Ordinary Shares in a Joint-Stock Company

How are ordinary shares in a joint stock company regulated? What rights do ordinary shareholders have?

1. What are ordinary shares?

From the provisions of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025), ordinary shares can be understood as the class of shares that must be held in a joint stock company, divided based on the company’s charter capital. In a joint stock company, ordinary shares used as underlying assets to issue non-voting depository receipts are called underlying ordinary shares. And ordinary shares cannot be converted into preference shares. Shareholders owning ordinary shares are called ordinary shareholders.

2. What rights do ordinary shareholders have?

Article 115 of the Law on Enterprises 2020 provides on the rights of ordinary shareholders, specifically:

(1) Ordinary shareholders have the following rights:

– Attending and speaking at General Meeting of Shareholders meetings and exercising voting rights directly or through authorized representatives or other forms as prescribed by the company charter or law. Each ordinary share has one vote;

– Receiving dividends at the level decided by the General Meeting of Shareholders;

– Having priority to purchase new shares corresponding to the ordinary share ownership ratio of each shareholder in the company;

– Freely transferring their shares to others, except as prescribed in Clause 3, Article 120, Clause 1, Article 127 of this Law and other relevant laws;

– Examining, looking up and extracting information on names and contact addresses in the list of voting shareholders; requesting correction of their inaccurate information;

– Examining, looking up, extracting or copying the company charter, minutes of General Meeting of Shareholders meetings and resolutions of the General Meeting of Shareholders;

– Upon dissolution or bankruptcy of the company, receiving part of the remaining assets corresponding to the share ownership ratio in the company.

(2) Shareholders or groups of shareholders owning 05% or more of the total ordinary shares or a smaller ratio as prescribed by the company charter have the following rights:

– Examining, looking up and extracting the book of minutes and resolutions and decisions of the Board of Directors, mid-year and annual financial reports, reports of the Supervisory Board, contracts and transactions subject to approval by the Board of Directors, and other documents, except documents relating to trade secrets and business secrets of the company;

– Requesting the convening of a General Meeting of Shareholders in the cases prescribed in Clause 3 of this Article;

– Requesting the Supervisory Board to inspect each specific issue relating to the management and operation of the company when deemed necessary. The request must be in writing and must include the following contents: full name, contact address, nationality, legal document number of the individual for shareholders that are individuals; name, enterprise code or legal document number of the organization, head office address for shareholders that are organizations; the number of shares and time of share registration of each shareholder, the total number of shares of the group of shareholders and the ownership ratio in the total shares of the company; the issue to be inspected and the purpose of inspection;

– Other rights as prescribed by this Law and the company charter.

(3) Shareholders or groups of shareholders prescribed in Clause 2 of this Article have the right to request the convening of a General Meeting of Shareholders in the following cases:

– The Board of Directors seriously violates the rights of shareholders, the obligations of managers, or issues decisions beyond its delegated authority;

– Other cases as prescribed by the company charter.

(4) A request to convene a General Meeting of Shareholders prescribed in Clause 3 of this Article must be in writing and must include the following contents: full name, contact address, nationality, legal document number of the individual for shareholders that are individuals; name, enterprise code or legal document number of the organization, head office address for shareholders that are organizations; the number of shares and time of share registration of each shareholder, the total number of shares of the group of shareholders and the ownership ratio in the total shares of the company, the basis and reasons for requesting the convening of the General Meeting of Shareholders. Accompanying the request to convene the meeting must be documents and evidence of the violations of the Board of Directors, the extent of violations or decisions beyond authority.

(5) Shareholders or groups of shareholders owning 10% or more of the total ordinary shares or a smaller ratio as prescribed by the company charter have the right to nominate persons to the Board of Directors and the Supervisory Board. Where the company charter has no other provisions, the nomination of persons to the Board of Directors and the Supervisory Board shall be carried out as follows:

– Ordinary shareholders forming a group to nominate persons to the Board of Directors and the Supervisory Board must notify the shareholders attending the meeting of the group meeting before the opening of the General Meeting of Shareholders;

– Based on the number of members of the Board of Directors and the Supervisory Board, the shareholders or groups of shareholders prescribed in this Clause may nominate one or more persons as candidates for the Board of Directors and the Supervisory Board as decided by the General Meeting of Shareholders. Where the number of candidates nominated by shareholders or groups of shareholders is lower than the number of candidates they are entitled to nominate under the decision of the General Meeting of Shareholders, the remaining candidates shall be nominated by the Board of Directors, the Supervisory Board and other shareholders.

(6) Other rights as prescribed by this Law and the company charter.

Accordingly, shareholders owning ordinary shares shall enjoy the above rights such as:

– Attending and speaking at General Meeting of Shareholders meetings and exercising voting rights directly or through authorized representatives or other forms

– Receiving dividends at the level decided by the General Meeting of Shareholders

– Having priority to purchase new shares corresponding to the ordinary share ownership ratio

– Freely transferring their shares to others

– Upon dissolution or bankruptcy of the company, receiving part of the remaining assets corresponding to the share ownership ratio in the company.

3. How are ordinary shares of founding shareholders regulated?

Article 120 of the Law on Enterprises 2020 provides on ordinary shares of founding shareholders as follows:

“Article 120. Ordinary shares of founding shareholders

1. A newly established joint stock company must have at least 03 founding shareholders. A joint stock company converted from a state-owned enterprise or from a limited liability company or divided, split, consolidated or merged from another joint stock company is not required to have founding shareholders; in this case, the company charter in the enterprise registration dossier must bear the signatures of the legal representative or the ordinary shareholders of that company.

2. Founding shareholders must jointly register to purchase at least 20% of the total ordinary shares offered upon enterprise registration.

3. Within 03 years from the date the company is granted the Enterprise Registration Certificate, ordinary shares of founding shareholders may be freely transferred to other founding shareholders and may only be transferred to persons who are not founding shareholders with the approval of the General Meeting of Shareholders. In this case, a founding shareholder intending to transfer ordinary shares has no voting right on the transfer of such shares.

4. The restrictions prescribed in Clause 3 of this Article do not apply to the following ordinary shares:

a) Shares additionally acquired by founding shareholders after enterprise registration;

b) Shares transferred to persons who are not founding shareholders.”

Accordingly, where your company was established for 2 years from 2020 to 2022 and you wish to transfer your ordinary shares to another person who is not a founding shareholder of the company, you need the approval of the General Meeting of Shareholders under Clause 3, Article 120 of the Law on Enterprises 2020.

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