Regulations surrounding the declaration of shareholders’ voting shares in the minutes of the General Meeting of Shareholders play a crucial role in corporate governance and transparency. These regulations provide a framework for recording and disclosing the voting decisions made by shareholders during important company meetings. Understanding these rules is essential for both companies and shareholders to ensure compliance and maintain the integrity of corporate decision-making.
Question:
Legal regulations mandate that joint-stock companies reduce their charter capital when contributing shareholders fall short. Nevertheless, the process necessitates the recording of minutes during the General Meeting of Shareholders. Shareholders’ voting representation aligns with their actual contributed capital as per Clause 3 of Article 113 in the 2020 Law on Enterprises.
So, in the section “TOTAL VOTING SHARES RECORDED,” should you record it as 100% of the voting shares, or should it only reflect the ratio according to the actual contributed capital? We hope for guidance so that the company can comply with the regulations.
Answer:
– According to Article 113 of Law on Enterprises 2020:
“1. Shareholders shall fully pay for the subscribed shares within 90 days from issuance date of the Certificate of Enterprise Registration unless shorter time limit is specified by the company’s charter or the shares registration contract. In case of capital contribution by assets, the time needed to transport or import the contributed assets and for completing ownership transfer procedures shall be added to this time limit. The Board of Directors shall supervise the shareholders fully and punctually paying for the subscribed shares.
2. During the period from the issuance date of the Certificate of Enterprise Registration to the deadline for paying for the subscribed shares mentioned in Clause 1 of this Article, the number votes of shareholders shall be proportional to their subscribed shares unless otherwise prescribed by the company’s charter.
3. In case a shareholder fails to pay or to fully pay for the subscribed shares by the deadline specified in Clause of this Article:
a) The shareholder that fails to pay for the subscribed shares is no longer a shareholder of the company and must not transfer the right to purchase the shares to another person;
b) The shareholder that only pays for part of the subscribed shares will be entitled to a number of votes, dividends and benefits that are proportional to the paid shares and must not transfer the right to purchase the unpaid shares to another person;
c) The shares that are not paid for shall be considered unsold shares and may be sold by the Board of Directors;
d) Within 30 days from the deadline for paying for the subscribed shares mentioned in Clause 1 of this Article, the company shall register the change in charter capital, which shall be equal to the total face values of paid shares unless the unpaid shares are sold out during this period; and register the change of founding shareholders.
4. Shareholders who do not pay or fully pay for their subscribed shares will bear responsibility for the company’s financial obligations that arise before the day on which the company registers the change in charter capital, as specified in Point d, Clause 3 of this Article. The members of the Board of Directors and the legal representative will share joint responsibility for any damage resulting from non-compliance with or incomplete compliance with the regulations of Clause 1 and Point d, Clause 3 of this Article.“
- – In the business case, the company specifies the actual ownership of shares held by attending shareholders in the minutes of the General Meeting of Shareholders, and calculates the total voting shares based on the actual paid shares of the shareholders.
Conclusion
In conclusion, the regulations governing the declaration of shareholders’ voting shares in the minutes of the General Meeting of Shareholders are fundamental to corporate accountability and transparency. These guidelines help maintain the accuracy of recorded decisions and provide a clear record of shareholder participation in vital company matters. As companies and shareholders navigate the complex landscape of corporate governance, adherence to these regulations becomes paramount for fostering trust and ensuring fair and ethical decision-making processes.
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