Currently, joint-stock company is a common form of enterprise in Vietnam. After contributing their capital to a joint-stock company for a long time, many shareholders would like to withdraw their contributed capital, which is under several conditions and procedures. In this article, Bizlawyer will clarify major conditions and procedures relating to this problem.

Article 115.2 of Law on Enterprise 2014 stipulates that ordinary shareholders “do not withdraw its ordinary share capital in any form unless the capital is redeemed by the company or other persons.”

According to this provision, it may withdraw its ordinary capital from the company in the following cases: (1) the company redeems his capital or (2) other persons redeem it. The conditions and procedures for withdrawing capital contributed are governed particularly as follows:

1. Shareholder requests its company for a share redemption

• Conditions:

According to Article 129.1 of Law on Enterprise 2014: “If any shareholder  votes against the Resolution on the company’s restructuring or changes to the shareholders’ rights and obligations prescribed in the company’s charter, this shareholder will have the right to request the company to redeems its shares”
Article 129.2 of Law on Enterprise also stipulates that “the company shall redeem shares at the request of shareholder as prescribed Clause 1 of this Article (…) within 90 days after receiving the request”
Accordingly, the company, when its shareholder votes against a resolution on re-organization of the company or against a change to the rights and obligations of shareholders stipulated in the charter of the company and requests the company to redeem its shares, is responsible for the redemption of such shares.

• Required procedure:

– The shareholder shall send a document to request the company to redeem its shares within 10 days after the General Meeting of Shareholders ratifies the Resolution on these issues that it has voted against. This documents must specify  the: name and address of the shareholder, the number shares of each class, the intended selling price and the reason for demanding redemption by the company

– The company will receive, examine the document and make a final agreement on the redemption price with the shareholder. Procedures for the redemption of the shares shall be completed within 90 days after receiving the request of the shareholder

2. Assignment of shares to other persons

• Conditions: Law on Enterprise permits shareholders to transfer their shares to other persons,  except for the following cases

a) Within 3 years from the issuance date of the Certificate of enterprise registration to the company, a founding shareholder may freely transfer their shares to other founding shareholders. They may transfer shares to other persons other than founding shareholders upon approval of the General Meeting of Shareholder; or

b) The company’s charter contains regulations on restriction on shares transfer, these regulations are only effective when they are specified in respective share certificates.

• Required procedure:

If the assignment of shares of founding shareholders is restricted within the first 03 years, as shown above, the following procedures shall be carried out:

– The founding shareholder obtains approval of the General Meeting of Shareholders on the assignment of its shares to persons other than founding shareholders of the company.

– If the founding shareholder cannot obtain such approval, it can offer its share to other founding shareholders in the company

If the shares can be assigned freely, the following procedures will be carried out:

– The shareholder concludes a stock purchase agreement with and handovers proof of ownership of its share to the acquirer and then completes legal procedures relating to the assignment.

– The shareholder then notifies the company about the assignment and the information of the acquirer.

– The acquirer then completes procedures for recording its information in the shareholder register

If the company is a listed or a public one, the company must comply with conditions and procedures in securities laws.

This article is about problems relating to the withdrawal of capital of shareholdesr in a company. Should you have any question or demand of service use, please contact us via our email: Info@bizlawyer.vn or Hotline Call: (+84)86.888.1900 for timely advice and support.