ASSIGNMENT COVER SHEET

STUDENT DETAILS

Student name: Nguyen Tran Gia Lam Student ID number: B1111916067

UNIT AND TUTORIAL DETAILS

Unit name: BUS301-BUSINESS LAW Unit number:

Tutorial/Lecture: Class day and time: Saturday morning
Lecturer or Tutor name: James Weisman

ASSIGNMENT DETAILS

Title: Shareholders rights and obligations in a JSC company/organization in Vietnam

Length: Due date: 30-07-2020 Date submitted: 23-07-2020

DECLARATION

I hold a copy of this assignment if the original is lost or damaged.

I hereby certify that no part of this assignment or product has been copied from any other student’s work or from
any other source except where due acknowledgement is made in the assignment.
I hereby certify that no part of this assignment or product has been submitted by me in another (previous or
current) assessment, except where appropriately referenced, and with prior permission from the Lecturer /
Tutor / Unit Coordinator for this unit.
No part of the assignment/product has been written/ produced for me by any other person except where
collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator concerned.
I am aware that this work may be reproduced and submitted to plagiarism detection software programs for the
purpose of detecting possible plagiarism (which may retain a copy on its database for future plagiarism
checking).

Student’s signature: Nguyen Tran Gia Lam

Note: An examiner or lecturer / tutor has the right to not mark this assignment if the above declaration has not been
signed.
Topic: Shareholders rights and obligations in a JSC company/organization in Vietnam
1. Introduction

In the modern business world, there are many types organizational structures that a company can
form. Currently, Limited Liability Company (LTD) and Joint Stock Company (JSC) are two of the most
popular enterprise forms operating in Vietnam. This essay will only explain the rights and duties of
a shareholder can perform in a JSC company in Vietnam.
2. Types of Shareholders

According to the Law on Enterprise in Vietnam (2014), a shareholder can be a person, company or
organization that holds at least one share of the company. There are basically two types of
shareholders: common shareholders and preferred shareholders.
2.1 Common Shareholder

Common shareholders are those who own a company’s common shares. This type of shareholder is
more common and common shareholders can have the right to influence decisions concerning the
company. They can also have the right to file class action lawsuits against the company in case any
wrongdoings happen that can potentially harm the company, as they have control over how the
company is operating and managed.
2.2 Preferred Shareholder

Preferred shareholders are those who own a share of the company’s preferred shares. They are the
more uncommon type of shareholders. Preferred shareholders have no control over the company
so they do not have any voting rights within the company. Instead, they are paid with a fixed
amount of annual dividend even before the common shareholders are paid their parts. Common
shareholders cannot be converted into preferred shareholders, but preferred shareholders can be
converted into common shareholders by the Resolution of the General Meeting of Shareholders.
Preferred shareholders include:
a) Voting preference shares;
b) Shares with preferred dividends;
c) Redeemable preferred shares;
d) Other preferred shares defined by the company’s charters.

According to Article 113 of the Law on Enterprise in Vietnam (2014), only organization authorized
by the government and founding shareholders may hold voting preference share. The voting share
preference of founding shareholders is only effective for three years after the day the company
been issued its Certificate of Business registration. After three years, voting preference shares of
founding shareholders shall be converted into common shareholders. Persons who are eligible to
buy shares with preferred dividends, redeemable preferred shares and other preferred shares shall
be prescribed by the company’s charter or the General Meeting of Shareholder.

3. Shareholders’ Rights

3.1 Rights of Common Shareholder

According to Article 114 of the Law on Enterprise in Vietnam (2014), an common shareholder has
the rights to:
- Attend and give opinions at the General Meeting of Shareholders, participate in
voting, an common shareholder can vote directly or through an authorized
representative or in other form provided by law or the company charter. Each
common shareholder must carry one vote.
- Receive dividends at the rate decided by the General Meeting of Shareholder.
- Have priorities to purchase new shares offered for sales in proportion to the number
of common shares the shareholder holds in the company.
- Freely transfer his/her/its share to other persons at any given time. Except for
company’s transfer restriction if it is provided in the company charter.
- Examine, look up, extract information in the list of shareholders with voting rights and
request modification if any incorrect information is present. Copy the company
charter, the minutes of meeting of the General Meeting of Shareholder and
resolution of the General Meeting of Shareholder.
- When the company dissolve or bankrupt, an common shareholder can receive part of
the residual in proportion to his/her/its number of shares in the company.

