Vietnam: Who will receive the dividend in case a shareholder transfers their shares during the period from the date of compilation of the list of shareholders to the dividend payment date?
- What are the conditions to be paid dividends?
- In case a shareholder transfers their shares during the period from the date of compilation of the list of shareholders to the dividend payment date, who will receive the dividend?
- Does the Board of Directors have the right to change the dividend payment period?
What are the conditions to be paid dividends?
According to the provisions of Clause 5, Article 4 of the 2020 Law on Enterprises in Vietnam on dividend as follows:
Definitions
…
5. “dividend” means a net profit on each share in cash or other assets.
According to the provisions of Clause 2, Article 135 of the 2020 Law on Enterprises in Vietnam, 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:
- 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.
In addition, the form of dividend payment is specified in Clause 3, Article 135 of the 2020 Law on Enterprises in Vietnam as follows:
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 using the methods of payment prescribed by law.
+ In case dividends are paid in shares, the company is not required to follow the procedures for offering shares prescribed in Articles 123, 124 and 125 of this Law and is only required to register the charter capital increase, which is equal to the total face value of shares paid as dividends, within 10 days from the completion date of dividend payment.
Vietnam: Who will receive the dividend in case a shareholder transfers their shares during the period from the date of compilation of the list of shareholders to the dividend payment date?
In case a shareholder transfers their shares during the period from the date of compilation of the list of shareholders to the dividend payment date, who will receive the dividend?
According to the provisions of Clause 5, Article 135 of the 2020 Law on Enterprises in Vietnam as follows:
Paying dividends
…
5. In case a shareholder transfers their shares during the period from the date of compilation of the list of shareholders to the dividend payment date, the transferor will receive the dividend.
Thus, in case a shareholder transfers their shares during the period from the date of compilation of the list of shareholders to the dividend payment date, the transferor will receive the dividend.
In addition, dividends shall be fully paid within 06 months form the ending date of the annual General Meeting of Shareholders. 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. Such a notification shall contain the following information:
- The company’s name and headquarters address;
- Full name, mailing address, nationality and legal document number if the shareholder is an individual;
- Name, EID number or legal document number and headquarters address if the shareholder is an organization;
- Quantity of each type of shares; dividend of each share and the total dividends receivable by the shareholder;
- Time and method of dividend payment;
- Full names and signatures of the company’s legal representatives and the President of the Board of Directors.
Does the Board of Directors have the right to change the dividend payment period?
According to the provisions at point o, clause 2, Article 153 of the 2020 Law on Enterprises in Vietnam:
The Board of Directors
1. The Board of Directors is the managerial body of the company and has the right to make decisions on behalf of the company, perform rights and obligations of the company, except the rights and obligations of the General Meeting of Shareholders.
…
2. The Board of Directors has the following rights and obligations:
…
o) Propose the dividends; decide the time and procedures for paying dividends or settling business losses;
Thus, one of the powers of the Board of Directors is to decide the time limit for paying dividends. Therefore, the Board of Directors has the right to change the dividend payment time, but must satisfy the regulations on full dividend payment within 06 months from the end of the Annual General Meeting of Shareholders.
LawNet
