legal english 2

GROUP PRESENTATION

Shareholding companies

A shareholding company is an enterprise in which:

(a) The charter capital shall be divided into equal portions called shares;

(b) Shareholders may be organizations or individuals; the minimum number of shareholders shall be three and there shall be no restriction on the maximum number;

(c) Shareholders shall be liable for the debts and other property obligations of the enterprise only within the amount of capital contributed to the enterprise;

(d) Shareholders may freely assign their shares to other persons, except in the cases stipulated in Clause 3 of Article 81 and Clause 5 of Article 84 of Law of Enterprises 2005.

Shareholding companies shall have legal entity status from the date of issuance of the business registration certificate. Shareholding companies may issue all types of securities to raise funds. As such, the owners of the shareholding company and the shareholding company itself are separate legal entities: in a court of law, the company is a legal person and its owners are natural persons, with rights and obligations in respect of their ownership of the company.

Characteristic of shareholding companies:

1. Capital and shares

The charter capital of a shareholding company is divided into equal portions that are known as shares. The owners (called shareholders) of a shareholding company buy and own the shares of the company in proportion to the capital contribution they make.

There are two types of shares: ordinary shares and preferred shares. Preferred shares usually have guaranteed priority by a shareholding company's charter over ordinary shares in the payment of dividends and usually in the distribution of assets.

According to Enterprise Law 2005, a shareholding company issues both ordinary shares and preferred shares that may be:

a) voting preference shares,

b) dividend preference shares,

c) redeemable preference shares,

d) other types of preference shares as stipulated by the company charter.

Only government-authorized organizations and founding shareholders may own voting preference shares. Voting preference is effective for 3 years from the date of business registration, after which voting preference shares of founding shareholders have to be converted into ordinary shares.

Shareholding company is entitled to issue shares to the public to mobilize capital. Shareholders can transfer and sell their shares freely at any time, except when they own voting preference shares and shares owned by founding shareholders which can be transferred to other founding shareholders 3 years from the registration date of the company and to other persons, if approved by the shareholders’ meeting.

2. Shareholders

Individuals (natural persons) and/or organizations (legal persons such as enterprises or otherwise authorized entities, for example, government agencies) can be shareholders by owning shares of a shareholding company. Shareholders are responsible for the debts and other liabilities of the enterprise within the amount of capital that they contributed.

The minimum number of shareholders must be at least 3. But there are no limits on the total number of shareholders of this type of company.

3. Management of a Shareholding Company

The highest-level decision making organ in a shareholding company is the General Meeting of Shareholders. Shareholders nominate the Board of Management and the Board of Supervision. Ordinary shareholders that own 10 percent (or a smaller ratio stipulated by the company charter) of total ordinary shares for at least 6 months have the right to nominate members of the Board of Management and the Board of Supervision. Board of Management appoints either a member of the Board to act as director or director general of the company or may appoint another person to do this job. The director or director general of a shareholding company cannot be the director or director general of another company.

4. Registering a Shareholding Company

You need to apply to the Provincial Business Registration Office under the Department of Planning and Investment in the province where you plan to locate the head office of your business, after completing all the documents for business registration.

To register, we need:

(a) Application form for registering a Shareholding Company. You can obtain this form from the Business Registration Office.

(b) Draft of the company charter

(c) List of members, attached with

1        Copies of the identification cards, passports or other relevant personal certification of members that are natural persons (individuals)

2        Copy of a decision of establishment, certificate of business registration or other relevant certification of the institutional members (other legal persons such as enterprises or other authorized agencies such as those that belong to government and are authorized to be a member of a shareholding company) and copy of the identification card, passport or other relevant personal certification of the authorized representative of the institutional members.

If such institutional members are foreign entities, their documents must be certified by competent agencies where they are established and such certification should not be older than 3 months from the date of submission of application dossiers.

(d) Certification of legal capital issued by the competent organization for enterprise that is going to operate in a business line where legal capital is required.

(e) Valid copy of the practice certificate of the general partners or another individual(s) in a business line where such a certificate is required.

REFERENCES

1. Policies - Law of Enterprise

http://chinhphu.vn/portal/page/portal/English/legaldocuments/Policies?categoryId=886&articleId=10001406

2. Registering a shareholding company

http://www.gbs.com.vn/index.php/vi/hoidap/dangkykinhdoanh/164-shareholding-company