Shareholding Companies

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 AGENDA
1. Definition.
2. Classification of shareholders.
3. Rights and Obligations of ordinary shareholders.
4. Ordinary shares of founding shareholders.
5. Share certificates.
6. Offer of share for sale and assignments of shares.
7. Issue of bonds.
8. Payment dividends.
9. Organizational & Management structure of shareholding companies.
10. General meeting of shareholders.
11. Authority to convene general meeting of shareholders.
12. Board of Management.
13. Chairman of the Board of Management.
14. Director or General Director of the company.
15. Conditions for conducting General Meeting of Shareholders.
16. Passing of resolutions of General Meetings of Shareholders.
17. Redemption of shares pursuant to a resolution of the company.
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 1. DEFINITION – Article 77

SHAREHOLDING
COMPANIES

Shareholders
Shareholder’s
Charter Shareholders: freely assign
liability to
organizations/ shares to
capital debts & other
individuals. others
divided into property
EXCEPT
equal obligations:
Min: 3 clause 3
portions within amount
Max: no article 81 +
called shares of capital
restriction clause 5
contributed
article 84 LOE

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1. DEFINITION - Article 77

SHAREHOLDING COMPANIES

Have legal entity status from date of

issuance of business registration certificate

May issue ALL types of securities to

raise funds
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 2. TYPE OF SHARES - Article 78

CLASSES OF SHARES

MAY HAVE
Preference shares  Preference shareholders
MUST HAVE
Ordinary shares
 Ordinary
shareholders Other
Voting Dividend Redeemable preference
preference preference preference shares
shares shares shares stipulated in
charter
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2. TYPES OF SHARE – PREFERENCE SHARES
Organizations authorized by the Government and
founding shareholders may hold
voting preference shares.

Dividend preference shares, redeemable preference

shares and other preference shares : stipulated in the
charter of the company or
decided by the General Meeting of Shareholders.

Holders of same class of shares enjoy same rights,

obligations and interests.

Preference shares Ordinary shares

X
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 3. RIGHTS
OF ORDINARY SHAREHOLDERS - Article 79
1. Participate and express opinions at General Meeting of
Shareholders (GMS) & able to vote directly/ through
authorized representative – each share shall carry one
vote.
2. Obtain dividend at rate decided by GMS.
3. Be given priority in buying new shares issued by the
company.
4. Freely assign shares to other shareholders/ non-holders
EXCEPT cases mentioned in clause 5 article 84. 7
 3. RIGHTS
OF ORDINARY SHAREHOLDERS - Article 79
5. Sight, look up and make extract of info and to request

rectification of incorrect information.

6. Review, look up and make extract/copy of charter,

book of minutes of meetings and resolutions of GMS.

7. Receive part of remaining assets in proportion of shares

contributed in case of dissolution/bankruptcy.

8. Other rights mentioned in LOE and charter of company. 8

 3. OBLIGATIONS
OF ORDINARY SHAREHOLDERS – Article 80
1. Pay in full for shares purchased within 90 days of issuance of
business registration certificate.
2. Be liable of debts and other property obligations to within
amount contributed.
3. Not to withdraw amount contributed in ANY form EXCEPT
when shares are redeemed; if withdrawn, members of Board
of Management and legal representative must be responsible
for the value withdrawn.
4. Comply with charter and internal management rules.
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 3. OBLIGATIONS
OF ORDINARY SHAREHOLDERS – Article 80

5. Observe resolutions of GMS and Board of Management.

6. Perform other obligations as mentioned.
7. Bear personal responsibility if performs one of the
following in any form in the name of company:
a) Breach the law
b) Conduct transactions and business for personal
benefit or other organizations/ individuals
c) Pay premature debts where company is likely to be
in financial danger

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4. Ordinary shares
of founding shareholders – Article 84
Founding shareholders
MUST together register to
subscribe at least 20% of
the number of ordinary
shares

MUST inform registration

office on equity capital
contribution within 90 days
of issuance of business
registration certificate
 4. Ordinary shares
of founding shareholders – Article 84
If a founding shareholder FAILS TO MAKE FULL PAYMENT
of subscribed shares, those shares shall be:
•Paid up by remaining founding shareholders in
proportion to the ratio of shares they own in the
company
•Paid up IN FULL by one or some founding shareholders
•Paid up by other persons who are not founding
shareholders

The founding shareholders are jointly liable for debts and

other property obligations of the company within the
value of such number of shares not yet contributed in full.
 4. Ordinary shares
of founding shareholders – Article 84

If founding shareholders DO NOT REGISTER to

subscribe for ALL the shares offered for sale, The
remaining shares MUST be offered for sale and
sold out within a time limit of three years from
the date of issuance of the business registration
certificate to the company
 4. Ordinary shares
of founding shareholders – Article 84
WITHIN 3 YEARS
– Free to transfer ordinary shares to other founding shareholders.

