Joint Stock Company In Viet Nam
A joint-stock company is a type of business in which foreign investors usually choose to establish a company in Vietnam. To understand deeply, we'd like to outline the elements of this form in this Article.
Table of contents:
Structure of Joint-Stock Company
According to Article 111 of the Law on Enterprise, the joint-stock company is an enterprise as follows:
a) The charter capital is divided into units of equal value called shares;
b) Shareholders can be organizations and individuals; the minimum number of shareholders is 03; there is no limit on the maximum number of shareholders;
c) A shareholder’s liability for the company’s debts and liabilities is equal to the amount of capital contributed to the company by the shareholder;
d) Shareholders may transfer their shares to other persons, except for the cases specified in Clause 3 Article 120 and Clause 1 Article 127 of Law on Enterprise;
e) A joint stock company may issue shares, bonds and other kinds of securities.
For the company’s structure, the joint-stock company is organized into one of two types:
General Meeting of Shareholders (“GMS”)
|Board of Directors||Board of Controllers|
If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory.
|General Meeting of Shareholders (“GMS”)|
|Board of Directors|
Rights and obligations of the GMS
1. The GMS shall consist of all voting shareholders and is the supreme body of a joint stock company.
2. The GMS has the following rights and obligations:
a) Ratify the orientation for the development of the company;
b) Decide the types of authorized shares and quantity of each type; decide the annual dividends of each type of shares
c) Elect and dismiss members of the Board of Directors and Controllers;
d) Decide investment in or sale of assets that are worth at least 35% of the total assets written in the latest financial statement, unless another ratio or value is specified in the company's charter;
dd) Decide revisions to the company’s charter;
e) Ratify annual financial statements;
g) Decide repurchase of more than 10% of total sold shares of each type;
h) Take actions against violations committed by members of the Board of Directors and Controllers that cause damage to the company and its shareholders;
i) Decide reorganization or dissolution of the company;
k) Decide the budget or total salaries, bonuses, and other benefits of the Board of Directors and the Board of Controllers;
l) Approve the rules and regulations of the company, the Board of Directors, and the Board of Controllers;
m) Approve the list of independent audit companies; choose independent audit companies to carry out audits of the company; dismiss independent audits where necessary;
n) Other rights and obligations prescribed by Law and the company's charter.
The Board of Directors has the following rights and obligations:
a) Decide the company’s medium-term development strategies and annual business plans;
b) Propose the types of authorized shares and quantity of each type;
c) Decide the sale of certain types of unsold authorized shares; decide on other methods of raising capital;
d) Decide selling prices for the company’s shares and bonds;
dd) Decide repurchase of shares as prescribed in Clause 1 and Clause 2 Article 133 of this Law;
e) Decide the investment plan and investment projects within its jurisdictions and limitations prescribed by law;
g) Decide solutions for market development, marketing, and technology;
h) Approve sale contracts, purchase contracts, borrowing contracts, lending contracts, other contracts and transactions that are worth at least 35% of the total assets written in the latest financial statement, unless another ratio or value is specified in the company's charter; contracts and transactions within the jurisdiction of the GMS as prescribed in Point d Clause 2 Article 138, Clause 1 and Clause 3 Article 167 of this Law.
i) Elect and dismiss the President of the Board of Directors; designate, dismiss, enter into, and terminate contracts with the Director/General Director and other key executives specified in the company's charter; decide salaries, remunerations, bonuses, and other benefits of these executives; designate authorized representatives to participate in the Board of Members or GMS of another company; decide their remunerations and other benefits;
k) Supervise the Director/General Director and other executives managing the company’s everyday business;
l) Decide the company’s organizational structure, rules, and regulations; establishment of subsidiary companies, branches, and representative offices; contribution of capital to and purchase of shares of other enterprises;
m) Approve the agenda and documents of the GMS; convene the GMS or carry out surveys for the GMS to ratify its resolutions;
n) Submit annual financial statements to the GMS;
o) Propose the dividends; decide the time and procedures for paying dividends or settling business losses;
p) Propose reorganization or dissolution of the bankruptcy; file bankruptcy of the company;
q) Other rights and obligations prescribed by Law and the company's charter.
3. The Board of Directors shall ratify its resolution and decisions by voting at the meeting, questionnaire survey, or another method specified in the company's charter. Each member of the Board of Directors shall have one vote.
4. In case a resolution or decision is ratified by the Board of Directors against regulations of law or a resolution of the GMS or the company’s charter and causes damage to the company, the members that vote for the ratification of such resolution or decision shall be jointly responsible for it and pay compensation for the company; the members that vote against such resolution or decision shall not be held responsible. In this case, the company’s shareholders are entitled to request the court to suspend or invalidate the resolution or decision.
The Director/General Director
1. The Board of Directors shall designate one of its members or hire a person as the Director/General Director.
2. The Director/General Director shall manage the company’s everyday business operation, is supervised by and responsible to the Board of Directors Members and the law for his/her performance.
The term of office of the Director/General Director shall not exceed 05 years without a term limit.
3. The Director/General Director has the following rights and obligations:
a) Decide everyday operating issues of the company that are outside the jurisdiction of the Board of Directors;
b) Organize the implementation of resolutions and decisions of the Board of Directors;
c) Organize the implementation of the company’s business plans and investment plans;
d) Propose the company’s organizational structure, rules, and regulations;
dd) Designate and dismiss the company’s executives, except those under the jurisdiction of the Board of Directors;
e) Decide salaries and other benefits for the company’s employees, including the executives designated by the Director/General Director;
g) Recruit employees;
h) Propose plans for distribution of dividends or settlement of business losses;
i) Other rights and obligations specified by law, the company's charter, resolutions, and decisions of the Board of Directors.
4. The Director/General Director shall manage the company’s everyday business in accordance with law, the company’s charter, his/her employment contract with the company, resolutions, and decisions of the Board of Directors. Otherwise, the Director/General Director shall be legally responsible for and pay damages to the company.
5. The Director/General Director of a public company or state-owned enterprise prescribed in Point b Clause 1 Article 88 of this Law or a subsidiary company of a state-owned enterprise prescribed in Clause 1 Article 88 of this Law shall satisfy the following requirements:
a) He/she is not one of the persons specified in Clause 2 Article 17 of this Law;
b) He/she is not a relative of any of the executives, controllers of the company and the parent company; the representatives of state investments and the enterprise’s investment in the company and the parent company;
c) He/she has professional qualifications and experience in business administration.
Application for registration of a joint-stock company
1. Application form for enterprise registration.
2. The company’s charter.
3. Lists of founding shareholders and shareholders that are foreign investors of the joint-stock company.
4. Copies of the following documents:
a) Legal documents of the enterprise’s legal representative;
b) Legal documents of founding shareholders and foreign shareholders that are individuals; legal documents of founding shareholders and foreign shareholders that are organizations; legal documents of authorized representatives of founding shareholders and foreign shareholders that are organizations and their letters of appointment of authorized representatives.
If a shareholder is a foreign organization, copies of legal documents of that organization must be legalized;
c) Investment registration certificate if the enterprise is founded or co-founded by foreign investors or foreign-invested business entities in accordance with the Law on Investment and its guiding documents.
A Joint-Stock Company is often chosen when the number of investors is large. In addition, if the enterprise needs to raise capital by issuing shares and bonds, it is necessary to choose the type of Joint-Stock company.
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