From January 01, 2021, what are the regulations regarding founding shareholders?

From January 1, 2021, what are the regulations on founding shareholders? - Illustration.

According to Clause 4, Article 4 of the Law on Enterprises 2020, a founding shareholder is defined as a shareholder who owns at least one ordinary share and signs the list of founding shareholders of a joint-stock company.

To be specific: Article 120 of the Law on Enterprises 2020 stipulates that a newly established joint-stock company must have at least 03 founding shareholders. A joint-stock company that is converted from a State-owned enterprise or from a limited liability company, or that is split, merged, or consolidated from another joint-stock company, does not necessarily need to have founding shareholders; in this case, the company’s charter in the business registration dossier must have the signature of the legal representative or ordinary shareholders of that company.

Additionally, the founding shareholders must collectively register to purchase at least 20% of the total number of ordinary shares offered for sale upon enterprise registration.

Notably, within 03 years from the date the enterprise is issued a Business Registration Certificate, the ordinary shares of the founding shareholders are freely transferable among them and can only be transferred to non-founding shareholders with the approval of the General Meeting of Shareholders. In this case, the founding shareholder intending to transfer ordinary shares does not have the right to vote on the share transfer.

However, the above restrictions do not apply to the following ordinary shares:

- Shares that founding shareholders acquire additionally after enterprise registration;- Shares that have been transferred to non-founding shareholders.

For detailed regulations, see the Law on Enterprises 2020, effective from January 1, 2021.

Le Vy

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