Repurchase of Shares According to the Company's Resolution: What Are the Regulations?

On June 17, 2020, the 14th National Assembly passed the Enterprise Law 2020, effective January 01, 2021.

Repurchase of shares as decided by the company, Enterprise Law 2020

Repurchase of shares as decided by the company - Illustrative image.

According to Article 133 of the Enterprise Law 2020, a company has the right to repurchase no more than 30% of the total sold common shares, part or all of the sold preferred shares, specifically:

- The Board of Directors has the right to decide to repurchase no more than 10% of the total sold shares of each type within 12 months. In other cases, the repurchase of shares shall be decided by the General Meeting of Shareholders;- The Board of Directors determines the repurchase price. For common shares, the repurchase price must not be higher than the market price at the time of repurchase, unless the company repurchases shares from each shareholder in proportion to their shareholding. For other types of shares, if the company's charter does not regulate or there is no other agreement between the company and the related shareholders, the repurchase price must not be lower than the market price;

Additionally, Clause 3 of Article 133 of the Enterprise Law 2020 also stipulates that the company may repurchase shares from each shareholder in proportion to their shareholding in the company following the procedures below:

- The decision to repurchase shares must be notified in a manner that ensures it reaches all shareholders within 30 days from the date of decision. The notification must include the name, address of the company's head office, the total number of shares and types of shares to be repurchased, the repurchase price or the pricing principles, payment procedures and deadlines, procedures, and deadlines for shareholders to sell their shares to the company;- Shareholders agreeing to sell their shares must send their written consent in a manner that ensures it reaches the company within 30 days from the notification date. The written consent to sell shares must include the full name, contact address, and legal document number for individual shareholders; name, enterprise code or legal document number, and head office address for organizational shareholders; the number of shares owned and number of shares consented to sell, payment method, and signatures of the shareholder or their legal representative. The company only repurchases shares within the specified period mentioned above.

For more details, refer to the Enterprise Law 2020, effective January 1, 2021.

Le Vy

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