If I buy securities of a Joint Stock Company before the date the Company closes the right to receive dividends, will I still be paid dividends?

What is a dividend of a Joint Stock Company?

According to the provisions of Clause 5, Article 4 of the Law on Enterprises 2020, dividends are defined as follows:

“Article 4. Explain the terms

In this Law, the following terms are understood as follows:

…

5. Dividends are net profits paid for each share in cash or other assets.”

What is the form of dividend payment of a Joint Stock Company?

According to the provisions of Article 135 of the Law on Enterprises 2020, dividend payments are made as follows:

“Article 135. Payment of dividends ie

1. Dividends paid for preferred shares are made according to conditions applicable to each type of preferred shares.

2. Dividends paid for common shares are determined based on realized net profits and dividend payments are deducted from the company’s retained profits. A joint stock company is only allowed to pay dividends on common shares when all of the following conditions are met:

a) The company has fulfilled its tax obligations and other financial obligations according to the provisions of law;

b) Has appropriated company funds and compensated for previous losses according to the provisions of law and the company’s Charter;

c) Immediately after paying off amount of dividends, the company still ensures payment of all due debts and other property obligations.

3. Dividends can be paid in cash, company shares or other assets specified in the company charter. If payment is made in cash, it must be made in Vietnam Dong and according to payment methods prescribed by law.

4. Dividends must be paid in full within 06 months from the end of the Annual General Meeting of Shareholders. The Board of Directors prepares a list of shareholders eligible to receive dividends, determines the amount of dividends to be paid for each share, the time limit and form of payment at least 30 days before each dividend payment. Notice of dividend payment is sent by a guaranteed method to shareholders at the address registered in the shareholder register no later than 15 days before the dividend payment. The notice must include the following contents:

a) Company name and head office address of the company;

b) Full name, contact address, nationality, legal document number of the individual for shareholders who are individuals;

c) Name, business code or legal document number of the organization, head office address for shareholders The shareholder is an organization;

d) Number of shares of each type of shareholder; dividend level for each share and total amount of dividends that shareholder receives;

đ) Time and method of dividend payment;

e) Full name, signature of the Chairman of the Board of Directors and the legal representative of the company.

5. In case a shareholder transfers his or her shares during the time between the completion of the list of shareholders and the time of dividend payment, the transferor is the recipient of dividends from the company.

6. In case of paying dividends in shares, the company does not have to carry out procedures for offering shares as prescribed in Articles 123, 124 and 125 of this Law. The company must register to increase charter capital corresponding to the total par value of the shares used to pay dividends within 10 days from the date of completion of dividend payment.”

Based on legal regulations, there are forms of dividend payment by a Joint Stock Company including:

– Pay dividends in cash. If payment is made in cash, it must be made in Vietnam Dong and according to payment methods prescribed by law.

– Pay dividends in company shares.

– Pay dividends using other assets specified in the company’s Charter.

What are the conditions for shareholders of a Joint Stock Company to receive dividends?

Also according to the provisions of Article 135 of the Law on Enterprises 2020, for preferred shares, dividends are paid according to the conditions specifically applied to each type of preferred shares. For common shares, a Joint Stock Company may only pay dividends on common shares when all of the following conditions are met:

– The company has fulfilled its tax obligations and other financial obligations according to the provisions of law;

– Has appropriated company funds and compensated for previous losses according to the provisions of law and the company’s Charter;

– Immediately after paying all dividends, the company still ensures to pay all due debts and other property obligations.

Thus, the conditions for a Joint Stock Company to pay dividends to shareholders must meet the above conditions, not depending on when shareholders buy dividends.

Dividends must be paid in full within 06 months from the end of the Annual General Meeting of Shareholders. The Board of Directors prepares a list of shareholders eligible to receive dividends, determines the amount of dividends to be paid for each share, the time limit and form of payment at least 30 days before each dividend payment. Notice of dividend payment is sent by a guaranteed method to shareholders at the address registered in the shareholder register no later than 15 days before the dividend payment. The notice must include the following contents:

– Company name and company headquarters address;

– Full name, contact address, nationality, legal document number of individual for individual shareholders;

– Name, business code or legal document number of the organization, head office address for institutional shareholders;

– Number of shares of each type of shareholder; dividend level for each share and total dividend that shareholder receives;

– Time and method of paying dividends;

– Full name and signature of the Chairman of the Board of Directors and the company’s legal representative.