Every year, until the end of the 4th month of the fiscal year, it is “off season” for the Annual General Meeting of Shareholders (GMS). This year, many public enterprises have moved the time to hold their annual General Meeting of Shareholders to the end of May or even the end of June.
1. Regulations on the General Meeting of Shareholders
Article 139, Enterprise Law 2020 provides for the meeting of the General Meeting of Shareholders as follows:
The General Meeting of Shareholders usually meets once a year, in addition to the annual meeting, the General Meeting of Shareholders may hold an extraordinary meeting. The meeting place must be in Vietnamese territory.
The General Meeting of Shareholders must hold an annual meeting within 04 months from the end of the fiscal year. Unless otherwise provided by the company’s charter, the General Meeting of Shareholders may be extended when necessary. However, this extension must not exceed 06 months from the end of the fiscal year.
Thus, the phenomenon of businesses delaying the time to hold the annual General Meeting of Shareholders is valid from a legal perspective. As long as the extension period does not exceed 06 months from the end of the fiscal year.
Enterprises can choose a fiscal year that coincides with the calendar year (January 1 – December 31 every year). Or, for an enterprise with its own peculiarities in terms of organization and operation, the annual accounting period is 12 full months according to the calendar year, starting from the first day of the first month of this quarter to the end of the last day of the last month of the previous quarter of the following year.
2. Many reasons for enterprises to extend the AGM
According to data from the Securities Investment newspaper on the morning of April 24, 2023:
KBC has approved the delay of holding the General Meeting of Shareholders, etc. The reason is to have more time to discuss important tasks and plans in 2023… Or the plan to buy back 13% of the outstanding shares.
Although planned to hold the General Meeting of Shareholders in April. Recently Pha Lai Thermal Power Joint Stock Company has been postponed to May 24. The AGM takes place later to have more time to prepare documents carefully for shareholders.
Many real estate and construction businesses also adjust the time to hold the meeting for the same reason.
3. Shareholders are concerned about the phenomenon of businesses extending the time to hold the General Meeting of Shareholders
Many shareholders are concerned about not being able to grasp information and projections of the business for the year. They also do not know the company’s business results to make an investment strategy. They believe that businesses are afraid to face shareholders when the business situation is not favorable.
The view of shareholders is that the majority of businesses that extend the AGM often have problems related to financial statements, inspection, examination, etc.
In fact, what benefits shareholders the most is the value of the company. This is shown through 02 factors:
– Sustainable growth;
– The market value of the business through the share price.
In the past year, most businesses have found it very difficult to meet these two factors…. Perhaps the reason why enterprises hold the AGM late is because they want to hear more information and prepare documents more carefully to answer questions from shareholders in the situation of stock price fluctuations.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
