Vietnam: Is it possible to pay dividends in USD? Can dividends paid to shareholders be returned?
What are dividends?
According to Article 4 of the 2020 Law on Enterprises of Vietnam, “dividend” means a net profit on each share in cash or other assets.
According to that, it can be understood that a dividend is the amount of profit a shareholder gets based on the shares he/she owns.
Is it possible to pay dividends in USD?
In Article 135 of the 2020 Law on Enterprises of Vietnam, there are provisions on paying dividends in Vietnam as follows:
Paying dividends in Vietnam
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.
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 use the methods of payment prescribed by law.
4. Dividends shall be fully paid within 06 months from 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.
Thus, according to the above regulations, if dividends are paid in cash, it shall be VND and using the methods of payment prescribed by law. Therefore, the payment of dividends in USD is not allowed if the dividends are paid in cash.
Vietnam: Is it possible to pay dividends in USD? Can dividends paid to shareholders be returned? (Image from the Internet)
Can dividends paid to shareholders be returned?
Article 136 of the 2020 Law on Enterprises of Vietnam provides for the return of payments for repurchased shares or dividends as follows:
Return of payments for repurchased shares or dividends
In case repurchased shares are paid for against the regulations of Clause 1 Article 134 of this Law or dividends are paid against regulations of Article 135 of this Law, the shareholder shall return the money or assets received. Otherwise, all members of the Board of Directors shall have a joint liability for the company’s debts and liabilities which is equal to the value of unrecovered money or assets.
Thus, in case dividends are paid against regulations, the shareholder shall return the money or assets received. Otherwise, all members of the Board of Directors shall have a joint liability for the company’s debts and liabilities.
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