Regarding the rights held by investors according to their ownership percentage
2023/02/24
- 米国公認会計士
- 逆井将也
Introduction
When establishing a company, acquiring a company, or merging a company in Vietnam, the issues that investors should be particularly concerned about are whether investors have decision-making rights based on their investment ratio and the issue of minority shareholder interests. This report provides information on the ownership percentage of limited liability companies with two or more members (hereinafter referred to as “limited liability companies with two or more members”) and the stock ownership ratio in joint stock companies (hereinafter collectively referred to as “investment ratio”). We will summarize the ratios that serve as watersheds in which influence changes.
1. Investment ratio (quorum) required for holding general meetings of members and shareholders
When a limited liability company with two or more members holds a general meeting of members, and a stock company holds a general meeting of shareholders, the attending members and shareholders must hold a certain percentage of investment. The Corporate Law stipulates as follows.
| 1st meeting | 2nd meeting (*) | 3nd meeting (*) | |
| Limited company with more than two people | Attending employees own 65% or more of the capital | Attending employees own 50% or more of the capital | No conditions regarding investment ratio |
| Co., Ltd. | Attending employees own 50% or more of the capital | Attending employees own 33% or more of the capital | No conditions regarding investment ratio |
(*) Note: If the first general meeting of members and shareholders cannot be held because the investment ratio of the attending members is less than 65%, and there is no other provision in the company’s articles of incorporation, the second general meeting of members and shareholders will be held. A general meeting of shareholders is convened in accordance with the Corporate Law. Furthermore, if the second general meeting of members and shareholders fails to meet the investment ratio requirements of the attending members, a third general meeting can be convened based on the Corporate Law.
2. Investment ratio required for adoption of resolutions/decisions at general meeting of members and general meeting of shareholders
The Corporate Law stipulates the conditions for the investment ratio required for adoption, as shown below, depending on the importance of the resolution/decision.
However, the company’s articles of incorporation may stipulate conditions for adoption that are stricter than those stipulated by law.
| Corporate form | Exercise form | Investment rate required for adoption | Resolutions/Decisions |
| Limited company with more than two people | (1) Exercise of voting rights at the general meeting | (1.1.) Each member holding 65% or more of the total equity of all members attending the meeting agrees. | a) Determining the direction of the company’s development b) Appointment, appointment and dismissal of the chairman at the general meeting of members c) Appointment, appointment and dismissal of employees or general president; d) Adoption of the annual financial report |
| (1.2.) Each employee owning 75% or more of the total equity of all employees attending the meeting agrees. | a) Sale of property with a value of 50% or more of the total amount of property stated in the most recent financial report b) Amendment and supplementation of the company’s articles of incorporation c) Company reorganization and dissolution |
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| (2) Expression of opinion in writing | Employees who own 65% or more of the capital approve. | Matters stipulated in laws and regulations and the Articles of Incorporation, excluding matters requiring the exercise of voting rights at the general meeting (contents of (1.1.) and (1.2.) b and c above) | |
| Co., Ltd. | (3) Exercise of voting rights at the general meeting | (3.1.) Shareholders representing 50% or more of the total number of votes of all shareholders present at the meeting approve. | Matters other than those listed in (3.2.) and (3.3.) below (example) a) Adoption of the company’s development direction b) Determination of annual dividend amount for each type of stock c) Appointment, dismissal, and dismissal of directors and members of the Board of Corporate Auditors d) Decision to amend or supplement the company’s articles of incorporation e) adoption of annual financial report; f) Decision to purchase more than 10% of the total number of issued shares |
| (3.2.) Shareholders representing at least 65% of the total voting votes of all shareholders present at the meeting approve. | a) Types of shares and total number of shares for each type b) Changes in management field, industry and area c) Changes in the company’s management organization structure d) Plans to invest in property or sell property with a value of 35% or more of the total amount of property stated in the company’s most recent financial report. However, this excludes cases where the articles of incorporation stipulate different proportions or values. e) Company reorganization and dissolution f) Other matters stipulated by the company’s articles of incorporation. |
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| (3.3.) At least 75% of the total number of preferred shares held by the preferred shareholders of the same type who attended the meeting voted in favor. | Changes in content that are disadvantageous to shareholders who own preferred stock | ||
| (4) Expression of opinion in writing | Shareholders holding more than 50% of the total voting votes of all shareholders with voting rights approve. | Matters stipulated in laws and regulations and the Articles of Incorporation, excluding matters requiring the exercise of voting rights at the general meeting (contents of (3.1.) a, c, e and (3.2) a, d, e above) | |
| 75% or more of the total number of preferred shares held by the same type of preferred shareholders approve. | Changes in content that are disadvantageous to shareholders who own preferred stock |
Unless the company’s articles of incorporation have different provisions other than the above rates, the election of directors and members of the board of corporate auditors shall be decided by cumulative voting. Specifically, when selecting directors and the board of corporate auditors, shareholders have voting rights equal to the number of shares they own multiplied by the number of directors and the board of corporate auditors to be elected, and one person holds all voting rights. Or you can vote for several candidates.
3. Investment ratio and recognized rights of minority employees/shareholders
A group of minority employees/shareholders has the following rights depending on their investment ratio:
| Corporate form | Minority House/Classification of shareholders | Recognized rights |
| Limited company with more than two people | Employees or groups of employees owning 10% or more of the company’s charter capital or other smaller percentage as specified in the company’s articles of incorporation.
Remaining employee group if the company has one employee who owns more than 90% of the charter capital |
a) To request the convening of a meeting to resolve matters that fall under the authority of the General Meeting of Members. b) Inspect, review and examine records and monitor each transaction, accounting books and annual financial reports. c) Inspecting, considering, examining and determining and copying the register of members, minutes of meetings of the general meeting of members, resolutions, decisions and other materials of the company. d) Requesting the court to cancel resolutions and decisions of the general meeting of members. |
| Co., Ltd. | Shareholders or shareholder groups holding 5% or more of the total number of common shares or other smaller percentage as provided in the company’s articles of incorporation. | a) Minutes of the board of directors and related to resolutions, decisions, semi-annual and annual financial reports, reports of the supervisory board, contracts, transactions requiring board approval, company trade secrets, business secrets; Examine, investigate, and make copies of other materials other than those listed above. b) To request the convening of a general meeting of shareholders in the following cases.(1) The board of directors committed a serious violation of the rights of shareholders or the obligations of managers, or made a decision that exceeded the authority granted to it. (2) In other cases pursuant to the provisions of the company’s articles of incorporation. c) If deemed necessary, request the Board of Corporate Auditors to inspect specific matters related to the management and operation activities of the company. |
| Shareholders or shareholder groups owning 10% or more of the total number of common shares, or other smaller percentages in accordance with the provisions of the company’s articles of incorporation. | Recommend personnel matters to the Board of Directors and Board of Corporate Auditors. | |
| Shareholders/shareholder groups holding at least 1% of the total number of common shares | Filing a lawsuit against a director, president, or general president to seek reimbursement of profits or compensation for damages to the company or a third party, and to pursue individual and joint liability. |
Conclusion
This article summarizes the points where the decision-making rights and claim rights of investors differ depending on the investment ratio and number of shares held between limited liability companies with two or more people and joint stock companies. Investors (employees/shareholders) should check and keep these matters in mind when planning future investments and managing the operations of existing investees.
*This article was translated by Yarakuzen.
