In the dynamic world of business and finance, shareholders play a crucial role in shaping the direction and success of companies. These individuals, entities, or institutions hold ownership stakes in corporations, entitling them to a share of profits, a say in decision-making processes, and a role in influencing the company strategic direction. This article delves into the intricacies of shareholders, their rights, types, and the impact they have on the corporate landscape. Please feel free to contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline - 0903.419.479 for legal advice and support.
Shareholders In A Joint Stock Company
In the dynamic world of business and finance, shareholders play a crucial role in shaping the direction and success of companies. These individuals, entities, or institutions hold ownership stakes in corporations, entitling them to a share of profits, a say in decision-making processes, and a role in influencing the company strategic direction. This article delves into the intricacies of shareholders, their rights, types, and the impact they have on the corporate landscape. Please feel free to contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline - 0903.419.479 for legal advice and support.
1. What is a shareholder?
What are shareholders? According to Clause 3, Article 4 of the Enterprise Law 2020 , shareholder is defined as an individual or organization that owns at least one share of a joint-stock company . In other words, the main shareholder is the person who contributes capital to a joint-stock company and owns the capital contribution corresponding to the number of shares purchased in the company.
The minimum number of shareholders is 03 and there is no limit to the maximum number. Shareholders are only responsible for debts and other property obligations of the enterprise to the extent of the amount of capital contributed to the enterprise.
Shareholders In A Joint Stock Company
2. Classification of shareholders
The Law on Enterprises divides shareholders into 3 main categories corresponding to the current types of shares , including:
2.1. Founding partner
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 that are authorized to be offered for sale at the time of business registration.
2.2. Common shareholders
A joint stock company must have common shares. Owners of common shares are common shareholders.
2.3. Preferred 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 are paid dividends at a higher rate than the dividend of ordinary shares or a stable annual rate.
- Redeemable preference shareholder: means a shareholder owning shares whose contributed capital is returned by the company at the request of the owner or according to the conditions stated in the shares of the redeemable preference share.
- Shareholders owning other preferred shares as provided for in the company charter.
3. Rights and obligations of shareholders
Depending on the type of shareholder, the law stipulates the rights and obligations of different types of shareholders, specifically:
3.1. For common shareholders
- Common 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 prescribed by law and the company charter. Each common share has one vote;
- Receive dividends at the rate decided by the General Meeting of Shareholders;
- Priority is given to buying new shares offered for sale in proportion to the percentage of common shares of each shareholder in the company;
- Freely transfer their shares to others, except for the cases specified in Clause 3, Article 119 and Clause 1, Article 126 of the Law on Enterprises;
- Review, look up and extract information in the List of Shareholders with voting rights and request correction of 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 dissolves or goes bankrupt, to receive a part of the remaining assets in proportion to the percentage of share ownership in the company;
- Obligations of common shareholders:
- Pay in full and on time the number of shares committed to buy. The capital contributed by ordinary shares must not be withdrawn 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 the debts and obligations of the company. other property of the company to the extent the value of the shares was withdrawn and damages occurred.
- Comply with the Company Charter and internal management regulations.
- Comply with the resolutions of the General Meeting of Shareholders and the Board of Directors.
- Perform other obligations as prescribed by the Enterprise Law and the company charter.
3.2. For founding shareholders
- There are founding shareholders who have the same rights as ordinary shareholders except for the right to transfer ordinary shares.
- 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. Within 3 years from the date the company is granted the Certificate of Business Registration , founding shareholders have the right to transfer only their shares to other founding shareholders and only transfer common shares. information to persons who are not founding shareholders if approved by the General Meeting of Shareholders.
- Restrictions on ordinary shares of founding shareholders are removed after 03 years from the date the company is granted the Certificate of Business Registration.
- Founding shareholders have the same obligations as common shareholders.
3.3. For preferred shareholders
- Preference shareholders have the following rights:
- Shareholders owning voting preference shares have the right to: Vote on issues under the authority of the General Meeting of Shareholders; Other rights as common shareholders, except that Shareholders owning voting preference shares may not transfer such shares to other people.
- Shareholders owning dividend preference shares have the right to: Receive dividends as prescribed; Receive the remaining assets in proportion to the share ownership ratio in the company, after the company has paid off all debts, return preferred shares when the company is dissolved or bankrupt; Other rights as common shareholders; Shareholders owning dividend preference shares without voting rights, attend the General Meeting of Shareholders, nominate people to the Board of Directors and the Supervisory Board.
- Shareholders owning redeemable preference shares have other rights like ordinary shareholders, except for the case that shareholders owning redeemable preference shares do not have the right to vote, attend the General Meeting of Shareholders, nominate members of the Board of Directors and the Supervisory Board .
- Preference shareholders have the same obligations as common shareholders
Shareholders are the lifeblood of corporations, providing the capital needed for growth and development. Their ownership stakes grant them both financial rewards and a platform for influencing corporate decisions and strategies.
Shareholders In A Joint Stock Company
As the corporate landscape evolves, shareholders are increasingly recognized for their role in promoting transparency, accountability, and responsible business practices. Understanding the dynamics of shareholders is essential not only for investors but also for anyone interested in the intricate workings of the business world. Please feel free to contact Apolo Lawyers Law Firm via email contact@apolo.com.vn or hotline - 0903.419.479 for legal advice and support.
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