From January 01, 2021, How Are Shares Offered to Existing Shareholders Implemented?

From January 1, 2021, how to offer shares to existing shareholders? - Illustration image.

Specifically, Article 124 of the Enterprise Law 2020 stipulates that offering shares to existing shareholders is a case where the company increases the number of shares, the type of shares entitled to be offered, and sells all those shares to all shareholders in proportion to their existing shareholding ratio in the company.

The offering of shares to existing shareholders of a joint-stock company that is not a public company is specifically implemented as follows:

- The company must notify shareholders in writing by a method that ensures delivery to their contact addresses in the shareholder register no later than 15 days before the end of the share purchase registration period;

- The notification must include: full name, contact address, nationality, legal document number of the individual shareholder; name, business code or legal document number of the organization, and principal office address for organizational shareholders; the number of shares and the existing shareholding ratio of the shareholder in the company; the total number of shares expected to be offered and the number of shares the shareholder is entitled to purchase; the offering price of the shares; the share purchase registration period; full name, and signature of the legal representative of the company.

The notification must be accompanied by a share purchase registration form issued by the company. In case the share purchase registration form is not returned to the company by the due date as notified, that shareholder is considered to have waived their pre-emptive right to buy;

- Shareholders have the right to transfer their pre-emptive rights to others.

Note: In the event the number of shares expected to be offered is not fully subscribed by shareholders and transferees of pre-emptive rights, the Board of Directors has the right to sell the remaining shares to the company's shareholders and others under conditions no more favorable than those offered to the shareholders, except where otherwise approved by the General Meeting of Shareholders or otherwise specified by securities law.

Additionally, Clause 5 of the Enterprise Law 2020 stipulates that after the shares are fully paid for, the company issues and delivers the share certificates to the buyers; in case share certificates are not issued, the shareholder information shall be recorded in the shareholder register to certify the ownership rights of those shareholders in the company.

See the detailed content of the document at Enterprise Law 2020, issued on June 17, 2020.

Le Vy

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