Business Type Conversion

1. What is Business Type Conversion?

Business type conversion is a form of corporate restructuring in which an enterprise changes its legal status from one type to another in accordance with the law, without having to undergo dissolution procedures of the old enterprise to establish a new one.

This conversion enables the company to inherit all legal rights and interests, as well as financial obligations, debts, labor contracts, and other asset obligations of the company prior to the conversion.

Pursuant to Chapter IX of the Law on Enterprises 2020, the following forms of business type conversion are permitted:

• Converting a Limited Liability Company (LLC) into a Joint-Stock Company (Article 202): Usually occurs when an LLC wishes to expand its scale or raise public capital by issuing shares.
• Converting a Joint-Stock Company into a Single-Member Limited Liability Company (Article 203): Occurs when one shareholder repurchases all shares of other shareholders, or only one shareholder remains due to other reasons.
• Converting a Joint-Stock Company into a Multi-Member Limited Liability Company (Article 204): Occurs when a joint-stock company no longer maintains the minimum requirement of 3 shareholders, or when shareholders wish to switch to a more closed management model of an LLC.
• Converting a Sole Proprietorship into a Limited Liability Company, Joint-Stock Company, or Partnership (Article 205): This is a significant step that helps sole proprietors limit their asset liability (from unlimited liability using all personal assets to limited liability within the scope of contributed capital).

2. What Documents and Procedures Are Required for an Application for Enterprise Registration in Case of Business Type Conversion?

Depending on which business type you intend to convert from and to, the composition of the application for enterprise registration will vary. However, pursuant to Article 26 of Decree 168/2025/ND-CP, a standard application submitted to the Business Registration Authority includes the following core document groups:

2.1. Core Application Components

1. Application Form for Enterprise Registration: Drafted according to the prescribed form in the Appendix issued together with Circular 68/2025/TT-BTC corresponding to the intended business type after conversion.
2. Charter of the Converted Company: The draft of the new Charter must comply with the provisions of the Law on Enterprises 2020 for the new business type and contain full signatures of the owner/members/new founding shareholders.
3. Resolutions, Decisions, and Valid Copies of Meeting Minutes:
   • Decision of the Company Owner (for single-member LLCs).
   • Resolution/Decision and Meeting Minutes of the Board of Members (for multi-member LLCs).
   • Resolution/Decision and Meeting Minutes of the General Meeting of Shareholders (for joint-stock companies).
   • The content of the minutes must clearly state the unanimous approval of the business type conversion.
4. List of Members / Founding Shareholders: Applicable to multi-member LLCs or joint-stock companies.
5. Legal Documents of Individuals/Organizations: Copies of personal legal identification documents; copies of the Establishment Decision / Enterprise Registration Certificate for organizations.
6. Supporting Documents (in case of changes in capital, members, or shares/stakes): Transfer contract or documentary evidence of completed transfer, Donation contract or copy of the certificate of the heir’s lawful right to inheritance, Documentary evidence of capital contribution of new members/shareholders, Repurchase contract or merger/consolidation contracts (if applicable).
   
7. Power of Attorney: Accompanied by the personal legal identification documents of the authorized person (if the enterprise owner authorizes Simple Law to execute procedures).

2.2. Order and Execution Procedures

• Step 1: Document Preparation. The enterprise reviews, drafts all required forms in full, and collects signatures from relevant individuals.
• Step 2: Document Submission. Pursuant to current regulations, applications for enterprise registration are prioritized online via the National Business Registration Portal using a business registration account or a public digital signature.
• Step 3: Review and Approval. The Business Registration Office (under the Department of Finance of the province/city where the enterprise is headquartered) receives and verifies the validity of the application. The processing timeframe is 03 working days from the date of receiving a complete and valid application.
• Step 4: Receiving Results. If the application is valid, the Business Registration Office issues a new Enterprise Registration Certificate and updates the conversion status on the National Portal. If the application is invalid, the authority issues a written Notice requesting modifications and supplements.

3. Quotation for Business Type Conversion Services at Simple Law

At Simple Law, we understand that time is invaluable for business leaders. Guided by the philosophy of “Simple to Grow”, our services are designed to minimize administrative procedures, allowing enterprise owners to focus on their core business with peace of mind.

Service costs for business type conversion at Simple Law are always transparent from the start with no hidden fees, including:

• State Fees: Fees for application submission and public announcement of enterprise registration details on the National Portal according to Ministry of Finance regulations.
• Simple Law’s Package Service Fee: This fee depends on the complexity of each specific case (e.g., standalone conversion vs. conversion combined with adding/removing members, transfer of shares/stakes, headquarters address changes, or changing business lines). Overall, our fees are competitive and flexible to suit the actual status of each company.

By choosing Simple Law, your service package includes:

1. In-depth consultation, risk analysis, and selecting the optimal business type before conversion.
2. 100% drafting of applications and documents in full compliance with current regulations.
3. Authorized representation for submitting applications and working with the Business Registration Office.
4. Direct hand-delivery of the new Enterprise Registration Certificate to the client (within just 3–7 working days).

4. Key Considerations After Completing Business Type Conversion Procedures

Many clients mistakenly believe that holding the new license completes the process. However, based on practical experience from Simple Law, business type conversion triggers a series of mandatory administrative and accounting tasks to ensure legal operations:

1. Re-engraving the Corporate Seal: Due to the change in business type (e.g., from LLC to joint-stock company), the full legal name on the corporate seal must be changed accordingly to match the new Enterprise Registration Certificate.
2. Notifying Tax Information Changes and Handling Invoices:
   • Although the tax identification number (TIN) remains unchanged, you must submit an Adjustment Declaration of Tax Registration Information to your managing tax authority.
   • Pursuant to Decree 123/2020/ND-CP and Circular 78/2021/TT-BTC, the company must submit a notification of change in electronic invoice information to the tax authority to update the new name/type on the invoice system.
     
3. Updating Bank Information: The legal representative must bring the new Certificate, new corporate seal, seal specimen, and personal identity documents to the bank branch where the company holds accounts to update account owner details. Skipping this step may cause disruptions in fund transfers, international payments, or e-tax payments.
4. Remaking Company Signboards: Signboards displayed at the headquarters, branches, and representative offices must be redesigned and reprinted to display the correct new company type as required.
5. Updating Internal Records and Partner Documents:
   • Re-signing labor contracts or signing addenda to labor contracts for employees.
   • Issuing written notifications to partners, clients, and suppliers so they can update billing information and execute commercial contracts.
   • Updating information on sub-licenses (e.g., Food Safety Certificate, Fire Safety Certificate, Tour Operator License, etc.) if applicable. Licensing authorities will require the re-issuance of sub-licenses under the new legal entity name.

Restructuring and carrying out a business type conversion brings great opportunities, but also involves many intertwined legal procedures. Do not let paperwork issues slow down your growth pace.

Let Simple Law accompany you on the path to optimizing your business model. Should you have any inquiries requiring detailed explanation, please contact us directly for precise guidance!