What is the organizational structure of a joint stock company in Vietnam? What types of shares are there in a joint stock company?
What are joint stock companies in Vietnam?
Article 111 of the 2020 Law on Enterprises of Vietnam provides for joint stock companies as follows:
Joint stock companies in Vietnam
1. A joint stock company is an enterprise in which:
a) The charter capital is divided into units of equal value called shares;
b) Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders;
c) A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the shareholder;
d) Shareholders may transfer their shares to other persons except for the cases specified in Clause 3 Article 120 and Clause 1 Article 127 of this Law.
2. A joint stock company has the status of a juridical person from the day on which the Certificate of Enterprise Registration is issued.
3. A joint stock company may issue shares, bonds and other kinds of securities.
Thus, a joint stock company can be understood as a type of enterprise in which there are at least 03 shareholders. Charter capital is divided into units of equal value called shares. A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the shareholder.
What is the organizational structure of a joint stock company in Vietnam? What types of shares are there in a joint stock company? (Image from the Internet)
What is the organizational structure of a joint stock company?
Article 137 of the 2020 Law on Enterprises of Vietnam provides for the organizational structure of a joint stock company as follows:
Organizational structure of a joint stock company
1. Unless otherwise prescribed by securities laws, a joint stock company may choose one of the following models:
a) A joint stock company with the General Meeting of Shareholders, Board of Directors, Board of Controllers and Director/General Director. If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory;
b) A joint stock company with the General Meeting of Shareholders, Board of Directors and Director/General Director. In this case, at least 20% of the members of the Board of Directors shall be independent members and there has to be an audit committee affiliated to the Board of Directors. The organizational structure, functions and duties of the audit committee shall be specified in the company's charter or the audit committee’s operating regulations promulgated by the Board of Directors.
2. If the company has only one legal representative, the President of the Board of Directors or the Director/General Director shall be the legal representative. The President of the Board of Directors shall be the company’s legal representative unless otherwise prescribed by the company's charter. If the company has more than one legal representative, the President of the Board of Directors and the Director/General Director shall be the company’s legal representatives.
Thus, according to the above regulations, a joint stock company may choose one of the following models:
- A joint stock company with the General Meeting of Shareholders, Board of Directors, Board of Controllers and Director/General Director. If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory;
- A joint stock company with the General Meeting of Shareholders, Board of Directors and Director/General Director. In this case, at least 20% of the members of the Board of Directors shall be independent members and there has to be an audit committee affiliated to the Board of Directors. The organizational structure, functions and duties of the audit committee shall be specified in the company's charter or the audit committee’s operating regulations promulgated by the Board of Directors.
What types of shares are there in a joint stock company in Vietnam?
Article 114 of the 2020 Law on Enterprises of Vietnam provides for the following types of shares in a joint stock company:
Types of shares
1. A joint stock company shall have ordinary shares, which are held by ordinary shareholders.
2. In addition to ordinary shares, a joint stock company may have preference shares, which are held by preference shareholders. Preference shares include:
a) Participating preference shares;
b) Redeemable preference shares;
c) Super-voting shares;
d) Other types of preference shares prescribed by the company's charter and securities laws.
3. The persons that may purchase participating preference shares, redeemable preference shares and other preference shares shall be specified in the company's charter or decided by the General Meeting of Shareholders.
4. Every share of the same type will confer upon the holder equal rights, obligations and interest.
5. Ordinary shares cannot not be converted into preference shares. Preference shares may be converted into ordinary shares under a resolution of the General Meeting of Shareholders.
6. Ordinary shares used as underlying assets to issue non-voting depository receipts are called underlying ordinary shares. Non-voting depository receipts have interest and obligations proportional to the underlying ordinary shares, except voting rights.
7. The Government shall provide for non-voting depository receipts.
Thus, a joint stock company shall have ordinary shares, which are held by ordinary shareholders. Preference shares include:
- Participating preference shares;
- Redeemable preference shares;
- Super-voting shares;
- Other types of preference shares prescribed by the company's charter and securities laws.
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