The order of organizing the Annual General Meeting of Shareholders in a Joint Stock Company is according to the provisions of the Enterprise Law 2020
2023/08/26
- Masaya Sakasai
Introduction
The General Meeting of Shareholders (“AGM”) includes all shareholders with voting rights and is the highest decision-making body of a joint stock company. Accordingly, each year, the General Meeting of Shareholders is required to hold an annual meeting. Organizing the annual General Meeting of Shareholders in a joint stock company is one of the important processes in the company’s operations and requires careful preparation to ensure compliance with legal regulations.[1]
However, in reality, many joint stock companies do not clearly understand this process, leading to not fully fulfilling their obligations according to the provisions of law. Therefore, in this report we will present some important contents in the process of organizing and conducting the annual General Meeting of Shareholders according to the provisions of the Enterprise Law 2020.
1. Key elements of an annual general meeting of shareholders:
1.1. Subject convening the annual meeting
According to the provisions of Article 140.1, Enterprise Law 2020, the Board of Directors is the subject convening the annual General Meeting of Shareholders.
1.2. Meeting location
The location of the General Meeting of Shareholders is determined to be the place where the chairman attends the meeting and must be within the territory of Vietnam.[2]
In fact, for small joint stock companies (less than 10 shareholders), the General Meeting of Shareholders is usually held at the company’s headquarters. In addition, during the period of the Covid-19 epidemic up to now, a number of joint stock companies have also held online meetings (via Zoom) or combined in-person and online. Currently, the law has regulations that shareholders have the right to attend meetings via online conference, however, the company must still ensure that the meeting location is where the chairman attends the meeting and is located on the territory of the meeting. Vietnamese territory.[3]
1.3. Meeting time
The General Meeting of Shareholders must hold an annual meeting within 04 months from the end of the fiscal year. However, in case of necessity, the Board of Directors can decide to extend the General Meeting of Shareholders unless otherwise stipulated in the Company’s Charter, but the maximum extension of the meeting shall not exceed 06 months from the end of the fiscal year.
In addition, in case the Board of Directors does not organize the General Meeting of Shareholders according to regulations, the following risks may arise:
Members of the Board of Directors are at risk of being sued to claim compensation for damages to the company due to violating the responsibilities of the business manager and failing to exercise assigned rights and obligations.[4]
A resolution of the General Meeting of Shareholders that has a delayed meeting time has the risk of requiring cancellation because the order and procedures for convening the General Meeting of Shareholders seriously violate the provisions of the Law and the Charter.[5]
Therefore, the company needs to pay attention to organizing the General Meeting of Shareholders according to the legal deadline to avoid the above risks.
1.4. Meeting participants
-Administrative Council
-List of shareholders with the right to attend meetings according to the shareholder register
-Secretary of the meeting.
1.5. The content needs to be discussed and approved during the meeting
The Annual General Meeting of Shareholders discussed and approved the following important issues:[6]
-The company’s annual business plan;
-Annual financial report
-Report of the Board of Directors on the management and performance of the Board of Directors and each member of the Board of Directors
-Report of the Supervisory Board on the company’s business results, the performance of the Board of Directors, Director or General Director
etc.
