How shall Resolutions of the GMS be ratified under Viet Nam Law on Enterprises?

Resolutions of General Meetings of Shareholders are vital documents of Joint Stock Companies. Viet Nam Law on Enterprises has regulations on resolutions of General Meetings of Shareholders. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I would like to ask what are methods for ratifying resolutions of the General Meeting of Shareholders in Joint stock companies? What are conditions for ratification of resolutions of the GMS? Thanks for answering me!”

Legal grounds

Law on Enterpirses

Methods for ratifying resolutions of the GMS

– The GMS shall decide ratification of resolutions by voting or questionnaire survey.

– Unless otherwise prescribed by the company’s charter, resolutions of the GMS on the following issues shall be voted on at the meeting:

+ Revisions to the company’s charter;

+ Orientation for development of the company;

+ Types of shares and quantity of each type;

+ Election and dismissal or members of the Board of Directors and the Board of Controllers;

+ Investment or sale of assets that are worth at least 35% of the total assets written in the latest financial statement, unless another ratio or value is specified in the company’s charter;

+ Ratification of the annual financial statement;

+ Reorganization or dissolution of the company.

Conditions for ratification of resolutions of the GMS

– A resolution on one of the following issues will be ratified if it is voted for by a number of shareholders that represent at least 65% (a specific ratio shall be specified in the company’s charter) of votes of all participants, except for the cases specified in Clauses 3, 4 and 6 of Article 148 Law on Enterprises:

+ Types of shares and quantity of each type;

+ Change of the company’s business lines;

+ Change of the company’s organizational structure;

+ Investment or sale of assets that are worth at least 35% of the total assets written in the latest financial statement, unless another ratio or value is specified in the company’s charter;

+ Reorganization or dissolution of the company.

+ Other issues specified in the company’s charter.

– A resolution will be ratified when it is voted for by a number of shareholders that hold more than 50% (a specific ratio shall be specified in the company’s charter) of the votes of all participants, except for the cases specified in Clauses 1, 3 , 4 and 6 of Article 148 Law on Enterprises.

– Unless otherwise prescribed by the company’s charter, the election of members of the Board of Directors and the Board of Controllers shall be cumulative voting, which means a shareholder will a number of votes that is proportional to that shareholder’s holding multiplied by (x) the number of members of the Board of Directors or the Board of Controllers and a shareholder may use all or part of the votes for one or some candidates. Successful candidates shall be chosen according to the votes they receive in descending order until the number of members of the Board of Directors or the Board of Controllers reaches the minimum number specified in the company’s charter. In case 02 or more candidates receive the same number of votes for the last member of the Board of Directors or the Board of Controllers, these candidates will undergo an additional election or be chosen according to the criteria specified in the election regulations or company’s charter.

– In case of questionnaire survey, a resolution will be ratified when it is voted for by a number of shareholders that hold more than 50% (a specific ratio shall be specified in the company’s charter) of the votes of all voting shareholders.

– A resolution of the GMS shall be notified to the shareholders having the right to participate in the GMS within 15 days from the day on which it is ratified or uploaded onto the company’s website (if any).

– A resolution on adverse changes to rights and obligations of preference shareholders may only be ratified if it is voted for by a number of preference shareholders that participate in the meeting and hold at least 75% of the same kind of preference shares. In case of questionnaire survey, it needs to be approved by a number of preference shareholders that holding at least 75% of the same kind of preference shares.

