A joint stock company, also known as a corporation, is a legal entity formed by individuals who pool their resources by purchasing shares in the company. This structure allows for the efficient raising of capital and the distribution of ownership among shareholders. Shareholders, as the owners of the company, have both rights and obligations that play a crucial role in the governance and operation of the joint stock company. Owners of shares are called shareholders, shareholders can be individuals or organizations. So what are the rights of shareholders in joint stock companies? Please refer to the content below to better understand the rights and obligations of shares. For more detail, please contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline: (+84) 903.419.479
A joint stock company, also known as a corporation, is a legal entity formed by individuals who pool their resources by purchasing shares in the company. This structure allows for the efficient raising of capital and the distribution of ownership among shareholders. Shareholders, as the owners of the company, have both rights and obligations that play a crucial role in the governance and operation of the joint stock company. Owners of shares are called shareholders, shareholders can be individuals or organizations. So what are the rights of shareholders in joint stock companies? Please refer to the content below to better understand the rights and obligations of shares. For more detail, please contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline: (+84) 903.419.479
The Enterprise Law 2020 divides shareholders into 3 main categories corresponding to the current types of shares, including:
1.1. Founding shareholder
Being a shareholder owning at least one common share and signing in the list of founding shareholders of a joint-stock company. In other words, a founding shareholder is the person who initially contributed capital to establish a joint-stock company, owning the first ordinary shares in a joint-stock company.
Newly established joint stock companies must have at least 03 founding shareholders. Founding shareholders must jointly register to buy at least 20 percent of the total number of ordinary shares authorized to be offered for sale at the time of business registration.
Rights And Obligations Of Shareholders In Joint Stock Company
1.2. Common Shareholder
A joint stock company must have common shares. Owners of common shares are common shareholders.
1.3. Preference shareholders
Corresponding to the types of preference shares, there are the following types of preferred shareholders:
- Voting preference shareholder: A shareholder who owns voting preference shares with more votes than ordinary shares. The number of votes of a voting preference share shall be stipulated in the company charter.
- Only organizations authorized by the Government and founding shareholders are entitled to hold voting preference shares. Voting preference of founding shareholders is only valid for 3 years from the date the company is granted the Certificate of Business Registration. After that time limit, the voting preference shares of the founding shareholders will be converted into common shares.
- Dividend preference shareholder: A shareholder who owns shares that is paid a dividend at a higher rate than the dividend of ordinary shares or a stable annual rate. Dividends distributed annually include fixed dividends and bonus dividends. Fixed dividends do not depend on the business results of the company. The specific fixed dividend level and the method of determining bonus dividends are specified in the shares of the dividend preferred shares.
- Redeemable preference shareholder: means a shareholder owning shares whose contributed capital is refunded by the company at the request of the owner or according to the conditions stated in the shares of redeemable preference shares.
- Shareholders owning other preferred shares as provided for in the company charter.
2.1. Rights of Founding Shareholders
- Founding shareholders must jointly register to buy at least 20 percent of the total number of ordinary shares that are offered for sale when registering for business establishment.
- Having a founding shareholder who has the same rights as a common shareholder, except for the right to transfer ordinary shares.
- Within 03 years from the date the company is granted the Certificate of Business Registration, the common shares of founding shareholders are freely transferable to other founding shareholders and can only be transferred to persons who are not. is a founding shareholder if approved by the General Meeting of Shareholders. In this case, the founding shareholders who intend to transfer ordinary shares do not have the right to vote on the transfer of such shares.
- Restrictions on ordinary shares of founding shareholders are removed after 03 years from the date the company is granted the Certificate of Business Registration.
(Based on Article 120 of the Enterprise Law 2020)
2.2. Rights of Common Shareholders
Pursuant to Article 115 of the Enterprise Law 2020, ordinary shareholders have the following rights:
- Attend and speak at the General Meeting of Shareholders and exercise the right to vote directly or through an authorized representative or in other forms as prescribed by the company charter and law. Each common share has one vote;
- Receive dividends at the rate decided by the General Meeting of Shareholders;
- Prioritize the purchase of new shares in proportion to the percentage of common shares owned by each shareholder in the company;
- Freely transfer their shares to others, except for the cases specified in Clause 3, Article 120, Clause 1, Article 127 of this Law and other relevant laws;
- Review, look up and extract information about names and contact addresses in the list of shareholders with voting rights; request correction of his incorrect information;
- Review, look up, extract or copy the company charter, minutes of the General Meeting of Shareholders and resolutions of the General Meeting of Shareholders;
- When the company is dissolved or goes bankrupt, to receive a part of the remaining assets in proportion to the percentage of share ownership in the company.
