The Shareholder Meeting of a joint stock company (JSC) must convene a meeting at least once a year during the first four months or, if permitted by the Business Registration Authority and the Board, six months after the end of a financial year. Such meeting is called the annual meeting (cuộc họp thường niên) and other meetings of the Shareholder Meeting are called irregular meetings (cuộc họp bất thường). The Enterprise Law 2014 is not clear if there are two or more meetings of the Shareholder Meeting of a JSC in the first four months after the end of a financial year, then whether the first meeting among these meetings is regarded as the annual meeting or the JSC may have flexibility in deciding which meeting is the annual meeting.
In an annual meeting, the Shareholder Meeting will consider and approve the following:
- annual business plan. The Board also has the authority to approve the annual business plan. Therefore, it is not clear whether (1) annual business plan must be approved by both the Board and the Shareholder Meeting or (2) the Shareholder Meeting only given that the Shareholder Meeting is superior to the Board;
- annual financial statements;
- report of the Board regarding management by and operational results of the Board and each Board director. This is slightly different from the Enterprise Law 2005 which does not require report on activity of each Board director;
- report of the Inspection Committee regarding business results of the company and/or operational results of the Board and the General Director;
- report on self-assessment of operational results of the Inspection Committee and of each inspector. This is a new item compared with the Enterprise Law 2005; and
- an amount of dividend payable on each class of share.
The Enterprise Law 2014 remains unclear whether the matters within the scope of an annual meeting of the Shareholder Meeting:
- could be decided at an irregular meeting of the Shareholder Meeting or by a collection of written opinions from shareholders. In the absence of a clear prohibition, one could reasonably argue that these matters could also be considered and approved at an irregular meeting of the Shareholder Meeting or via a collection of written opinions from shareholders. Otherwise, Article 136.2 of the Enterprise Law 2014 becomes too restrictive and inflexible for the operation of a JSC; and
- must be decided at an annual meeting of the Shareholder Meeting. For example, it is not clear if a JSC has no profit for paying dividends then whether the annual meeting of the Shareholder Meeting of such JSC must still decide that the JSC will not pay dividends for the relevant year. Or the Shareholder Meeting of such JSC can decide to skip dividend payment from the agenda of the annual meeting of Shareholder Meeting
This post is an extract from our book on Enterprise Law in Vietnam.