Power and method for ratifying resolutions of the GMS by questionnaire survey

Unless otherwise prescribed by the company’s charter, a questionnaire survey on ratification of resolution of the GMS shall be carried out as follows:

– The Board of Directors is entitled to carry out questionnaire survey to ratify a resolution of the GMS when it is considered necessary for the company’s interests, except for the cases specified in Clause 2 Article 147 of Law on Enterprises;

– The Board of Directors shall prepare the questionnaires, the draft resolution and explaining documents; send it to all voting shareholders at least 10 days before the deadline for submission of the questionnaires unless a longer period is specified in the company’s charter. The list of shareholders to receive the questionnaires shall be compiled in accordance with Clause 1 and Clause 2 Article 141 of Law on Enterprises. Questionnaires and documents shall be sent in accordance with Article 143 of Law on Enterprises;

– A questionnaire shall contain:

+ The company’s name, EID number, headquarter address;

+ Purposes of the survey;

+ If the shareholder is an individual: full name, mailing address, nationality, legal document number; If the shareholder is an organization: name, EID number or legal document number of the organization or full name, mailing address, nationality, legal document number of the organization’s representative; quantity of each type of shares and number of votes of the shareholder;

+ The issues that need voting;

+ The options including affirmative, negative, abstention;

+ Deadline for submission of the answered questionnaire;

+ Full name and signature of the President of the Board of Directors;

– Shareholders may send answered questionnaires to the company by post, fax or email as follows:

+ An answered questionnaire sent by post shall bear the signature of the shareholder (if the shareholder is an individua+ or the shareholder’s authorized representative or legal representative (if the shareholder is an organization), be placed in a closed envelope which must not be opened before vote counting time;

+ An answered questionnaire sent by fax or email shall be kept confidential until the vote counting time;

+ Answered questionnaires that are submitted after the deadline or opened before vote counting time (for those sent by post) or revealed (for those sent by fax or emai+ shall be considered invalid. Questionnaires that are not submitted shall not be counted as votes;

– The Board of Directors shall organize vote counting and issue a vote counting record in the presence of the Board of Controllers or the shareholders that are not holding any managerial position in the company. The vote counting record shall have the following information:

+ The company’s name, EID number, headquarter address;

+ Purposes and the issue that needs voting;

+ Quantities of voters, votes casted, valid votes and invalid votes, voting method and a list of voters;

+ Quantities of affirmative votes, negative votes and abstentions on each issue;

+ Ratified decisions and corresponding ratio of affirmative votes;

+ Full names and signatures of the President of the Board of Directors, vote counting supervisors and vote counters.

The members of the Board of Directors, vote counters and vote counting supervisor are jointly responsible for the accuracy and honesty of the vote counting record; for the damage caused the decisions that are ratified due to inaccurate or dishonest vote counting;

– The vote counting record and the resolution shall be sent to all shareholders within 15 days from the date of vote counting completion or uploaded on the company’s website (if any);

– Answered questionnaires, the vote counting record, the ratified resolution and relevant documents enclosed with the answered questionnaires shall be retained at the company’s headquarters;

– An resolution that is ratified through questionnaire survey has the same value as those ratified at the GMS.

Requesting invalidation of a resolution of the GMS

Within 90 days from the receipt of the resolution or minutes of the GMS or the vote counting record, the shareholder or group of shareholders mentioned in Clause 2 Article 115 of Law on Enterprises is entitled to request the court or an arbitral tribunal to consider invalidating the resolution in part or in full in the following cases:

– The procedures for convening the GMS and issuing decisions prescribed in Law on Enterprises and the company’s charter are not followed, except for the cases specified in Clause 2 Article 152 of Law on Enterprises;

– The contents of the resolution violations the law or the company’s charter.

Effect of the resolution of the GMS

– The resolution of the GMS takes effect from the day on which it is ratified or on the effective date specified therein.

– A resolution that is ratified by 100% of the voting shares shall be lawful and effective even if the procedures for convening the meeting and issuing such resolution prescribed in Law on Enterprises and the company’s charter are not followed;

– In case a shareholder or group of shareholders requests the court or an arbitral tribunal to consider invalidating the resolution as prescribed in Article 151 of Law on Enterprises, the resolution shall remain effective until the effective date of the decision on invalidation of such resolution, except for the cases in which temporary emergency measures are implemented under a decision of a competent authority.

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