Types of shares in Joint-stock companies according to Viet Nam Law on Enterprises
A Joint-stock company may issue many types of shares. Viet Nam Law on Enterprises has clear regulations on types of shares in Joint-stock companies. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to learn more about the difference between shares and share certificate. How many types of shares in joint-stock companies? Thanks for answering me!”
Legal grounds
Law on Enterprises
What types of shares are there in joint-stock companies?
– A joint stock company shall have ordinary shares, which are held by ordinary shareholders.
– In addition to ordinary shares, a joint stock company may have preference shares, which are held by preference shareholders. Preference shares include:
+ Participating preference shares;
+ Redeemable preference shares;
+ Super-voting shares;
+ Other types of preference shares prescribed by the company’s charter and securities laws.
– The persons that may purchase participating preference shares, redeemable preference shares and other preference shares shall be specified in the company’s charter or decided by the GMS.
– Every share of the same type will confer upon the holder equal rights, obligations and interest.
– Ordinary shares cannot not be converted into preference shares. preference shares may be converted into ordinary shares under a resolution of the GMS.
– Ordinary shares used as underlying assets to issue non-voting depository receipts are called underlying ordinary shares. Non-voting depository receipts have interest and obligations proportional to the underlying ordinary shares, except voting rights.
– The Government shall provide for non-voting depository receipts.
*Share certificate
– A share certificate is a certificate issued by a joint stock company, a book entry or electronic data that certifies the ownership of one or a number of shares of the company. A share certificate shall contain the following information:
+ The company’s name, EID number, headquarter address;
+ Quantity and type of shares;
+ The face value of each share and total face value of the number of shares written therein;
+ Full name, signature, mailing address, nationality and legal document number if the shareholder is an individual; names, EID numbers or legal document number and headquarters address if the shareholder is an organization;
+ Signatures of the company’s legal representatives;
+ Registration number on the company’s shareholder register and issuance date of the share certificate;
+ Other information specified in Articles 116, 117 and 118 of Law on Enterprises for certificates of preference shares.
– Errors in a share certificate do not affect rights and interests of its holder. The company’s legal representative shall be responsible for the damage caused by such errors.
– In case a share certificate is lost or damaged, it will be reissued at the request of its holder. The request shall contain:
+ Information about the lost or damaged certificate;
+ The commitment to take responsibility for disputes caused by its reissuance.
Super-voting shares and rights of their holders
– Super-voting shares are ordinary shares that have more votes than other ordinary shares. The number of votes of a preferred voting share shall be specified in the company’s charter. Only organizations authorized by the Government and founding shareholders may hold super-voting shares. The super-voting powers of founding shareholders shall be effective for 03 years from the issuance date of the Certificate of Enterprise Registration. The right to vote and voting preference period of super-voting shares held by organizations authorized by the Government shall be specified in the company’s charter. After this period expires, super-voting shares shall become ordinary shares.
– Holders of super-voting shares have the rights to:
+ Vote on the matters under the jurisdiction of the GMS with the number of votes specified in Clause 1 of Article 116 of Law on Enterprises
+ Other rights of ordinary shareholders, except the cases specified in Clause 3 of Article 116 of Law on Enterprises
– Holders of super-voting shares must not transfer these shares to other persons unless it is demanded by an effective court judgment or decision or transferred in accordance with inheritance laws..
Participating preference shares and rights of their holders
– Participating preference shares are shares that provide their holders with higher dividends than those of ordinary shares or with stable annual dividend. Annual dividend includes fixed dividend and extra dividend. Fix dividends do not depend on the company’s business performance. Fix dividend and method for determination of extra dividend shall be written on the certificates of participating preference shares.
– Holders of participating preference shares have the rights to:
+ Receive the dividend prescribed in Clause 1 of Article 117 of Law on Enterprises;
+ Receive part of the company’s remaining assets in proportion to their holdings in case the company is dissolved or goes bankrupt after the company’s debts and redeemable preference shares are fully paid;
+ Other rights of ordinary shareholders, except the cases specified in Clause 3 of Article 117 of Law on Enterprises;
– Holders of participating preference shares do not have the right to vote, participate in the GMS, nominate candidates for the Board of Directors and the Board of Controllers, except the cases specified in Clause 6 Article 148 of Law on Enterprises.
Redeemable preference shares and rights of their holders
– Redeemable preference shares are shares that will be redeemed by the company at the request of their holders or under the conditions written in the certificates of redeemable preference shares and the company’s charter.
– Holders of redeemable preference shares have all of the rights of ordinary shareholders, except the cases specified in Clause 3 of Article 118 of Law on Enterprises
– Holders of redeemable preference shares do not have the right to vote, participate in the GMS, nominate candidates for the Board of Directors and the Board of Controllers, except the cases specified in Clause 5 Article 114 and Clause 6 Article 148 of Law on Enterprises.
Ordinary shares of founding shareholders
– A new joint stock company shall have at least 03 founding shareholders. A joint stock company converted from a state-owned enterprise or limited liability company or after division, consolidation, acquisition of another joint stock company is not required to have founding shareholders. Instead, the company’s charter in the enterprise registration application shall contain signatures of the company’s legal representatives or ordinary shareholders.
– The founding shareholders shall subscribe for at least 20% of the total authorized ordinary shares upon enterprise registration.
– Within 03 years from the issuance date of the Certificate of Enterprise Registration, the ordinary shares of founding shareholders may be transferred to other founding shareholders and may only be transferred to a person that is not a founding shareholder if the transfer is accepted by the GMS. In this case, the transferor does not have the right to vote on this transfer.
– The limitations specified in Clause 3 of Article 120 of Law on Enterprises do not apply to the following ordinary shares:
+ Additional shares acquired by founding shareholders after the enterprise is registered;
+ Shares that have been transferred to other persons that are not founding shareholders.
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Frequently asked questions
Yes! Super-voting shares are ordinary shares that have more votes than other ordinary shares.
The number of votes of a preferred voting share shall be specified in the company’s charter.
Only organizations authorized by the Government and founding shareholders may hold super-voting shares. The super-voting powers of founding shareholders shall be effective for 03 years from the issuance date of the Certificate of Enterprise Registration. The right to vote and voting preference period of super-voting shares held by organizations authorized by the Government shall be specified in the company’s charter. After this period expires, super-voting shares shall become ordinary shares.
Conclusion: So the above is Types of shares in Joint-stock companies according to Viet Nam Law on Enterprises. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
