Vietnam: How is a joint stock company an enterprise? What do shareholders of a joint stock company include?
How is a joint stock company in Vietnam an enterprise?
Joint stock companies are specified in Clause 1, Article 111 of the Law on Enterprises 2020 as follows:
Joint stock companies
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;
a) 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, according to the above provisions, a joint stock company is an enterprise in which the charter capital is divided into units of equal value called shares.
Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders;
Shareholders may transfer their shares to other persons except for the cases specified in Clause 3 Article 120 of the Law on Enterprises 2020 and Clause 1 Article 127 of the Law on Enterprises 2020.
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What do shareholders of a joint stock company in Vietnam include?
Under Article 114 of the Law on Enterprises 2020, the types of shares are stipulated as follows:
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 GMS.
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 GMS.
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.
At the same time, under Clause 1, Article 120 of the Law on Enterprises 2020:
Ordinary shares of founding shareholders
1. A new joint stock company shall have at least 03 founding shareholders. A joint stock company converted from a state-owned enterprise or limited liability company or after division, consolidation, acquisition of another joint stock company is not required to have founding shareholders. Instead, the company's charter in the enterprise registration application shall contain signatures of the company’s legal representatives or ordinary shareholders.
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From the above provisions, there are 3 types of shareholders in a joint stock company in Vietnam, including:
(1) Founding shareholders are shareholders who hold at least one ordinary share and sign the list of founding shareholders of a joint stock company.
(2) Ordinary shareholders are the holders of ordinary shares.
(3) Preference shareholders are holders of preference shares.
Preference shares include the following types:
- Participating preference shares;
- Redeemable preference shares;
- Super-voting shares;
- Other preference shares as prescribed in the company's charter and the law on securities.
When may a joint stock company in Vietnam decrease its charter capital?
The decrease in charter capital in a joint stock company is specified in Clause 5, Article 112 of the Law on Enterprises 2020 as follows:
Capital of a joint stock company
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3. Authorized shares are the total number of shares that are offered by the General Meeting of Shareholders (GMS) to raise capital. The number of authorized shares of a joint stock company upon its registration is the total number of shares that will be offered by the company to raise capital, including subscribed shares and unsubscribed shares.
4. Unsold shares are authorized shares that have not been paid for. Upon registration of a joint stock company, unsold shares are the total number of unsubscribed shares.
5. A joint stock company may decrease its charter capital in the following cases:
a) The decrease is decided by the GMS, in which case the company will return part of the contributed capital to the shareholders in proportion to their holdings if the company has operated for at least 02 consecutive years from the enterprise registration date and is able to fully pay its debts and other liabilities after the return of capital;
b) The company repurchases the sold shares in accordance with Article 132 and Article 133 of this Law;
c) Charter capital is not fully and punctually contributed by the shareholders as prescribed in Article 113 of this Law.
Thus, according to regulations, a joint stock company in Vietnam may decrease its charter capital in the following cases:
(1) The decrease is decided by the GMS, in which case the company will return part of the contributed capital to the shareholders in proportion to their holdings if the company has operated for at least 02 consecutive years from the enterprise registration date and is able to fully pay its debts and other liabilities after the return of capital;
(2) The company repurchases the sold shares in accordance with Article 132 and Article 133 of the Law on Enterprises 2020;
(3) Charter capital is not fully and punctually contributed by the shareholders as prescribed in Article 113 of the Law on Enterprises 2020.
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