Conditions for Dividend Payment to Shareholders in Joint Stock Companies from January 01, 2021

Conditions for dividend payment to shareholders in JSCs from January 01, 2021 - Illustrated image.

To be specific: Article 135 of the Law on Enterprises 2020 prescribes the payment of dividends as follows:

- Dividends paid to preference shares shall be made in accordance with specific conditions applicable to each type of preference share.

- Dividends paid to ordinary shares shall be determined based on realized net profit and dividend payouts derived from the retained earnings of the company. A joint-stock company is only allowed to pay dividends to ordinary shares when the following conditions are met:

- The company has completed tax obligations and other financial obligations as prescribed by law;- The company has made provisions for company funds and offset previous losses as prescribed by law and the company’s Charter;- Immediately after paying all the dividends, the company ensures sufficient payment of all due debts and other asset obligations.

Note that Clause 3, Article 135 of the Law on Enterprises 2020 stipulates that dividends can be paid in cash, by the company’s shares, or other assets specified in the company’s Charter. If paid in cash, it must be made in Vietnamese Dong and through legal payment methods prescribed by law.

Additionally, Clause 4, Article 135 of the Law on Enterprises 2020 stipulates that dividends must be fully paid within 06 months from the date the annual General Meeting of Shareholders ends. The Board of Directors shall prepare a list of shareholders entitled to dividends, determine the amount of dividend to be paid for each share, the deadline, and the payment method no later than 30 days before each dividend payment. Notice of dividend payment shall be sent by a method ensuring delivery to shareholders at the registered address in the shareholder register no later than 15 days before the dividend payment is made.

For detailed regulations, see Law on Enterprises 2020, effective from January 01, 2021.

Le Vy

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