Vietnam: What are the regulations on share repurchase under the company’s decision?

Vietnam: What are the regulations on share repurchase under the company’s decision? - Illustrative image.

According to Article 133 of the Enterprise Law 2020, the company in Vietnam is entitled to repurchase up to 30% the total ordinary shares, all or part of the participating preference shares that have been sold. To be specific:

- The Board of Directors is entitled to decide repurchase of up to 10% of the total shares of each type which are sold within 12 months. Other cases of share repurchase shall be decided by the GMS;

- The Board of Directors is entitled to impose the repurchase price. The repurchase price for ordinary shares must not exceed their market price at the time, except in the cases of repurchasing shares of each shareholder in proportion to their holding in the company. Repurchase prices of other types of shares must not be lower than their market prices unless otherwise prescribed by the company's charter or agreed upon by the company and relevant shareholders;

According to Clause 3, Article 133 of the Enterprise Law 2020, the company may repurchase shares of each shareholder in proportion to their holding in the company as follows:

+ The notification on the company’s decision to repurchase shares shall be sent by express mail to all shareholders within 30 days from its ratification date. The notification shall contain the company’s name and headquarters address, total number and types of shares repurchased, repurchase prices or pricing rules; procedures and deadline for paying, procedures and deadline for shareholders to sell their shares to the company;

+ The shareholders that agree to sell back their shares to the company shall send a written agreement to the company by express mail within 30 days from the notification date. The agreement shall contain the full name, mailing address, nationality, legal document number if the shareholder is an individual; name, EID number or legal document number, headquarters address if the shareholder is an organization; the quantity of shares being held, quantity of shares to be sold; method of payment, signature of the shareholder or the shareholder’s legal representative. The company only buys back the shares within this time limit.

More details may be found in the Enterprise Law 2020 effective January 1, 2021.

Le Vy

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