From January 01, 2021, the Rights of Shareholders Holding Voting Preference Shares

Shareholder Rights for Voting Preference Shares - Illustrative image.

To be specific: According to Article 116 of the Enterprise Law 2020, voting preference shares are ordinary shares that carry more voting rights compared to other ordinary shares; the number of votes per voting preference share is stipulated in the company’s Charter.

Only organizations authorized by the Government of Vietnam and founding shareholders are entitled to hold voting preference shares. The voting preference of founding shareholders is valid for 3 years from the date the company is issued the Enterprise Registration Certificate. The voting rights and the preference term for voting preference shares held by organizations authorized by the Government of Vietnam are stipulated in the company's Charter. Upon the expiration of the voting preference term, voting preference shares will be converted into ordinary shares.

Please note, shareholders holding voting preference shares have the following rights:

- To vote on matters within the authority of the General Meeting of Shareholders with the number of votes stipulated in the company's Charter;

- Other rights similar to ordinary shareholders.

However, Clause 3 of Article 116 of the Enterprise Law 2020 also stipulates that shareholders holding voting preference shares are not allowed to transfer these shares to others, except for transfers under legally effective judgments, decisions of the Court, or inheritance.

Furthermore, Clause 2 of Article 114 of the Enterprise Law 2020 stipulates several types of preference shares including: dividend preference shares; redeemable preference shares; and other types of preference shares as stipulated in the company’s Charter and securities law.

For more details, see the full text of the Enterprise Law 2020, effective January 1, 2021.

Le Vy

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