When is the time of dividend payment in Vietnam? What are dividends based on?
Vietnam: May dividends of a joint stock company be paid in the form of shares?
Pursuant to Article 4 of the Law on Enterprise 2020, dividends are explained as follows:
Definitions
For the purpose of this document, the terms below are construed as follows:
1. “copy” means a copy extracted from master register or a copy that has been certified by a competent organization or compared to the original document.
2. “foreigner” means a person who has a foreign nationality according to his/her documents.
3. “shareholder” means the individual or organization that holds at least a share of a joint stock company.
4. “founding shareholder” means a shareholder that holds at least an ordinary share and has his/her signature in the list of shareholders that are also founder of the joint stock company.
5. “dividend” means a net profit on each share in cash or other assets.
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Refer to Clause 3, Article 135 of the Law on Enterprise 2020, which stipulates the form of dividend payment as follows:
Paying dividends
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3. 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.
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Dividends can be paid in cash, company shares or other assets specified in the company charter.
Thus, dividends of a joint stock company can be divided in the form of company shares.
Note: If payment is made in cash, it must be made in Vietnam Dong and according to payment methods prescribed by law.
When is the time of dividend payment in Vietnam? What are dividends based on?
Vietnam: What are dividends based on?
Dividend payment is prescribed in Article 135 of the Law on Enterprise 2020, specifically as follows:
Paying dividends
1. Dividends of preference shares shall be paid under the conditions applied thereto.
2. 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:
a) The company has fully its tax liabilities and other liabilities as prescribed by law;
b) The company’s funds are contributed to and the previous losses are made up for as prescribed by law and the company's charter;
c) After dividends are fully paid, the company is still able to fully pay its debts and other liabilities when they are due.
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Accordingly, dividends of ordinary shares shall be determined according to the realized net profit and the dividend payment from the company’s retained earnings.
When is the time of dividend payment in Vietnam?
According to Clause 4, Article 135 of the Law on Enterprise 2020, it is stipulated as follows:
Paying dividends
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4. 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. Such a notification shall contain the following information:
a) The company’s name and headquarters address;
b) Full name, mailing address, nationality and legal document number if the shareholder is an individual;
c) Name, EID number or legal document number and headquarters address if the shareholder is an organization;
d) Quantity of each type of shares; dividend of each share and the total dividends receivable by the shareholder;
dd) Time and method of dividend payment;
e) Full names and signatures of the company’s legal representatives and the President of the Board of Directors.
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.
6. 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.
According to this regulation, 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.
Note: 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.
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