The legal framework governing shareholder meetings in Vietnam has undergone significant updates, making it crucial for foreign companies to understand current quorum requirements. This comprehensive guide examines the essential aspects of meeting quorum rules and their practical implementation in the Vietnamese business context.
1. Legal Framework Overview
Vietnam’s Enterprise Law sets forth specific requirements for shareholder meeting quorums, ensuring proper corporate governance and decision-making validity. The 2025 regulations maintain strict attendance thresholds while accommodating modern business practices.
Key Legal Documents
- Enterprise Law 2020 (amended in 2022)
- Law amending the Law on Public Investment, the Law on Public-Private Partnership Investment, the Law on Investment, the Law on Housing, the Law on Bidding, the Law on Electricity, the Law on Enterprises, the Law on Special Consumption Tax, and the Law on Civil Judgment Enforcement (Law No. 03/2022/QH15)
- Company charter and internal regulations
2. Calculating Quorum Requirements
2.1 Shareholder Attendance Requirements (Article 145 of the Enterprise Law)
- First Meeting: Conducted when shareholders attending represent more than 50% of the total voting shares.
- Second Meeting: If the first meeting does not meet the quorum, the second meeting must be convened within 30 days. This meeting is valid if shareholders attending represent at least 33% of the total voting shares.
- Third Meeting: If the second meeting still does not meet the quorum, a third meeting must be convened within 20 days. The third meeting can proceed regardless of the number of voting shares represented.
2.2 Key Factors to Consider
Proper quorum calculation is essential for meeting validity. Companies must consider several factors when determining whether quorum requirements are met:
- Total issued voting shares: This serves as the basis for calculating the required attendance ratio. Precisely determining the total voting shares ensures accurate compliance with quorum regulations.
- Attendance method: Shareholders may attend in person or by proxy. Proxy attendance must comply with legal requirements and the company charter to ensure the validity of the voting rights exercised.
- Different share classes and corresponding voting rights: Companies may issue various share classes with different voting rights. Understanding these differences helps in accurately determining the number of voting shares in the meeting.
- Exclusion of treasury shares from calculations: Treasury shares are repurchased by the company and do not carry voting rights. Therefore, when calculating the total number of voting shares, treasury shares must be excluded to ensure accuracy.
3. Meeting Validity Requirements
Beyond basic quorum calculations, several elements determine meeting validity:
3.1 Documentation Requirements
- List of shareholders entitled to attend the meeting (Article 141 of the Enterprise Law)
- Meeting invitation (Clause 1 Article 143 of the Enterprise Law)
- Supporting documents accompanying the invitation (Clause 3 Article 143 of the Enterprise Law)
- Meeting agenda, related documents, and draft resolutions for each agenda item
- Voting ballots
- Meeting agenda and content (Article 142 of the Enterprise Law)
- Attendance registration and shareholder verification records (Clause 1 Article 146 of the Enterprise Law)
- Valid proxies for represented shareholders (Article 144 of the Enterprise Law)
- Minutes of the meeting recording the number of attending shareholders (Article 150 of the Enterprise Law)
3.2 Virtual Meeting Considerations
With the increasing adoption of virtual meetings, additional requirements apply:
- Stable technical infrastructure: Companies must select and implement reliable online meeting platforms that ensure continuous connectivity and quality for all attending shareholders. This prevents disruptions and allows full participation in discussions and voting.
- Electronic shareholder identity verification: Before the meeting begins, a process must be in place to verify shareholder identities or those of authorized representatives using electronic measures such as confirmation codes, digital signatures, or other security methods. This ensures that only eligible participants can attend and vote.
- Digital records of participation and voting: The online meeting system must have functions to record and store information on shareholder participation and voting outcomes. This creates legal evidence of the meeting process and results while ensuring transparency and future verification.
For more information on Regulations on the Number of Shareholders Attending Meetings, please refer to this article
4. Practical Implementation Guidelines
To ensure compliance with quorum requirements, companies should follow these practical steps:
4.1 Pre-Meeting Preparation
- Maintain an updated shareholder register (Article 122 of the 2020 Enterprise Law): The company must create and retain a shareholder register from the moment it is granted an Enterprise Registration Certificate. The register must include details such as: name, contact address, nationality, and legal identification number for individual shareholders; name, enterprise code or legal identification number, and head office address for institutional shareholders; number of shares of each type and the date of share registration.
