Issuing shares is an activity to raise charter capital available only to a joint-stock company, in which, shares are a certificate issue by a joint-stock company, book entries, or electronic data certifying ownership. owns one or more shares of that company. Shareholders (who hold shares in a joint-stock company) will transfer, buy and sell shares (divided capital) of the company, and those who buy shares will be certified and verified ownership for the share of shares that he has obtained by shares. The issuance of shares aims to help the joint-stock company to raise capital from outside. How are shares of a joint-stock company issue? What are the conditions for issuing shares of a joint-stock company? Today, LSX Lawfirm will give you an article about “How are shares of a joint-stock company in Vietnam issued?“, as follows:
Legal grounds
Securities Law 2019
Shares of the issuing joint-stock company
Accordingly to Clause 2, Article 4 of the Securities Law 2019, shares are securities that certify the owner’s lawful rights and interests to part of the share capital of the issuing organization.
So Shares are certificates issue by a joint-stock company, book entries, or electronic data certifying the ownership of one or more shares of that company.
Each stock has an initial value in money called the par value of the stock. The law of some foreign companies has regulations on the minimum par value of shares, but Vietnam’s Enterprise Law 2020 does not provide for this issue. The actual value of the stock depends on the company’s business and other market factors.
Shares are valuable documents proving the ownership of shares and at the same time as a member of the company. Therefore, stocks usually do not have an expiration date. The life of the stock will be the same as that of the company that issued it.
Stocks are marketable assets. Shares can transfer from one person to another.
Shares of joint-stock companies are issued
Issuing shares is an activity to raise charter capital available only to a joint-stock company, in which, shares are a certificate issue by a joint-stock company, book entries, or electronic data certifying ownership. owns one or more shares of that company.
Shareholders (who hold shares in a joint-stock company) will transfer, buy and sell shares (divided capital) of the company and those who buy shares will be certified and verified ownership for the share of shares that he has obtained by shares.
The issuance of shares aims to help the joint-stock company to raise capital from outside.
Conditions for issuing shares of joint-stock companies
In order to issue shares, joint-stock companies need to meet the following conditions and requirements:
- Charter capital: At the time of registration for the offering, the contributed charter capital of the company must reach VND 10 billion or more (according to the value recorded in the accounting books) then.
- Business performance of the company: must be profitable in the year preceding the year of registration of the offering;
- Besides, up to the year of registration for offering, the company must not have accumulated losses.
- The method of issuance and the plan to use capital after receiving from the offering must approved by the General Assembly before.
- Certain other conditions are suitable for the field, nature and business lines of the enterprise.
When issuing shares, the following basic contents are require on the share:
- Firstly, Company name, business code, location where the head office is located
- Secondly, Type of shares with the number of shares
- Thirdly, Total par value of shares and par value of each share written on the share
- Finally, Full name, nationality, place of permanent residence, people’s identity card number, citizen identification card number, passport number or other legal documents to certify information of shareholders if they are individuals.
In addition
In case the shareholder is an organization, on the share, it is necessary to record information about the name of the organization, the enterprise code, the address of the head office, or the number of the decision to establish the company.
- Firstly, Brief summary of the share transfer process
- Secondly, Signature (with full name) of the legal representative enclosed with the company’s seal (if any)
- Thirdly, Time of issue of shares and registration number are record in the register of shareholders.
Some other information content as prescribed by the law on enterprises, especially in the case of shares belonging to preference shares.
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Related questions
The issue price of par value of shares is the nominal value that a joint-stock company assigns to a share, recorded on the share. Par value of shares is usually used to record in a company’s books of accounts. The par value of the stock has no real value to the investor once invested.
Issued shares are the maximum number of shares a business is legally allowed to issue. When a company is incorporated, the owners decide the maximum number of shares. These shares are called authorized shares. Shares issued to the public for trading on the open market may include all or only a portion of the company’s authorized shares.
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