary, 1Office is not just a management support tool, but a strategic solution that helps joint-stock companies overcome operational difficulties, enhance management efficiency, and promote long-term growth.

11. Conclusion

A joint-stock company is one of the most popular and high-potential business models in Vietnam. However, along with significant advantages like the ability to raise large amounts of capital and a transparent governance structure, this model also presents many challenges in operations and internal management. This article has provided a comprehensive overview of the concept, its pros and cons, opportunities, challenges, and ways to optimize the management of a joint-stock company—especially through a digital solution like 1Office.

To stay updated with more in-depth management knowledge, readers can continue to follow other blog posts on the 1Office website. If your business needs a comprehensive management solution tailored to the specific characteristics of a joint-stock company model, do not hesitate to contact 1Office for a detailed and expert consultation.