- Send meeting notifications within the prescribed timeframe (Article 143 of the 2020 Enterprise Law): The convener of the General Meeting of Shareholders (GMS) must send invitations to all eligible shareholders at least 21 days before the meeting. The notification must include the meeting agenda, relevant documents, and a sample voting ballot.
- Establish a clear registration process (Clause 1, Article 146 of the 2020 Enterprise Law): Before the meeting commences, the company must register attending shareholders. A detailed registration process should be in place, including identity verification for shareholders or authorized representatives, ensuring only eligible individuals are allowed to participate.
4.2 During the Meeting
- Verify shareholder identity and voting rights (Clause 2, Article 144 of the 2020 Enterprise Law): Proxy authorizations must be in writing, clearly stating the authorized representative’s name and the number of shares being represented. The authorized representative must present the proxy document upon registration. Shareholder identity verification should be conducted against the shareholder register and proxy documents to confirm participation rights and corresponding voting shares.
- Record the number of attending shareholders throughout the meeting (Clause 1, Article 146 of the 2020 Enterprise Law): Shareholder registration must be conducted before the meeting starts. A list of attendees should be maintained, including details of shares and voting rights per shareholder, with continuous updates if changes occur during the meeting.
- Ensure the minimum shareholder requirement is maintained (Article 145 of the 2020 Enterprise Law): The GMS may proceed when shareholders attending represent more than 50% of total voting shares, with the specific percentage determined by the company’s charter. Continuous monitoring of shareholder presence and voting rights is necessary to ensure compliance.
5. Non-Compliance Consequences
Failure to meet quorum requirements can have serious implications:
- Administrative penalties: Failure to convene the GMS can lead to the absence of required records such as meeting minutes and resolutions, resulting in fines ranging from VND 30,000,000 to VND 50,000,000 (Point d, Clause 2, Article 52 of Decree 122/2021/ND-CP).
- Resolution annulment (Article 151 of the Enterprise Law): If GMS regulations are violated, resolutions may be annulled upon the request of eligible shareholders and approved by a court or arbitration.
- Legal risks from shareholders: Non-compliance with GMS regulations may infringe on shareholders’ legitimate rights and interests. In such cases, shareholders have the right to file complaints, petitions, or even lawsuits against the company to protect their rights.
6. Best Practices for Compliance
Companies can ensure compliance by following these recommendations:
- Maintain detailed attendance records (Article 11 of the 2020 Enterprise Law): Companies must store GMS minutes and related documents at their headquarters or another designated location as specified in the company charter. Proper documentation prevents legal risks and ensures corporate governance transparency.
- Engage professional corporate secretarial services: Hiring professional corporate secretarial services helps manage administrative and legal tasks efficiently, such as drafting meeting documents, maintaining records, and meeting legal deadlines. This reduces the burden on internal teams and ensures procedural compliance.
- Develop an effective shareholder communication system: Establishing a transparent and timely communication channel between the company and shareholders is crucial for corporate governance. This includes sending meeting notifications, providing relevant documents in advance, and facilitating shareholder participation. An effective communication system strengthens shareholder trust and ensures they are well-informed for decision-making.
Frequently Asked Questions
- What happens if quorum is lost during a meeting? (Article 145 of the Enterprise Law)
If quorum is lost during a meeting, any subsequent decisions made become invalid. The meeting should be adjourned until quorum can be re-established.
- Can proxies be used to meet quorum requirements? (Article 144 of the Enterprise Law)
Yes, properly authorized proxies count toward quorum requirements. Proxy documentation must comply with Vietnamese legal requirements.
- Are there special requirements for foreign-owned companies? (Clause 1, Article 150 of the 2020 Enterprise Law)
Foreign-owned companies must follow the same quorum requirements but may need to provide additional documentation and translations.
Understanding and properly implementing shareholder meeting quorum requirements is crucial for maintaining legal compliance and ensuring valid corporate decision-making in Vietnam. Companies should stay informed about regulatory updates and maintain robust meeting management procedures.
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