– Transfer their ordinary shares to another person who is not

founding shareholders only if approved by the General Meeting
of Shareholders

AFTER 3 YEARS

• ALL restrictions imposed on ordinary shares of the founding

shareholders will be void
 5. Share Certificate – Article 85

• Certificates issued by a shareholding company or book

entries certifying the ownership of one or more shares of
such company .
• May or may not indicate names

• MUST contain following main contents:

– Name and address of head office of the company;
– Number and date of issuance of the business registration
certificate;
– Number of shares and classes of shares;
– Etc.
5. Share Certificate – Article 85

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 6. Offer for sale and transfer of shares –
Article 87
─ The Board of Management shall decide on: Time;
Method and Price within in the quantity of shares to
be offered.

─ The price offered shall not be lower than the market

price at the time of offering or the most recently
recorded value in the books of shares EXCEPT

• Shares offered first time to non founding

shareholders

• Shares offered to all shareholders with

proportion to existing share

• Shares offered to brokers and guarantors.

• Other cases in company’s charter.

 6. Offer for sale and transfer of shares –
Article 87
In the case the company issues additional ordinary shares and offer such shares
to all ordinary shareholders in proportion to the respective percentage of shares
they currently hold in the company:

• The company MUST notify sale of shares in method guaranteed to inform

shareholders

• Notice must bear FULL INFORMATION for shareholders either as

individual or organizations.

• Shareholders have the RIGHT TO TRANSFER their priority right to others

• If registration form not sent to company within time limit specified,

shareholders shall not have the priority to buy shares.
 6. Offer for sale and transfer of shares –
Article 87
─ Shares shall be deemed to have been sold upon full payment
and with correct info on buyer in Clause2 of article 86.

─ After shares are sold, the company must issue and grant share
certificates to the purchasers.

─ Shares may be freely assigned. Assignment shall be

conducted in writing by normal methods or by hand delivery
of share certificates

─ Conditions, methods and procedures for share offered shall

comply with law on securities.
 7. Issuance of Bonds – Article 88

A shareholding company may issue bonds, convertible

bonds and other classes of bonds in accordance with
the law and company’s charter.
The company may not issue bond in the following case:
• Payment has not been made in full for the principal
and interest of issued bonds over last 3 consecutive
years.
• The average after tax profit rate of three previous
consecutive years is not higher than the interest rate
intended previous consecutive years.
7. Issuance of Bonds – Article 88
 8. Payment of dividends – Article 93

Paid to preference shares shall be in accordance with

the conditions applied separately to each type.
Paid to ordinary shares shall be determined on the
basis of the net profit performed and payment for
dividends shall be from profits retained by the
company.
May be paid in cash, shares of the company or by
other assets stipulated in the charter of the company.

Dividends may be paid by bank transfer where the

company has sufficient bank details of the
shareholder’s bank account
9. Organizational structure & management
of shareholding companies – Article 95
 9. Organizational structure & management
of shareholding companies – Article 95

>11 member owning >50% of the total

shares: MUST also have Inspection Committee

─If the legal representative of the company is

absent from Vietnam for more than 30 days, he
MUST authorize another person in writing to
exercise and perform duty.
 10.General meeting of shareholders
– Article 96

─ Vote and make the highest decision authority

─ Pass the development direction of the
company
─ Select, remove or discharge members of the
BoM and Inspection Committee
─ Make decision on the shares and rate of
annual dividend.
 10.General meeting of shareholders
– Article 96

─ Make investment decisions or decisions on

sale of assets.

─ Make decisions on amendments of and

additions to the charter of the company.

─ Approve annual financial statements.

 11. Authority to convene general meeting
of shareholders – Article 97

─ Once a year
─ MUST hold an annual meeting within a time
limit of 4 months from the end of the financial
year.
─ Convene a meeting when: number of the
remaining members of the BoM < required by
law; upon demand by the Inspection
Committee, etc.
 11. Authority to convene general meeting
of shareholders – Article 97

─ If the BoM fails to convene a Meeting as stipulated, the

chairman MUST be responsible before the law and any
damage arising to the company.