2. Procedure for convening and organizing the General Meeting of Shareholders[7]:
| Sequence | work content | To be in charge of | Duration |
| Step 1: Prepare |
Prepare a list of shareholders with the right to attend the meeting | Board of Directors | No more than 10 days before the date of sending the invitation to the General Meeting of Shareholders, if the Charter does not stipulate a shorter time limit[8] |
| Prepare meeting agenda and content; meeting documents; draft resolution of the General Meeting of Shareholders according to the expected content of the meeting | At least 21 days before the opening date of the meeting if the company charter does not stipulate a longer period[9] | ||
| Determine meeting time and location | |||
| Step 2: Meeting request |
Send a meeting invitation to all shareholders with the right to attend the meeting with the following documents[10]:
(1) Meeting agenda, meeting documents, draft resolutions for each issue; (2) Votes. |
Board of Directors | At least 21 days before the opening date of the meeting, if the company charter does not stipulate a longer period[11] |
| Step 3: Proposal on meeting agenda |
Recommend the issue to be included in the agenda of the General Meeting of Shareholders[12] | Shareholder or group of shareholders owning 05% or more of the total number of common shares or a smaller percentage as prescribed in the Charter | Send to the company no later than 03 working days before the opening date, unless the company charter stipulates another deadline. |
| Refuse the proposal to add additional issues to the agenda of the General Meeting of Shareholders if they fall into one of the cases in Article 142.3, Law on Enterprises[13] | Board of Directors | At least 02 working days before the opening date of the General Meeting of Shareholders | |
| Step 4: Conduct meetings[14] |
Register shareholders to attend the General Meeting of Shareholders
|
Usually the Department/personnel supporting the organization of the General Meeting of Shareholders | Before opening the meeting |
| Elect the chairman of the meeting | Chairman of the Board of Directors or person authorized by the Chairman of the Board of Directors | In the opening session of the meeting | |
| Appoint meeting secretary | Chair the meeting | ||
| Election of vote counting committee | General Meeting of Shareholders | ||
| Approve the meeting agenda and content in the opening session | General Meeting of Shareholders | ||
| Discuss and vote on each issue; Counting votes[15] | General Meeting of Shareholders | The results of vote counting are announced by the chairman immediately before closing the meeting, unless otherwise stipulated in the company charter. | |
| Step 5: Approval of Meeting Minutes and Resolutions of the General Meeting of Shareholders |
Approval of resolutions of the General Meeting of Shareholders | General Meeting of Shareholders | At the meeting (if approved by vote) |
| Notify the Resolution of the General Meeting of Shareholders to shareholders with the right to attend the meeting | Board of Directors | Within 15 days from the date of approval | |
| Record meeting minutes and approve meeting minutes
|
Chairman and Secretary of the meeting | Before ending the meeting | |
| Send meeting minutes to all shareholders | Board of Directors | Within 15 days from the end of the meeting
|
|
| Step 6: Post-meeting procedures |
Keep meeting minutes, appendices to the list of shareholders registered to attend the meeting, approved resolutions and related documents attached to the meeting invitation notice at the company’s headquarters. | Board of Directors | After the meeting ended |
| Send meeting minutes and resolutions of the General Meeting of Shareholders to the Supervisory Board | Board of Directors | At the same time as sending to members of the Board of Directors |
Conclusion
This article has explained the procedures for holding an annual general meeting of shareholders, which is particularly important for stock companies.
It can be said that understanding and implementing the appropriate procedures and procedures for holding a general meeting of shareholders in order to resolve and implement important matters related to the company’s direction and strategy is an essential part of corporate management.
References
[1] Article 138, Paragraph 1 of the Enterprise Law
[2] Article 140, Paragraph 1 of the Enterprise Law
[3]Article 144, Paragraph 3, Item c of the Enterprise Law
[4] Article 166, Paragraph 1, Item a of the Enterprise Law
[5] Article 151, Paragraph 1 of the Enterprise Law
[6] Article 139, Paragraph 3 of the Enterprise Law
[7] The above procedure for holding a general meeting of shareholders is the same for general meetings of shareholders other than annual general meetings.
[8] Article 141, Paragraph 1 of the Enterprise Law
[9] Article 143, Paragraph 1, Article 143, Paragraph 4 of the Enterprise Law
[10] Based on Article 143, Paragraph 4 of the Corporation Law, attached materials may be uploaded to the company’s website, but the convocation notice must include the upload destination and download method.
[11] Article 143, Paragraph 1 of the Enterprise Law
[12] Pursuant to Article 142, Paragraph 2 of the Corporation Law, the proposal must clearly state the names of the shareholders, the number of shares for each type of shareholder, and the items to be added to the agenda.
[13] Based on Article 142, Paragraph 3 of the Enterprise Law, it is necessary to reject the proposal in writing and clearly state the reasons for the rejection.[14] Pursuant to Section 145, Section 1 of the Enterprise Law, a general meeting of shareholders may be held when shareholders representing more than 50% of the total voting votes are present.[15] The results of the vote will be announced by the Chairman immediately before the end of the meeting, unless otherwise provided in the Articles of Incorporation.
