What are rights and obligations of an ordinary shareholders in a joint stock company in Viet Nam?

A joint stock company is one of the four types of business enterprises specified under Viet Nam Law on Enterprise 2020. A joint stock company is an enterprise type known very widely because of its own characteristics in issuing shares to the stock market. An ordinary shareholder is a common type of shareholder in a joint stock company. What are rights and obligations of an ordinary shareholders in a joint stock company? Let’s find out with Lawyer X through the following article!

Legal grounds

Viet Nam Law on Enterprises 2020

What is a joint stock company? What is an ordinary shareholder?

Enterprise means an organization that has a proper name, assets, premises, is established or registered in accordance with law for business purposes. According to Law on Enterprises 2020, there are four types of enterprises including: Private enterprises, Partnerships, Limited Liability Companies, and Joint Stock Companies.

A joint stock company is an enterprise in which:

– The charter capital is divided into equal portions called shares;

– Shareholders may be organizations or individuals; the minimum number of shareholders is three and there is no restriction on the maximum number;

– Shareholders are liable for debts and other property obligations of the enterprise only within their amounts of capital contributed to the enterprise;

– A joint stock company has legal entity status

– A joint stock company may issue all types of shares to raise funds.

– A joint stock company has the right to issue shares, bonds and other securities of the company.

Shares can be divided into two main categories: ordinary shares and preferrence shares. A joint stock company must have ordinary shares. Owners of ordinary shares are ordinary shareholders. In addition to ordinary shares, a joint stock company may have preference shares. Owners of preference shares are called preference shareholders. Preference shares include the following types: Dividend preference shares; Redeemable preference shares; Voting preference shares; Other preferrence shares in accordance with the company’s charter and the law on securities.

Rights and obligations of ordinary shareholders

Rights of ordinary shareholders

An ordinary shareholder has the following rights:

– To attend and express opinions at the General Meeting of Shareholders and to exercise the right to vote directly or through an authorized representative or in other forms provided by law or the company charter. Each ordinary share carry one vote;

– To receive dividends at the rate decided by the General Meeting of Shareholders;

– To be given priority in purchasing new shares corresponding to the proportion of ordinary shares owned by each shareholder in the company;

– To freely transfer their shares to others, except for the cases specified in Clause 3, Article 120, Clause 1, Article 127 of the Law on Enterprises 2020 and other relevant laws;

– To examine, look up and extract information about names and contacts in the list of shareholders with voting rights; to request to correct their inaccurate information;

-To examine, look up, extract or copy the company’s charter, minutes of the General Meeting of Shareholders and resolutions of the General Meeting of Shareholders;

– To receive a portion of the remaining assets corresponding to the percentage of shares in the company, when the company is dissolved or goes bankrupt,

A shareholder or group of shareholders owning at least 05% of the total number of ordinary shares or a smaller percentage as prescribed in the company’s charter has the following rights:

– To examine, look up, extract the book of minutes and resolutions, decisions of the Board of Directors, mid-year and annual financial statements, reports of the Supervisory Board, contracts, transactions must be approved by the Association. Board of Directors and other documents, except documents related to trade secrets, business secrets of the company;

– To request the Supervisory Board to inspect each specific issue related to the company’s management and operation when deeming it necessary. The request must be in writing and must include the following contents: full name, contact address, nationality, number of legal papers of the individual for an individual shareholder; name, business number or number of legal papers of the organization, address of the head office if the shareholder is an organization; number of shares and time of registration of shares of each shareholder, total number of shares of the group of shareholders and the percentage of ownership in the total number of shares of the company; issues to be inspected and purposes of the inspection;

– The right to request convening a meeting of the General Meeting of Shareholders in the following cases:

+ The Board of Directors seriously violates the rights of shareholders, the obligations of the manager or makes decisions beyond the assigned authority;

+ Other cases as provided in the company’s charter.

– Other rights as provided by Law on Enterprises and the company’s charter.

A shareholder or group of shareholders owning 10% or more of the total number of ordinary shares or a smaller percentage as stipulated in the company’s charter has the right to nominate a person to the Board of Directors or the Supervisory Board. Unless otherwise provided in the company charter, the nomination of persons to the Board of Directors and the Control Board shall be as follows:

– The ordinary shareholders form a group to nominate candidates to the Board of Directors and the Supervisory Board must notify the meeting shareholders of the group before the opening of the General Meeting of Shareholders;

– Based on the number of members of the Board of Directors and the Supervisory Board, a shareholder or group of shareholders is entitled to nominate one or a number of people according to the decision of the General Meeting of Shareholders as candidate for the Board of Directors and Supervisory Board. In case the number of candidates nominated by a shareholder or group of shareholders is lower than the number of candidates they are entitled to nominate under a decision of the General Meeting of Shareholders, the remaining number of candidates shall be determined by the Board of Directors or Board of Shareholders, Supervisory Board and other shareholders.

Obligations of ordinary shareholders

An ordinary shareholder has general obligations of a shareholder:

– To Pay fully and on time the shares registered to purchase.

– Not withdrawing the capital contributed by ordinary shares from the company in any form, unless the shares are redeemed by the company or by others. In case a shareholder withdraws part or all of the contributed share capital contrary to the provisions of this Clause, such shareholder and the person with related interests in the company must be jointly liable for the company’s debts and other liabilities to the extent that the value of the shares was withdrawn and any damages occurred.

– Comply with the company’s charter and internal management regulations of the company.

– Abide by the resolutions and decisions of the General Meeting of Shareholders, the Board of Directors.

– Keep the information provided by the company confidential in accordance with the company’s charter and law; only use the information provided to exercise and protect its legitimate rights and interests; It is strictly forbidden to distribute or copy or send information provided by the company to other organizations or individuals.

– Other obligations as provided for by Law on Enterprises and the company’s charter.

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