SHARE HOLDING COMPANY

Business Law, 2014

 Content
1. Definition
2. Capital of Joint stock/
shareholding company
3. Types of share
4. Rights of ordinary shareholder
5. Obligations of ordinary
shareholder
6. Ordinary share of founding
shareholder
7. Share certificate
8. Shares offering, sales of shares
and transfer of shares
9. Issue of bond
10. Redemption of share
11. Payment of dividend
1. Organizational and
management structure
2. General Meeting of
Shareholders ( GMS)
3. Conducting GMS
4. Revoke resolution
5. Board of Management
6. Chairman of BoM
7. Director or General
Director
8. Contract and
transaction
9. Inspection Committee
10. Right and obligation of
Inspection Committee
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 1. DEFINITION – Article 110

SHAREHOLDING
COMPANIES

Shareholders
Shareholder’s freely assign
Charter Shareholders:
liability to shares to
capital organizations/
debts & other others
individuals.
divided into property EXCEPT
equal obligations: clause 3
Min: 3
portions within amount article 119 +
Max: no
called shares of capital clause 1
restriction
contributed article 126
LOE
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1. DEFINITION - Article 110

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. Capital/Share of Joint Stock Company

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Art 111
2. Capital/Share of Joint Stock Company…

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 3. TYPE OF SHARES - Article 113

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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3. 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

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 4. RIGHTS OF ORDINARY SHAREHOLDERS -
Article 114
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 3 article 119 & Clause1,
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 4. RIGHTS OF ORDINARY SHAREHOLDERS -
Article 114

5. Sight, look up and make extract of info and to request

modification of incorrect information.

6. examine, 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.10

 4. RIGHTS OF ORDINARY SHAREHOLDERS -
Article 114

BoM commits serious Term of BoM has

of shareholders’ rights expired >6month;
and managers’ no new BoM
obligation…. reelected 11
 5. OBLIGATIONS OF ORDINARY
SHAREHOLDERS – Article 115
Pay in full shares registered to purchase
•Not to withdraw capital contributed by ordinary shares in any form. Except case
of redemptions
•Shareholders who withdraw part/whole of the contributed share capital not in
accordance with this Clause must together with stakeholders in the company,
jointly liable for debts and other property obligation of the company within the
value of withdraw shares and damages incurred

Comply with Charter and internal management regulations

Observe obligation of the GMS and BoM

Other obligations as provided in this law and company charter

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 6. Ordinary shares of founding
shareholders – Article 119
• Newly established at least 3 Founding
Shareholders
• Not Newly?
• Founding shareholders MUST together register
to subscribe at least 20% of the number of
ordinary shares
 6. Ordinary shares
of founding shareholders – Article 119
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
 7. Share Certificate – Article 120
• Certificates issued by a shareholding
company or book entries certifying the
ownership of one or more shares of
such company .
• 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.
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 8. Share offering – Article 122, 125
─ Means the increase of the number of shares allowed
to be offered by the company and the sale of such
shares in the course of its operation to increase
charter capital
─ Share may be offered :
• Offering to existing shareholders

• Public offering

• Private offering

Within 10 days since completing, must re-register

for charter capital
 8. Sale of Shares ,Art 125

Board of Management shall determine the timing and method

of sale and the selling prices of share.

Selling price of shares must not be lower than the market price,
except:
•Share initially offered to persons other than founding
shareholders
•Shares offered to all shareholders in proportion to their
respective numbers of shares in the company
•Shares offered to brokers or underwriters. Specific amount
of discount/rate shall be approve by GMS

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 8. Transfer of shares – Article 126

1. Shares may be freely transferred, except the cases in Art 119.3 and cases
specified in company charter

2. Carried out under contracts by normal methods or through securities markets

3. In an individual shareholders dies, his/her heir by testament or by law shall

become a shareholder of the company

4. Individual dies without any heir/ heir disclaims the inheritance, ect. Shares shall
be dealt accordance with civil law

5. May donate some or all of their shares to others; use shares for debt repayment.

6. If only some shares are transferred, the old share certificate will be canceled and
new one shall be issued
 9. Issuance of Bonds – Article 127

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:
•Not fully paid for the principle and interest of issued
bonds or has not repaid or not fully repaid its due
debts during three previous consecutive years may not
issue bonds
•Unless issue bond to creditor being selected
institutions
•BoM decides types, value of bonds, timing of issue.
Must report to GMS
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10. Redemption of Shares. Article 129, 130

Shares of a shareholders will be redeem if they vote against:

1. The resolution on reorganization of the company

2. Change in rights and obligations of shareholders provided in
the company charter

• The company shall redeem shares at the market price or

price determined on the basis of the principle provided in
the company charter within 90 days after receiving the
request

• May request valuation by a professional valuation

organization if parties cant reach agreement
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10. Redemption of Shares. Article 129, 130

•BoM has right to decide on redemption of no more

than 10% of total number of share of each type already
sold within 12 months. Other cases will be decided by
GMS

•Price normally decided by BoM and must not be higher

than market price

•The company may redeem shares of each shareholder

in proportion to the number of share each holds
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 11. Payment of dividends – Article 132