─ The convener must prepare a list of shareholders

entitled to attend the meeting, provide information,
prepare the program and documents, determine the
time send invitations, etc.
 12. Board of Management – Article 108

─ Body managing the

company.
─ Shall have full
authority to make
decisions in the name
of the company.
─ To exercise the rights
and obligations of
company which do
not fall within the
authority of the
General Meeting of
Shareholders.
 12. Board of Management – Article 108

─ Rights and Duties to make decisions on

• Medium term development strategies and plans.
• Offering new numbers and prices of share for sale.
• Raising additional fund in other forms.
• Investment plans and investment projects.
• Organizational structure and internal management
rules.
• Establishment of subsidiary companies, branches
and representative offices and capital
contribution.
 12. Board of Management – Article 109

• At least 3 and Not more than 11.

• Reside permanently in VN.

• Term of BoM : 5 years.

• Term of office of BoM : not exceed five year

and re-elective for unlimited number of terms.
 13. Chairman of the Board of Management
- Article 111

The General Meeting of Shareholders or the

Board of Management shall elect the chairman
of The BoM who may act concurrently as the
director or general director of the company
unless stated otherwise in company’s charter.
 13. Chairman of the Board of Management
- Article 111
Rights and Duties
• Prepare working plans and programs of the BoM
• Organize for resolutions of the BoM to be passed
• Monitor the implementation of resolutions of
BoM
• Chair the General Meetings of Shareholders
• Prepare, or organize the preparation of agenda,
content and documents for meeting of the BoM,
to convene and preside over meeting of the BoM
 14. Director or general director of the
company – Article 116

─ One of BoM members or Another person

hired
─ Representative-at-law of the company unless
company’s charter provides otherwise
─ Manage day-to-day business operations
under supervision of BoM
─ Term: 5 years
─ Unlimited renewal
 14. Director or general director of the
company – Article 116

• Right and duties :

- Make decision on day to day business operation of the
company
- Organizing implementation of Resolution of BOM
- Recommending and supervising Business and
investment plans of the company
- Appointing, dismissing or removing management
position, except those under the authority of BOM,
- Recruit Employee
- Other rights and duties stipulated in this Law and the
company’s charter
 15. Inspection Committee

Have 3-5 member work for a period of not more than 5

years.
Member can be reappointed for unlimited number of
term
Head of the IC shall be elected among the IC Members
Criteria:
a.At least 21 years old, full civil act capacity, not in
subjects prohibited by law.
b.No related to members of BOM, Directors, Managers
c.Do not hold managerial position, need not be
shareholders or employees of the compay
15. Rights and duties of Inspection Committee

• Supervise the BOM, Director and General

Director in management and administration of
the company; responsible to the GMS for the
performance of it assigned duties
• Inspect the reasonableness, truthfulness,
legalities… in management and administration
of business activities
• Evaluate reports and review books of accounts
• Other rights and duties as stipulated by law
and charter of the company
 16. Conditions for conducting general
meeting of shareholders – Article 102
─ 1st : The number of attending shareholders
represents >= 65% of the voting shares
─ 2nd : The number of attending shareholders
represents >= 51% of the voting shares; within
30 days after proposed opening date of 1st.
─ 3rd : Being convened irrespective of : the
number of attending shareholders, the % of
shares with voting rights of shareholders
attending the meeting; within 20 days after
proposed opening date of 2nd.
 17. Adoption of decisions of Shareholders’
Meeting – Article 104
The following matters must be adopted by voting at the General
Meeting of Shareholders:
─ Amendment & Addition of charter;
─ Development orientations for company;
─ Decision on types of shares, total number of shares offered for
sale;
─ Appointment, discharge or removal of members of the Board
of Management and Inspection Committee;
─ Investment or sale of assets at 50% or more total value of
company’s assets unless different percentage provided in
charter;
─ Approval of annual financial statements;
─ Restructure or dissolution.
 17. Decisions from General Meeting of
Shareholders – Article 104
A resolution shall be passed when the following
conditions are satisfied:
>= 65% of the total voting shares of all
attending shareholders, >=75% of attending
shareholders on types of shares and number of
shares to offer or for investments or sale of
assets equal to or more than 50% of the total
value of asset
 17. Demand for cancellation of Resolution of
General Meeting of Shareholders
Within 90 days, Shareholders, members of BOM,
director or inspection committee shall have the
rights to request the court or arbitrator to
consider and cancel a resolution in the following
case:
1. Order and procedure for convening the GMS
did not comply with laws and charter of the
company
2. Order and procedure for issuing a resolution
and content of resolution breach the law and
charter of the company
 18. Redemption of shares pursuant to a
resolution of the company – Article 91
May redeem no more than 30% of the total number of ordinary
shares, and a part or all of the dividend preference shares sold:
• The Board of Management has the right to buy no more
than 10% of the total number of shares of each class already
sold within each period of 12 months.
• The Board of Management shall decide on the price for
buy back of shares.
• The company may redeem shares of each shareholder in
proportion to the number of shares each holds in the
company.