A shareholder or a group of shareholders holding 10 percent of the total common share for a
period of at least 6 months or more, or holding a smaller percentage according to the company
charter has the following rights to:
- Nominate candidates to the Broad of Directors and the Supervisor Board.
 - Examine and extract the book of minutes and resolutions of the Board of Directors,
mid-year and annual financial statements made according to the forms of the
Vietnamese accounting system, and reports of the Supervisory Boards.

This shareholder or a group of shareholders also have the right to request convening of a General
Meeting of Shareholders in these following cases:
- The Board of Directors commits a serious violation of the rights of shareholders or
obligations of managers or issues a decision which falls outside its assigned
competence.
- The term of the Board of Directors has expired for more than 6 months and no new
Board of Director has been selected to replace it. And other cases provided in the
company charter.
3.2 Common shares of founding shareholders
- A newly established joint stock company must at least have three founding shareholders. A
joint stock company that has been converted from a state enterprise or a limited liability or
divided or separated from or consolidated or merge with another joint stock company are not
required to have founding shareholders.
- These founding shareholders shall together register to buy at least 20 percent of the total
number of common shares are offered at the time of enterprise registration.
- During the first 3 years from the date of enterprise registration of the company, its founding
shareholders have the right to freely transfer their shares to other founding shareholders and
may transfer their common share to persons other than founding shareholders if approved by
the General Meeting of Shareholders.
- After 3 years from the date of enterprise registration of the company, all restriction on
common shares of founding shareholders shall be lifted.
3.3 Rights of Preferred Shareholder

Voting preference shares and rights of voting preference shareholders

- Voting preference share carries more votes than an common share. The number of
votes per voting preference shares is decided by the company’s charter.
- Vote on matters which fall within the competence of the General Meeting of
Shareholders with the number of votes provided in the context before.
- Other rights as common shareholders, except voting preference shareholders may
not transfer their shares to other persons.
Dividend preference shares and rights of dividend preference shareholders
- Dividend preference share shall be paid at a higher rate than that paid for an common
share or at an annual fixed rate. Annually paid dividend includes fixed dividends and
bonus dividends. Fixed dividends must not depend on the business results of the
company. The amount of fixed dividend and method for determining bonus dividends
shall be stated on the dividend preference share certificates.
- To receive dividends specified in the context above.
- When the company resolve or bankrupts, dividend preference shareholders will
receive part of the residual assets in proportion to their number of shares in the
company after the company has fully paid its debt and redeemable preference
shares.
- Other rights as common shareholders, but dividend preference shareholders do not
have the right to vote, attend the General Meeting of Shareholder and nominate
candidates to the Board of Directors and the Supervisory Board.

Redeemable preferred shares and rights of redeemable preferred shareholders

- Redeemable preference share shall be redeemed by the company when its owner
demand it or under the conditions stated in the redeemable preference share
certificate.
- Other rights as common shareholders, but redeemable preference shareholders do
not have the right to vote, attend the General Meeting of Shareholder and nominate
candidates to the Board of Directors and the Supervisory Board.
4. Shareholder’s obligation
4.1 Obligations of common shareholders
- To make a full payment for the shares registered to purchase and not to withdraw the
capital contributed by common shares from the company in any form, unless their
shares are redeemable by the company or other persons. A shareholder who
withdraws part or the whole of the contributed share capital not in compliance with
the law must, together with stakeholders in the company, be jointly liable for the
debts and other property obligations of the company within the value of withdrawn
shares and the damages incurred.
- To comply with the charter and the internal regulations of the company.
 - To monitor resolution of the General Meeting of Shareholders and the Broad of
Directors.
- To perform other obligations as provided in the Law of Enterprise Vietnam (2014) and
the company charter.
5. Conclusion

This essay had introduced the rights and duties of shareholders in a Joint Stock company. The
importance and presence of shareholders are undeniable as they are the fundamental structure of
the company. The roles of shareholders are more involving with the business operations. Their
duties are to make sure the company performs as expected. However, if there are any violations
against the company charter and law, it is also the shareholders duties to address those problems.
All of the rights and obligations above are all according to the Law on Enterprise in Vietnam (2014).

REFERENCE
Law on Enterprise, 68/2014/QH13