Vietnam: Conditions for paying dividends to shareholders of a joint stock company from January 01, 2021

Vietnam: Conditions for paying dividends to shareholders of a joint stock company from January 01, 2021 - Illustrated image.

Article 135 of the Law on Enterprises 2020 prescribes the payment of dividends in Vietnam as follows:

Paying dividends

- Dividends of preference shares shall be paid under the conditions applied thereto.

- Dividends of ordinary shares shall be determined according to the realized net profit and the dividend payment from the company’s retained earnings. The joint stock company may only pay dividend of ordinary shares when the following conditions are fully satisfied:

+ The company has fully its tax liabilities and other liabilities as prescribed by law;

+ The company’s funds are contributed to and the previous losses are made up for as prescribed by law and the company's charter;

+ After dividends are fully paid, the company is still able to fully pay its debts and other liabilities when they are due.

Under Clause 3, Article 135 of the Law on Enterprises 2020, dividends can be paid in cash, the company’s shares or other assets specified in the company's charter. If dividends are paid in cash, it shall be VND and use the methods of payment prescribed by law.

Additionally, under Clause 4, Article 135 of the Law on Enterprises 2020, dividends shall be fully paid within 06 months form the ending date of the annual GMS. The Board of Directors shall compile a list of shareholders that receive dividends, dividend of each share, time and method of payment at least 30 days before each payment of dividends. The notification of dividend payment shall be sent by express mail to the shareholders’ registered addresses at least 15 days before the dividend payment date..

For detailed regulations, see Law on Enterprises 2020, effective from January 01, 2021.

Le Vy

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