Question 5: I know that when establishing a joint stock company, there must be a legal representative. What is the legal representative and what are the notes on the legal representative in the joint stock company?
Answer:
The concept of legal representative is stipulated in Clause 1, Article 13 of the Law on Enterprises. Accordingly, the legal representative of an enterprise is the individual that exercises the rights and fulfills the obligations on when making transactions on behalf of the enterprise, represents the enterprise as the plaintiff, defendant, and person with relevant interests and duties before the arbitral tribunal, the court, exercises other rights and fulfills other obligations as prescribed by law. In term of the number of legal representatives, Clause 2, Article 13 of the Law on Enterprises also stipulates that joint-stock company may have one or multiple legal representatives;the quantity, titles, rights and obligations of legal representative of the enterprise shall be specified in the company’s charter.
In addition, when establishing a joint stock company, some of the following issues regarding the legal representative should also be noted:
- If there is only one representative at law, the Chairman or General Director is the legal representative of the company.
- Unless otherwise prescribed by the company’s charter, the Chairperson of the Board of Directors shall be the legal representative of the company.
- If there are more than one legal representatives, the Chairperson of the Board of Directors and the Director/General Director shall naturally be the legal representatives of the company.
- There must always be at least one legal representative that resides in Vietnam. If the enterprise has only one legal representative, such person must resides in Vietnam and authorizes another person in writing to perform the legal representative’s right and obligations when leaving Vietnam.
Question 6: Please indicate role as well as rights and obligations of the General Meeting of Shareholders in the joint stock company?
Reply:
According to the Law on Enterprises, the General Meeting of Shareholders consists of all shareholders having voting right and is the supreme regulatory body of a joint-stock company. As the highest decision-making body in the company, the General Meeting of Shareholders exercises the following basic rights and obligations:
a) Ratify the company’s development orientation;
b) Decide the types of shares and amount of each type of authorized shares; decide annual dividend payment of each type of shares;
c) Elect, dismiss, discharge from duty members of the Board of Directors and Controllers;
d) Decide investment or sale of assets of which the values are equal to or higher than 35% of the total asset value written in the latest financial statement of the company, unless a smaller rate is prescribed by the company’s charter;
e) Decide amendments to the company’s charter;
f) Ratify annual financial statements;
g) Decide repurchase of more than 10% of total sold shares of each type;
h) Consider taking actions against violations committed by the Board of Directors and the Control Board that cause damage to the company and its shareholders;
i) Decide the company’s restructuring and dissolution;
j) Perform other rights and obligations prescribed by this Law and the company’s charter.
Question 7: Please indicate the regulations on convening the General Meeting of Shareholders of the joint stock company?
Answer:
The convening of the General Meeting of Shareholders can be divided into two cases, including (1) convening the Annual General Meeting of Shareholders and (2) convening the Extraordinary General Meeting of Shareholders.
In case of convening the Annual General Meeting of Shareholders:
As stipulated in Clause 1, Clause 2, Article 136 of the Law on Enterprises, the Annual General Meeting of Shareholders shall be held once a year. Apart from annual general meetings, extraordinary general meetings may be held. The General Meeting of Shareholders must be held within Vietnam’s territory. If the General Meeting of Shareholders is held at multiple locations at the same time, the location of the General Meeting of Shareholders shall be the place where the chair is present. An annual general meeting shall be held within 04 months from the end of the fiscal year. At the request of the Board of Directors, the business registration authority may extend this deadline. Nevertheless, the time limit shall not exceed 06 months from the end of the fiscal year.
The Annual General Meeting of Shareholders shall discuss and ratify the following issues:
a) The company’s annual business plan;
b) The annual financial statement;
c) Report of the Board of Directors on business administration and performance of the Board of Directors and each member thereof;
d) Report of the Control Board on the company’s business outcome, performance of the Board of Directors, Director/General Director;
e) Self-assessment report of the Control Board and each Controller;
g) Level of dividend on each share of each type;
h) Other issues within the competence of the General Meeting of Shareholders.
In case of convening the Extraordinary General Meeting of Shareholders:
As stipulated in Clause 3, Article 136 of the Law on Enterprises, the Board of Directors shall convene a extraordinary General Meeting of Shareholders in the following cases:
a) The meeting is deemed necessary for the company’s interests;
b) The number of remaining members of the Board of Directors, the Control Board is smaller than the minimum number prescribed by law;
c) The meeting is requested by the shareholder or group of shareholders mentioned in Clause 2 Article 144 of this Law;
d) At the request of the Control Board;
e) Other cases prescribed by law and the company’s charter.
If the Board of Directors does not convene the General Meeting of Shareholders in accordance with regulations, within 30 days, the Control Board shall convene the General Meeting of Shareholders in accordance with the provisions of this Law. .
If the Control Board fails to convene the General Meeting of Shareholders in accordance with regulations, the shareholder or group of shareholders as stipulated in Clause 2, Article 114 of the Law on Enterprises shall have the right to represent the company to convene the General Meeting of Shareholders in accordance with regulations.
The convener of the General Meeting of Shareholders shall perform the following tasks:
a) Make a list of shareholders entitled to attend the meeting;
b) Provide information and settle complaints about the list of shareholders;
c) Prepare the program and agenda of the meeting;
d) Prepare documents for the meeting;
e) Draft Resolutions of the General Meeting of Shareholders according to the intended contents of the meeting; compile the list and descriptions of candidates for the Board of Directors and the Control Board;
f) Determine the time and location of the meeting;
g) Send invitations to every shareholders entitled to attend the meeting as prescribed in this Law;
h) Perform other tasks serving the meeting.
Question 8: We plan to convene the General Meeting of Shareholders to decide on some important contents of the company. Please provide the conditions for holding the General Meeting of Shareholders of the joint stock company?
Answer:
The conditions for conducting the General Meeting of Shareholders are stipulated in Article 141 of the Law on Enterprises. Accordingly, the General Meeting of Shareholders shall be held when it is attended by a number of shareholders represent at least 51% of votes; the specific ratio shall be prescribed by the company’s charter.
If the conditions for holding the first General Meeting are not satisfied, the second General Meeting shall be held within 30 working days from the intended date of the first General Meeting, unless otherwise prescribed by the company’s charter. The second General Meeting of Shareholders shall be held when it is attended by a number of shareholders represent at least 33% of votes; the specific ratio shall be prescribed by the company’s charter.
If the conditions for holding the second General Meeting are not satisfied, the third General Meeting shall be held within 20 working days from the intended date of the second General Meeting, unless otherwise prescribed by the company’s charter. In this case, the second General Meeting of Shareholders shall be held regardless of the number of votes of the attending shareholders.
Hoang Thanh Tuan
Agency for Business Registration