What are the types of shares in a joint stock company according to the law

What types of shares does a joint stock company have? What are the characteristics of each type of share?

1. What is a joint stock company?

According to the provisions of Article 111 of the Law on Enterprises 2020 on Joint Stock Companies as follows:

“Article 111. Joint stock company

1. A joint stock company is an enterprise, in which:

a) charter capital is divided into equal parts are called shares;

b) Shareholders can be organizations or individuals; the minimum number of shareholders is 03 and there is no maximum limit;

c) Shareholders are only responsible for debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

d) Shareholders have the right to freely transfer shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.

2. Joint stock companies have legal status from the date of issuance of the Business Registration Certificate.

3. Joint stock companies have the right to issue shares, bonds and other types of public securities company.”

According to legal regulations, shares of a Joint Stock Company are understood as equal parts divided from the Company’s charter capital. Organizations and individuals who own shares of the Company are called shareholders. Shareholders are only responsible for the debts and other property obligations of the Joint Stock Company within the amount of capital contributed. Shareholders have the right to freely transfer their shares to others, except in cases prescribed by law.

2. What types of shares does a joint stock company have?

According to the provisions of Article 114 of the Law on Enterprises 2020 on the types of shares of a joint stock company as follows:

“Article 114. Types of shares

1. A joint stock company must have common shares. The owner of common shares is a common shareholder common.

2. In addition to common shares, a joint stock company can have preference shares. Preference shares are called preference shareholders. Preference shares include the following types:

a) Dividend preference shares;

b) Redeemable preference shares;

c) Voting preference shares;

d) Other preference shares as prescribed in the company charter and securities laws.

3. Persons with the right to buy dividend preference shares, redeemable preference shares and other preference shares as prescribed by the company’s Charter or decided by the General Meeting of Shareholders.

4. Each share of the same type gives the owner of that share equal rights, obligations and benefits.

5. Common shares cannot be converted into preferred shares. Preferred shares can be converted into common shares according to the resolution of the General Meeting of Shareholders.

6. Common shares used as the underlying asset to issue depository receipts without voting rights are called underlying common shares. Non-voting depositary certificates have economic benefits and obligations corresponding to the underlying common shares, excluding voting rights.

7. The Government regulates depository certificates without voting rights.”

Accordingly, a Joint Stock Company has the following types of shares:

– Common shares: this is a type of share required for a Joint Stock Company to have.

– Preference shares, including: Dividend preference shares; Redeemable preference shares; Voting preference shares; Shares other preferential shares as prescribed in the Company’s Charter and securities laws.

3. What are the characteristics of the types of shares of a Joint Stock Company?

Voting preferred shares are regulated in Article 116 of the Law on Enterprises 2020 as follows:

“Article 116. Voting preferred shares and shareholders’ rights own voting preference shares

1. Voting preference shares are common shares that have more votes than other common shares; The number of votes per voting preference share is prescribed by the company’s charter. Only organizations authorized by the Government and founding shareholders are entitled to hold voting preference shares. The voting incentives of founding shareholders are valid for 03 years from the date the company is granted a Business Registration Certificate. Voting rights and voting preference period for voting preference shares held by organizations authorized by the Government are specified in the company’s Charter. After the voting preference period, voting preference shares are converted into common shares.

2. Shareholders who own voting preference shares have the following rights:

a) Voting on issues under the authority of the General Meeting of Shareholders with the number of votes as prescribed in Clause 1 of this Article;

b) Other rights as common shareholders, except for the cases specified in Clause 3 of this Article.

3. Shareholders who own voting preference shares may not transfer those shares to others, except in cases of transfer under a legally effective Court judgment or decision or inheritance.

4. The Government regulates this Article in detail.”

Dividend preference shares are regulated in Article 117 of the Law on Enterprises 2020 as follows:

“Article 117. Dividend preference shares and rights of shareholders who own dividend preference shares

1. Dividend preference shares are shares that pay dividends at a higher rate than the dividend rate of common shares or a stable annual rate. Annual dividends include fixed dividends and bonus dividends. Fixed dividends do not depend on the company’s business results. The specific fixed dividend level and method of determining bonus dividends are clearly stated in the shares of dividend preference shares.

2. Shareholders who own dividend preference shares have the following rights:

a) Receive dividends according to the provisions of Clause 1 of this Article;

b) Receive the remaining assets corresponding to the percentage of shares owned in the company after the company has paid all debts, preference shares are refundable when the company is dissolved or bankrupt;

c) Other rights as common shareholders, except for the cases specified in Clause 3 of this Article.

3. Shareholders who own dividend preference shares do not have the right to vote, attend the General Meeting of Shareholders, or nominate people to the Board of Directors and Supervisory Board, except for the case specified in Clause 6, Article 148 of this Law.”

Redeemable preference shares are specified in Article 118 of the Law on Enterprises 2020 as follows:

“Article 118. Shares Redeemable preference and rights of shareholders owning redeemable preference shares

1. Redeemable preference shares are shares for which the company returns its capital contribution at the request of the owner or according to the conditions stated in the shares of redeemable preference shares and the company’s Charter.

2. Shareholders who own redeemable preference shares have the same rights as common shareholders, except for the cases specified in Clause 3 of this Article.

3. Shareholders who own redeemable preferred shares do not have the right to vote, attend the General Meeting of Shareholders, or nominate people to the Board of Directors and Supervisory Board, except for the cases specified in Clause 5, Article 114 and Clause 6, Article 148 of this Law.”