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
12. Organizational structure & management
of shareholding companies – Article 95
 12. Organizational structure & management
of shareholding companies – Article 134
< 11 member , Institution owner owning < 50% of the total shares:
may/may not 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.
─Unless otherwise provided in the charter, Chairman of BoM must be the
company representative
─In case there is only 1 at law representative, that person may either be:
chairman of BOM, Director, general director as provided in the company charter
─In case of > 1 at law representative, chair of BoM and director, general director
must naturally be the company’s representative
 13.General meeting of shareholders
– Article 96
─ Vote and make the highest decision authority
─ Pass the development direction of the company
─ Decide on types/total number of shares of each types; rate of annual dividends for
each type of share
─ Elect, remove or dismiss members of the BoM and Inspection Committee
─ Make decision on the shares and rate of annual dividend.
─ Make investment decision; decision on sale of assets valued at 35 or more % of the
total value assets recorded
─ Decide on amendments and supplementation to Company charter
─ Approve financial statement
─ Decide on redemption of more than 10% of the total number of shares of each type
─ Consider; handle violations committed by BoM, IC which cause damage to the
company
─ Decide on reorganization
─ Other rights and obligation provided in law and charter
 14. Competence to convene general meeting
of shareholders – Article 136

─ Once a year
─ MUST hold an annual meeting within a time
limit of 4 months from the end of the financial
year.
─ Convene an extraordinary meeting when:
number of the remaining members of the BoM
< required by law; upon demand by the
Inspection Committee, or if BoM consider it is
necessary for the interest of the company, ect.
 14. Competence to convene general meeting
of shareholders – Article 136
─ Unless otherwise stated by the charter, the BoM shall convene
a meeting of the GMS. If the BoM fails to convene a Meeting as
stipulated, the chairman and members of BoM MUST be
responsible before the law and any damage arising to the
company.
─ Then, the ICwill replace the BoM in convening the GMS; if IC fails
to convene, head of IC must responsible before law and shall
pay compensation
─ Requesting shareholder or group of shareholders provided in Art
114.2 has the right to represent the company to convene the
GMS
 14. Condition for conducting the GMS.
Article 141

─ 1st : The number of attending shareholders

represents >= 51% of the voting shares
─ 2nd : The number of attending shareholders
represents >= 33% 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.

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 14. Form of Passing Resolution of GMS
Art 143

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14. Condition For Approval of Resolutions Art 144

65% of total vote 51 % of total vote

Types of shares and total number of Other resolutions except the case
share of each type specified in Clause 1,3 of this article
Changes in business sectors, trades and
fields
Investment project or sale of assets
equal to or more than 35% of total value
assets
Reorgnization
Dissolution of the company
Other issue provided by company
charter

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15. Request For Revocation of Resolutions of
GMS Art 147

Shareholders, group of shareholders may request a court or arbitration to

consider and revoke the whole, part of a resolution of GMS if:

•Order and procedures for convening and passing resolutions of GMS fail to
comply with this law and company charter

•The resolution content violate company charter

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 16. Board of Management – Article 149
─ 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.
 16. Board of Management – Article 149

─ Rights and Duties to make decisions on

• Medium term development strategies and plans.
• Recommend types of shares, total number of shares
of each type
• Offering new shares; raising additional funds
• Selling prices of shares
• Investment plans, projects
• Appoint, remove, dismiss chairman of BoM, director,
general director, key managers, salaries and other
benefits of such managers
• Recommend reorganization or dissolution, ect.
Decision pass by voting
 16. Board of Management term of office and
numbers – Article 150

• 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.
 17. Chairman of the Board of Management
- Article 152

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.
A shareholding company in which the state owns 51% or
more, chairman of BoM may not concurrently be the
director or general director
 17. Chairman of the Board of Management
- Article 152
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
 18. Director or general director of the
company – Article 157

─ One of BoM members or Another person

hired
─ Manage day-to-day business operations
under supervision of BoM
─ Term: 5 years
─ Unlimited renewal
 18. Director or general director of the
company – Article 157

• Right and duties :

- Make decision on day to day business operation of the
company
- Organizing implementation of Resolution of BOM
- Organize implementation of business and investment plan
- Propose organizational structure and internal management
regulations
- 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
 19. Contract and transaction which shall be
approved by GMS or BoM
Between company and:
•shareholders, authorized representatives of shareholders
holding>10% of total ordinary shares, their affiliated
person
•Members of BoM, director, general directors

BoM : contract, transactions valued at less than 35% total

value

GMS approve contracts and transaction > 35% total value

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 20. Inspection Committee Art 163

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 and
must be professional accountant or auditor.
Criteria:
a.full civil act capacity, not in subjects prohibited by this law.
b.No related to members of BOM, Directors, Managers
c.Do not hold managerial position, need not be shareholders
or employees of the company
d.In case the state own >50%, supervisors be an auditor or
accountant
21. 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
21. Responsibilities of Inspection Committee

• Comply with law, charter, resolutions of GMS

• Exercise vested rights and obligations in an honest,
prudent, best manner Ensure maximum lawful
interest of the company
• Loyal to the interest of the company and shareholders,
• Not abusing positions or post
• Liable for damages due to violation of rights
• BoM detecting violations of IC members shall sent
written notice to IC and request for stop of violations

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 THANK YOU FOR
YOUR ATTENTION!

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