The charter of the joint stock company plays the role of an internal constitution, governing the company’s operating principles, as well as the rights and obligations of shareholders and managerial members. A clear understanding of and strict compliance with regulations on the company charter not only enable efficient business operations but also help prevent unnecessary legal disputes. We invite readers to review the article below to gain insight into the current regulations on the charter of the joint stock company.
I. Overview of the charter of the joint stock company
The charter of the joint stock company is an important document established at the time of enterprise incorporation and approved by the founding shareholders.
It contains detailed provisions on the organizational structure, rights and obligations of shareholders, management principles, profit distribution, loss handling, and other legal matters related to the company’s operations. Understanding the role and fundamental contents of the charter is the first step toward building a solid legal foundation for the enterprise.
II. Legal regulations on the charter of the joint stock company
1. Definition of the charter of the joint stock company
The charter of the joint stock company is the most important document within the internal document system of an enterprise governing all of the company’s activities. According to Clause 1 Article 24 of the Law on Enterprise 2020, the company charter comprises the charter submitted upon enterprise registration and the amended and supplemented charter during the business operation.
In summary, the charter of the joint stock company may be understood as a foundational document that governs all internal operating principles of the company, including organizational and management structure, administration, rights and obligations of shareholders, as well as matters relating to charter capital, profit distribution, loss handling, and other business activities.
2. Is it mandatory to record the names of all shareholders in the charter of the joint stock company?
Point d Clause 2 Article 24 of the Law on Enterprise 2020 provides that the charter of the company shall contain the following principal contents: Full name, contact address, nationality of general partners in a partnership; of the owner and members in a limited liability company; of founding shareholders in a joint stock company.
Accordingly, it is not mandatory to record the names of all shareholders; however, the full names, contact addresses, and nationalities of founding shareholders must be stated in the charter of a joint stock company.
3. Is it mandatory to amend the charter when there is a change in capital contribution?
Point c Clause 2 Article 24 of the Law on Enterprise provides that one of the principal contents of the company charter is: Charter capital; total number of shares, types of shares, and par value of each type of shares for a joint stock company.
Therefore, when shareholders change their capital contributions, the company charter must be amended accordingly to be appropriate with the actual situation.
III. Questions regarding the charter of the joint stock company
1. What contents does the latest charter of the joint stock company include? Which content is the most important?
The principal contents of the joint stock company charter according to Clause 2 Article 24 of the Law on Enterprise 2020 include:
- Name and address of the company’s headquarters; name and address of branches and representative offices (if any);
- Business lines and sectors;
- Charter capital; total number of shares, types of shares, and par value of each type of shares;
- Full name, contact address, nationality of founding shareholders; number of shares, types of shares, and par value of each type of shares held by founding shareholders;
- Rights and obligations of shareholders;
- Organizational management structure;
- Number, titles, rights and obligations of legal representatives of the enterprise; allocation of rights and obligations among legal representatives in case the company has more than one legal representative;
- Procedures for adoption of company decisions; principles for internal dispute resolution;
- Bases and methods for determining salaries, remuneration, and bonuses of managers and Controllers;
- Circumstances under which shareholders have the right to request the company to redeem shares in the joint stock company;
- Principles for distribution of after-tax profits and handling of business losses;
- Circumstances of dissolution, dissolution procedures, and procedures for liquidation of company assets;
- Procedures for amendment and supplementation of the company charter.
In the charter of the joint stock company, each content plays an essential role and must be carefully drafted to ensure transparency, legal compliance, and practical applicability. An incomplete or unclear charter may result in internal disputes, management difficulties, or legal violations.
Therefore, when drafting the joint stock company charter, it is necessary to ensure full inclusion of the contents prescribed by law, with provisions drafted in a comprehensive, detailed manner consistent with the enterprise’s objectives, scale, and strategy.
2. Should one download the joint stock company charter template from the internet? Why or why not?
Online templates of joint stock company charters serve as useful reference materials for identifying basic contents and shaping the structure and layout of a charter. Through such templates, enterprises can readily understand the required provisions to be included.
However, these templates should not be applied mechanically. Each company has its own specific characteristics in terms of business sector, scale, and management strategy. Accordingly, the charter should be itself-made to suit the company’s operational characteristics and to avoid legal risks. If necessary, enterprises should seek assistance from lawyers or legal experts to ensure that the charter is drafted accurately and effectively.
3. Who approves the charter of the joint stock company?
Pursuant to Point d Clause 3 Article 24 of the Law on Enterprise 2020, the charter submitted upon enterprise registration of the joint stock company must be signed and approved by: Founding shareholders being individuals, and the legal representative or authorized representative of founding shareholders being organizations.
With respect to amended and supplemented charters, the General Meeting of Shareholders has the authority to decide on such amendments and supplements in accordance with Point đ Clause 2 Article 138 of the Law on Enterprise 2020.
4. Is the charter of the joint stock company required to record the names of all company shareholders?
According to Point d Clause 2 Article 24 of the Law on Enterprise 2020, one of the principal contents of the company charter is: Full name, contact address, nationality, etc, of founding shareholders in the joint stock company.
Accordingly, the charter of the joint stock company is not required to record the names of all shareholders, but only the information of founding shareholders as prescribed above.
5. Must the charter of the joint stock company submitted upon enterprise registration take the signatures of founding shareholders?
Point d Clause 3 Article 24 of the Law on Enterprise 2020 provides:
- The company charter submitted upon enterprise registration must include the full names and signatures of the following persons: Founding shareholders being individuals, and the legal representative or authorized representative of founding shareholders being organizations in the joint stock company.
Accordingly, the charter of the joint stock company submitted upon enterprise registration must include the full names and signatures of founding shareholders being individuals, and the legal representative or authorized representative of founding shareholders being organizations.
IV. Legal consulting services related to the charter of the joint stock company
The above is NPLaw’s article on the current regulations governing the charter of the joint stock company. With a team of experienced lawyers and legal consultants, NPLaw provides reputable and professional legal services, ensuring the best protection of the lawful rights and interests of Clients. Should you require legal assistance, please contact NPLaw for consultation and support.
