Update day: September 1 , 2023

Guidelines for holding the General Meeting of Shareholders in accordance with the law (Part 1)

The General Meeting of Shareholders is an important event in the operation of a joint stock company. This is where important issues are decided such as changing the organizational structure, approving the strategic policy of the company, etc. However, holding a General Meeting of Shareholders in accordance with the law is not always easy. Misunderstandings of the procedure, regulations, and requirements of the meeting can lead to unreasonable decisions, illegality, and damage to the company.

To help the enterprise to hold a legal and effective General Meeting of Shareholders, this article will provide a detailed guide on the process of holding the meeting. We will cover the necessary steps to prepare for a meeting, from planning, informing, preparing documents to conducting the meeting and recording the decisions. In addition, we will analyze the important legal regulations related to the General Meeting of Shareholders such as the rights and responsibilities of the relevant parties, the right to vote and represent, and the procedure of passing decisions. By clearly understanding these regulations, you can ensure that the process of holding the General Meeting of Shareholders complies with the law and brings maximum benefits for the company and shareholders.

Table of contents:

1. Rights and Obligations of the General Meeting of Shareholders

Before conducting the opening of the General Meeting of Shareholders, the enterprise needs to determine the purpose of opening the General Meeting of Shareholders. According to regulations, the General Meeting of Shareholders will be established for the following purposes, in other words, the General Meeting of Shareholders has the following rights:

To approve the company’s development orientation;
To decide on the class of shares and the total number of shares of each class that are entitled to offer for sale; to decide on the annual dividend rate of each class of shares;
To elect, dismiss, and relieve members of the Board of Directors, and Supervisors;
To decide to invest in or sell assets that are valued at 35% or more of the total value of assets recorded in the most recent financial statement of the company, unless the company’s Charter stipulates a different percentage or different value;
To decide to amend the company’s Charter;
To approve the annual financial statement;
To decide to buy back more than 10% of the total number of sold shares of each class;
To consider, and handle violations of members of the Board of Directors, and Supervisors which cause damage to the company and shareholders;
To decide to reorganize, or dissolve the company;
To decide the budget or total remuneration, bonus, and other benefits for Board of Directors, Board of Supervisors;
To approve the internal governance regulations; the operating regulations of the Board of Directors, Board of Supervisors;
To approve the list of independent audit firms; to decide the independent audit firm to inspect the company’s operation, to dismiss the independent auditor when it is necessary and the Rights and obligations as prescribed in the company’s Charter.

Based on the purpose of the meeting, the enterprise compares with the law and the company’s charter to ensure that the issue that the enterprise intends to adopt is within the competence of the General Meeting of Shareholders.

2. The Annual General Meeting of Shareholders

The General Meeting of Shareholders holds an annual meeting once a year. The General Meeting of Shareholders must hold the annual meeting within 04 months from the last day of the fiscal year. Unless the company’s Charter has different regulations, the Board of Directors decides to extend the annual General Meeting of Shareholders in case of necessity, but not exceeding 06 months from the last day of the fiscal year.

The following contents will be discussed and approved at the Annual General Meeting of Shareholders:

The company’s annual business plan;
The annual financial statement;
Board of Directors’ report on the management and operating results of the Board of Directors and each member of the Board of Directors;
Board of Supervisors report on the business results of the company, operating results of the Board of Directors, Director or General Director;
Report on self-assessment of the operating results of the Board of Supervisors and Supervisors;
The amount of dividend for each share of each class and the other issues under the General Meeting of Shareholders’ authority stipulated in the company’s charter.

3. The Extraordinary General Meeting of Shareholders

In addition to the Annual General Meeting of Shareholders which is held every year, to facilitate the process of the enterprise’s operation, the Extraordinary General Meeting of Shareholders will be held at any time when the following events incur:

The Board of Directors considers that it is necessary for the benefit of the company;
The number of remaining members of the Board of Directors, and Board of Supervisors is less than the minimum number of members as prescribed by law;
At the request of a shareholder or group of shareholders who own 5% or more of the total number of ordinary shares or a smaller percentage as prescribed in the company’s Charter. This shareholder or group of shareholders is entitled to request the convening of the General Meeting of Shareholders when the Board of Directors has committed a serious violation of the rights of shareholders, obligations of manager or made decisions beyond their assigned authority; or other cases permitted by the Charter’s regulations.
At the request of the Board of Supervisors;
And other cases that the company’s Charter stipulates the General Meeting of Shareholders will be held when it incurs.

In fact, holding the General Meeting of Shareholders is not much complicated procedure for the enterprise. However, both corporate law and the company’s charter stipulate the order, form, rights, method of passing the decisions, etc. which relate to the General Meeting of Shareholders, so proper and adequate application regulations related to the General Meeting of Shareholders will help the enterprise to ensure the validity of the approved contents. In the next article, we will share the steps to hold the General Meeting of Shareholders in accordance with the law.

Time of writing: 11/07/2023

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn

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