Vietnam: If the founding shareholder dies, does the heir need to have the consent of the General Meeting of Shareholders to become a new shareholder of the company?
- Are shares in a joint-stock company freely transferable in Vietnam?
- If the founding shareholder dies, does the heir need to have the consent of the General Meeting of Shareholders to become a new shareholder of the company in Vietnam?
- In case the founding shareholders lose and the number of founding shareholders is only 02 people, is it mandatory to change the type of business in Vietnam?
Are shares in a joint-stock company freely transferable in Vietnam?
According to the provisions of Clause 1, Article 127 of the Law on Enterprises 2020 of Vietnam on this content as follows:
Article 127. Transfer of shares
1. Shares may be transferred freely except the cases specified in Clause 3 Article 120 of this Law and other cases of restriction specified in the company's charter. The restrictions on transfer of shares specified in the company's charter are only applicable if they are written in the certificates of the shares subject to restriction.
Accordingly, the transfer of shares of a joint-stock company is free but must not violate the provisions of Clause 3, Article 120 of the Law on Enterprises 2020 of Vietnam, specifically as follows:
Article 120. Ordinary shares of founding shareholders
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3. Within 03 years from the issuance date of the Certificate of Enterprise Registration, the ordinary shares of founding shareholders may be transferred to other founding shareholders and may only be transferred to a person that is not a founding shareholder if the transfer is accepted by the GMS. In this case, the transferor does not have the right to vote on this transfer.
Thus, within 03 years from the date the company is granted the Certificate of Business Registration, the ordinary shares of the founding shareholders are only freely transferred to other founding shareholders and at the same time have the approval of the General Meeting of Shareholders in case the transferee is not a founding shareholder.
Vietnam: If the founding shareholder dies, does the heir need to have the consent of the General Meeting of Shareholders to become a new shareholder of the company?
If the founding shareholder dies, does the heir need to have the consent of the General Meeting of Shareholders to become a new shareholder of the company in Vietnam?
According to the provisions of Clause 3, Article 127 of the Law on Enterprises 2020 of Vietnam, in case the founding shareholder of the company dies, the number of shares of the deceased shareholder is prescribed as follows:
Article 127. Transfer of shares
1. Shares may be transferred freely except the cases specified in Clause 3 Article 120 of this Law and other cases of restriction specified in the company's charter. The restrictions on transfer of shares specified in the company's charter are only applicable if they are written in the certificates of the shares subject to restriction.
2. The transfer shall be made into a contract or carried out on the securities market. In case of transfer under a contract, the documents shall bear the signatures of the transferor and the transferee or their authorized representatives. In case shares are transferred on the securities market, the transfer procedures prescribed by securities laws shall apply.
3. In case of the death of a shareholder that is an individual, his/her heir at law or designated by a will shall become a shareholder of the company.
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Accordingly, in case a shareholder dies, the heir under the will or by law of that shareholder will become a shareholder of the company without the approval of the General Meeting of Shareholders.
In case the founding shareholders lose and the number of founding shareholders is only 02 people, is it mandatory to change the type of business in Vietnam?
According to the provisions of Article 204 of the Law on Enterprises 2020 of Vietnam on this content as follows:
Article 204. Conversion of a joint stock company into a multiple-member limited liability company
1. A joint stock company can be converted into a multiple-member limited liability:
a) without raising additional capital or selling stakes;
b) by raising additional capital from other organizations and individuals;
c) by transfer all or part of the shares to other organizations and individuals;
d) when only 02 shareholders remain in the company; or
dd) combining the methods specified in Points a, b and c of this Clause and other methods.
2. The conversion shall be registered with the business registration authority within 10 days from the day on which the conversion is complete. Within 03 working days from the receipt of the application for conversion, the business registration authority shall issue the Certificate of Enterprise Registration and update the company’s status to the national enterprise registration database.
3. The limited liability company obviously inherits all lawful rights and interests, debts including tax debts, employment contract and other obligations of the joint stock company.
According to the above provisions, in case the founding shareholder dies, resulting in the company having only 02 shareholders, the joint-stock company must be converted into a two-member limited liability company.
At the same time, the Company must register the company conversion with the Business Registration Agency within 10 days from the date of completion of the conversion.
Within 03 working days from the date of receipt of the conversion dossier, the Business Registration Agency shall issue an Enterprise Registration Certificate and update the legal status of the company on the National Database on Business Registration.
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