A joint stock company is a type of enterprise with a relatively complex organizational and operational structure. So what exactly is a shareholder in a joint stock company, and what legal matters surround this position? Let's explore the relevant legal provisions with NPLaw in the article below.
A joint stock company is a type of enterprise with a relatively complex organizational and operational structure. So what exactly is a shareholder in a joint stock company, and what legal matters surround this position? Let's explore the relevant legal provisions with NPLaw in the article below.
I. Definition of a Joint Stock Company
A joint stock company is a business institution, a type of enterprise that is established, exists, and develops based on capital contributions from multiple shareholders. The company’s charter capital is divided into equal units called shares. Individuals or organizations that own shares are called shareholders.
II. Legal provisions on shareholders of the Joint Stock Company
1. Rights of Shareholders
According to Article 115 of the Law on Enterprise 2020, shareholders have the following rights:
- Right to attend and give opinion at the General Meeting of Shareholders:
Ordinary shareholders are entitled to attend the meetings of the General Meeting of Shareholders and exercise their voting rights directly or through an authorized representative, or in other forms prescribed by the company’s charter and the law. Each ordinary share equals one vote.
- Right to receive dividends:
Ordinary shareholders are entitled to dividends when the company operates profitably. The dividend rate is decided by the General Meeting of Shareholders. Upon dissolution or bankruptcy, shareholders receive a portion of the remaining assets proportionate to their share ownership.
- Pre-emptive right to buy shares:
Ordinary shareholders have the right to buy newly offered shares in proportion to their current shareholding.
- Right to transfer shares:
Ordinary shareholders are free to transfer their shares to others, except for founding shareholders or when restricted by the company’s charter.
- Right to access information:
Shareholders may inspect and extract information from the list of voting shareholders, request corrections of inaccurate information, and review or copy the company’s charter, General Meeting minutes, and resolutions.
- Other rights
Major shareholders (owning ≥5% of total ordinary shares or a smaller ratio per the charter):
+ Inspect and extract board meeting minutes, decisions, financial statements, supervisory board reports, contracts, and other documents (excluding trade secrets);
+ Request to convene the General Meeting under specific circumstances;
+ Request the Supervisory Board to examine management issues if deemed necessary (in writing, including identity, shareholding details, issues to be reviewed, and purpose);
+ Other rights as provided by law and the company’s charter.
2. Obligations of Shareholders
According to Article 119 of the Law on Enterprise 2020, shareholders have the following obligations:
- Pay for shares in full and on time: Shareholders must fully pay for registered shares within 90 days from the date the business registration certificate is issued, unless otherwise provided in the charter or share purchase agreement.
- Prohibited from withdrawing contributed capital in common/ ordinary shares: Shareholders may not withdraw capital contributed in the form of ordinary shares in any manner unless the company or another party buys back the shares. If they do, they and relevant parties are jointly liable for the company’s debts and obligations within the withdrawn capital amount and related damages.
- Comply with the company’s charter and internal regulations.
- Abide by resolutions and decisions of the General Meeting and Board of Directors.
- Maintain confidentiality: Information provided by the company must be kept confidential and only used to protect shareholders’ legal rights. It is strictly prohibited to disclose or send the information to third parties.
- Other obligations as prescribed by law and the charter.
III. Questions about shareholders in the Joint Stock Company
1. What is the minimum number of shareholders required in a joint stock company?
According to point b, clause 1, Article 111 of the Law on Enterprise 2020:
+ Shareholders may be organizations or individuals, and the company must have at least three shareholders with no maximum limit.
2. When can shareholders transfer their shares?
Shareholders may transfer shares in the following cases:
- Selling shares to another person;
- Donating shares to relatives or others;
- Transferring shares to another company or corporation.
The transfer must comply with legal and internal company regulations. It must be in writing and published in a newspaper or on the company’s website within 15 days of the transfer decision.
3. Can a shareholder be an organization?
As stipulated in point b, clause 1, Article 111 of the Law on Enterprise 2020, shareholders may be either individuals or organizations.
4. What is the time limit for capital contribution in the joint stock company?
Clause 1, Article 113 of the Law on Enterprise 2020 provides:
- Shareholders must fully pay for registered shares within 90 days of receiving the business registration certificate unless a shorter period is set in the charter or agreement.
Note: Time for asset transportation/importation and ownership transfer is excluded from this period.
- The Board of Directors is responsible for monitoring and urging timely payment.
IV. Legal consultation regarding shareholders in the Joint Stock Company
The above is a detailed overview provided by NPLaw regarding shareholder-related issues in joint stock companies. If you or your relatives need further assistance or have legal questions, please feel free to contact us for direct advice and resolution support.
