LLC or joint stock company? 6 criteria to choose the right one
Comparing an LLC and a joint stock company on 6 criteria: number of members, liability, fundraising, transfers, governance and tax. Suggestions for each case.
This is the question we receive most when advising on company formation. There is no “best” company type, only the one best suited to your plans. Consider the following 6 criteria.
LLC vs. JSC comparison
| Item | LLC | Joint Stock Company |
|---|---|---|
| Number of members | 1, or 2 – 50 members | At least 3, no maximum |
| Liability | Limited to capital contributed | Limited to shares held |
| Raising capital | No share issuance | Shares and bonds may be issued |
| Transfer | Remaining members first | Free, except restrictions in the first 3 years |
| Governance | Lean | General Meeting of Shareholders, Board |
| Best for | Family, small groups | Many shareholders, fundraising |
1. Number of Capital Contributors
A single-member LLC has one owner; a multi-member LLC has 2 to 50 members. A joint stock company needs at least 3 shareholders with no upper limit. If you run the business alone, a single-member LLC is the natural choice.
2. Liability for Assets
Both types have limited liability within the capital contributed – personal assets are separated from business risk. On this criterion the two types are equivalent.
3. Ability to Raise Capital
A joint stock company can issue shares to raise capital from investors, which suits start-ups planning a funding round. An LLC cannot issue shares; adding a capital contributor requires adjusting the membership.
4. Transfer of Capital
A member of a multi-member LLC who wants to transfer capital must first offer it to the other members. Shares in a joint stock company are freely transferable, except for restrictions on founding shareholders during the first 3 years and restrictions in the charter. If you want tight control over who joins the company, an LLC has the advantage.
5. Governance Structure
An LLC runs lean: a Members’ Council or Company Chairperson and a Director. A joint stock company has a General Meeting of Shareholders, a Board of Directors and possibly a Supervisory Board – meetings and voting procedures are more complex.
6. Tax and Accounting
For corporate income tax, the two types are the same. The difference lies in personal income tax on capital transfers: transferring contributed capital is taxed on taxable income, while transferring securities (shares) is taxed on the transfer price.
Suggested Choices
Quickly Choose a Company Type
How many members or shareholders will the company have?
- One personSingle-member LLC
- 2 – 50 people, want to control membershipMulti-member LLC
- From 3 people, planning to raise capitalJoint Stock Company
A company can change its type as its scale changes.
| Situation | Recommended |
|---|---|
| Running a business alone, want full control | Single-member LLC |
| Family or friends, 2 – 5 people, want to control membership | Multi-member LLC |
| Start-up planning to raise capital and issue bonus shares | Joint Stock Company |
| Project with many investors, aiming for a listing | Joint Stock Company |
You can start with an LLC and convert to a joint stock company when you need to raise capital. Learn more: LLC formation and joint stock company formation.
Content reviewed by Lawyer Đoàn Minh Đức (Director – Managing Lawyer); updated 18 Oct 2026.
This article is for reference only, based on regulations as of the update date. For advice on your specific case, please contact a lawyer.
