Vietnam: What are the regulations on shares, share certificates, dividends and shareholders in a joint stock enterprise?
What is share, share certificate, dividend and shareholder in Vietnam?
Share:
According to Point a, Clause 1, Article 111 of the Law on Enterprises 2020, the charter capital is divided into units of equal value called shares.
Shares include ordinary shares and preference shares.
- Owners of ordinary shares are ordinary shareholders.
- Owners of preference shares are preference shareholders, preference shares include the following types:
+ Participating preference shares;
+ Redeemable preference shares;
+ Super-voting shares;
+ Other types of preference shares prescribed by the company's charter and securities laws.
Note: Only shareholders owning ordinary shares and shareholders owning preference shares have the right to vote in the General Meeting of Shareholders.
Share certificate:
Pursuant to Clause 1, Article 121 of the Law on Enterprises 2020, a share certificate is a certificate issued by a joint stock company, a book entry or electronic data that certifies the ownership of one or a number of shares of the company.
Share certificates are a type of securities and are traded on stock exchanges as prescribed in Clause 1, Article 4 of the Law on Securities 2019.
Dividend:
Dividend means a net profit on each share in cash or other assets.
The net profit of an enterprise is understood as the difference between the total revenue minus all expenses, including taxes. Thus, net profit is the profit of an enterprise after paying taxes
According to Article 135 of the Law on Enterprises 2020, 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.
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 (under Clause 3, Article 135 of the Enterprise Law 2020).
Shareholder:
According to Point b, Clause 1, Article 111 of the Enterprise Law 2020, shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders.
Shareholders have rights corresponding to the type of their shares.
What are the criteria for distinguishing between shares and share certificates in Vietnam?
Shares and share certificates are distinguished based on the provisions of Chapter V of the Enterprise Law 2020 and the Law on Securities 2019, as follows:
What are the procedures for establishing a joint stock enterprise in Vietnam?
Based on Decision 855/QD-BKHDT in 2021, the procedures for establishing a joint stock enterprise are carried out according to the following 03 steps:
Step 1: Submit the application
Option 1: Apply directly at the Business Registration Office under the Department of Planning and Investment where the enterprise is headquartered.
Option 2: Register online at the National Business Registration Portal (https://dangkykinhdoanh.gov.vn) using a public digital signature or using a business registration account.
Note: For Hanoi and Ho Chi Minh City, applications must be submitted online
Step 2: Receive and settle
Step 3: Return results
* Settlement fee:
- VND 50,000/time for applications submitted directly at the Business Registration Office under the Department of Planning and Investment.
- Free for online registration applications.
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