- Other rights as prescribed by law and the Company Charter.
In addition, Shareholders or groups of shareholders owning 5 percent or more of the total number of ordinary shares or a smaller percentage as prescribed in the company charter have the following rights:
- Review, look up, extract from the book of minutes and resolutions and decisions of the Board of Directors, mid-year and annual financial statements, reports of the Supervisory Board, contracts and transactions that must be approved Board of Directors and other documents, except documents related to trade secrets, business secrets of the company;
- Request to convene the General Meeting of Shareholders in the case specified in Clause 3 of this Article;
- Request the Control Board to examine each specific issue related to the management and operation of the company when deeming it necessary. The request must be in writing and must include the following contents: full name, contact address, nationality, legal document number of the individual for individual shareholders; name, enterprise code or legal document number of the organization, head office address, for shareholders being organizations; the number of shares and the time of registration of shares of each shareholder, the total number of shares of the whole group of shareholders and the percentage of ownership in the total number of shares of the company; the problem to be examined, the purpose of the test;
- Other rights as prescribed by this Law and the company charter.
- Have the right to request the convening of the General Meeting of Shareholders in the following cases:
- The Board of Directors seriously violates the rights of shareholders, the obligations of managers or makes decisions beyond its assigned authority;
- Other cases as prescribed in the company charter.
A shareholder or group of shareholders owning 10 percent or more of the total number of ordinary shares or a smaller percentage as prescribed in the company charter has the right to nominate a person to the Board of Directors or the Control Board.
Rights And Obligations Of Shareholders In Joint Stock Company
2.3. Rights of Preferred Shareholders
- For shareholders owning voting preference shares:
Shareholders owning voting preference shares have the following rights:
a) Vote on issues under the authority of the General Meeting of Shareholders with the number of votes specified in Clause 1 of this Article;
b) Other rights as common shareholders, except for the following cases:
Shareholders owning voting preference shares may not transfer such shares to other people, except in the case of transfer under a legally effective court judgment or decision or inheritance.
(Based on Article 116 of the Enterprise Law 2020)
- For Shareholders owning dividend preference shares:
Shareholders owning dividend preference shares have the following rights:
- Receive dividends as prescribed in Clause 1 of this Article;
- Receive the remaining assets in proportion to the share ownership ratio in the company after the company has paid off all debts, refundable preferred shares when the company is dissolved or bankrupt;
- Other rights as common shareholders, except for the following cases: Shareholders owning dividend preference shares do not have the right to vote, attend the General Meeting of Shareholders, nominate persons to be on the Board of Directors and Control Board, except for the case specified in Clause 6, Article 148 of this Law.
(Article 117 Enterprise Law 2020)
- For shareholders owning redeemable preferred shares
Shareholders owning redeemable preferred shares have the same rights as ordinary shareholders, except for the following cases:
Shareholders owning redeemable preference shares without voting rights, attending the General Meeting of Shareholders, and nominating persons to the Board of Directors and Control Board, except for the cases specified in Clause 5, Article 114 and Clause 6 of this Article. Article 148 of this Law.
(Article 118 Enterprise Law 2020)
Pursuant to Article 119 of the Enterprise Law 2020, Shareholders have the following obligations:
- Pay in full and on time the number of shares committed to buy.
- Not to withdraw capital contributed by ordinary shares from the company in any form, except in the case of shares being bought back by the company or another person. In case a shareholder withdraws part or all of the contributed share capital contrary to the provisions of this Clause, such shareholder and persons with related interests in the company must be jointly responsible for all debts and obligations. Other assets of the company within the value of shares were withdrawn and damages occurred.
- Comply with the company charter and internal management regulations.
- To abide by resolutions and decisions of the General Meeting of Shareholders and the Board of Directors.
- Confidentiality of information provided by the company in accordance with the provisions of the company charter and the law; only use the information provided to exercise and protect their legitimate rights and interests; It is strictly forbidden to distribute, copy or send information provided by the company to other organizations and individuals.
- Other obligations as prescribed by this Law and the company charter.
In conclusion, shareholders in a joint stock company possess a set of rights and obligations that form the foundation of their relationship with the company. These rights empower shareholders to participate in decision-making and benefit from the company success, while their obligations ensure that the company operates within legal and ethical boundaries. A balance between these rights and obligations is crucial for maintaining a healthy and productive shareholder-company dynamic. If you have any questions, please contact immediately Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline - 0903.419.479 for legal advice and support.
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