Regulations on paying for subscribed shares upon enterprise registration in Vietnam

Regulations on paying for subscribed shares upon enterprise registration in Vietnam
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What are the regulations on paying for subscribed shares upon enterprise registration in Vietnam? - Thanh Binh (Tien Giang)

Regulations on paying for subscribed shares upon enterprise registration in Vietnam

Regulations on paying for subscribed shares upon enterprise registration in Vietnam (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. Regulations on paying for subscribed shares upon enterprise registration in Vietnam

Regulations on payment for shares registered to buy when registering to establish an enterprise according to Article 113 of the Law on Enterprise 2020 are as follows:

- Shareholders shall fully pay for the subscribed shares within 90 days from issuance date of the Certificate of Enterprise Registration unless shorter time limit is specified by the company's charter or the shares registration contract. In case of capital contribution by assets, the time needed to transport or import the contributed assets and for completing ownership transfer procedures shall be added to this time limit.

The Board of Directors shall supervise the shareholders fully and punctually paying for the subscribed shares.

- During the period from the issuance date of the Certificate of Enterprise Registration to the deadline for paying for the subscribed shares mentioned in Clause 1 of Article 113 of the Law on Enterprise 2020, the number votes of shareholders shall be proportional to their subscribed shares unless otherwise prescribed by the company's charter.

- In case a shareholder fails to pay or to fully pay for the subscribed shares by the deadline specified in Clause of Article 113 of the Law on Enterprise 2020:

+ The shareholder that fails to pay for the subscribed shares is no longer a shareholder of the company and must not transfer the right to purchase the shares to another person;

+ The shareholder that only pays for part of the subscribed shares will be entitled to a number of votes, dividends and benefits that are proportional to the paid shares and must not transfer the right to purchase the unpaid shares to another person;

+ The shares that are not paid for shall be considered unsold shares and may be sold by the Board of Directors;

+ Within 30 days from the deadline for paying for the subscribed shares mentioned in Clause 1 of Article 113 of the Law on Enterprise 2020, the company shall register the change in charter capital, which shall be equal to the total face values of paid shares unless the unpaid shares are sold out during this period; and register the change of founding shareholders.

- The shareholders that do not pay or fully pay for their subscribed shares shall be held liable for the company’s financial obligations that incur before the day on which the company register the change in charter capital as prescribed in Point d Clause 3 of Article 113 of the Law on Enterprise 2020 in proportion to the amount of their subscribed shares.

Members of the Board of Directors and the legal representative shall be jointly responsible for the damage caused by the failure to comply with or fully comply with regulations of Clause 1 and Point d Clause 3 of Article 113 of the Law on Enterprise 2020.

- Except for the cases in Clause 2 of Article 113 of the Law on Enterprise 2020, a capital contributor will become the company’s shareholder from the day on which the shareholder’s shares are fully paid for and the shareholder’s information specified in Points b, c, d and dd Clause 2 Article 122 of the Law on Enterprise 2020 is recorded in the shareholder register.

2. Types of shares in Vietnam

Types of shares according to Article 114 of the Law on Enterprise 20200 are as follows:

- A joint stock company shall have ordinary shares, which are held by ordinary shareholders.

- In addition to ordinary shares, a joint stock company may have preference shares, which are held by preference shareholders. Preference shares include:

+ Participating preference shares;

+ Redeemable preference shares;

+ Super-voting shares;

+ Other types of preference shares prescribed by the company's charter and securities laws.

- The persons that may purchase participating preference shares, redeemable preference shares and other preference shares shall be specified in the company's charter or decided by the GMS.

- Every share of the same type will confer upon the holder equal rights, obligations and interest.

- Ordinary shares cannot not be converted into preference shares. preference shares may be converted into ordinary shares under a resolution of the GMS.

- Ordinary shares used as underlying assets to issue non-voting depository receipts are called underlying ordinary shares. Non-voting depository receipts have interest and obligations proportional to the underlying ordinary shares, except voting rights.

- The Government shall provide for non-voting depository receipts.

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