When is the time for paying dividends to the shareholders of the joint stock company?

Paying dividends to shareholders of joint stock companies is a way to encourage and motivate investors, demonstrating the company’s commitment to sharing profits. This dividend not only increases investment value but also strengthens shareholders’ confidence in the long-term growth potential of the business. Reasonable dividend payment timing helps optimize cash flow and enhance brand value, thereby attracting new capital sources for the company.

When must a dividend payment notice be sent to shareholders?

Dividends are net profits paid per share in cash or other assets.

Notification of dividend payment is a mandatory obligation of a joint stock company to its shareholders. Dividend payments must comply with legal regulations on time and content of notification. The Board of Directors must comply with the correct order and procedures according to the Law on Enterprise.

According to Clause 4, Article 135 of the Law on Enterprise 2020 stipulates:

1. Deadline for sending notice: At least 15 days before dividend payment.
2. Sending method: By guaranteed method to the shareholder’s registered address in the shareholder register.
3. Mandatory notification content:

• Company name and head office address
• Shareholder information (full name, address, nationality, legal document number for individuals; name, business code for organizations)
• Number of shares of each type of shareholder, dividend level and total amount of dividends received
• Time and method of paying dividends
• Full name and signature of the Chairman of the Board of Directors and legal representative.

The Board of Directors must prepare a list of shareholders eligible to receive dividends at least 30 days before each dividend payment. This list clearly defines the dividend level, period and payment method for each share.

In case a shareholder transfers his or her shares during the time between the completion of the list of shareholders and the time of dividend payment, the transferor is the recipient of dividends from the company.

In case of paying dividends in shares, the company does not have to carry out procedures for offering shares according to the provisions of Articles 123, 124 and 125 of the Law on Enterprise 2020. The company must register to increase charter capital corresponding to Total par value of shares used to pay dividends within 10 days from the date of completion of dividend payment.

Thus, within 06 months from the end of the Annual General Meeting of Shareholders, dividends must be paid and the content of notification of payment must be as prescribed above.

On the other hand, according to the provisions of Article 139 of the Law on Enterprise 2020, there is a regulation that the annual General Meeting of Shareholders (GMS) takes place once a year, within 04 months from the end of the fiscal year.

The time of dividend payment to shareholders

Pursuant to Clause 4, Article 135 of the Law on Enterprises 2020, dividend payment must comply with regulations on time and order. The company must ensure the rights of shareholders according to the approved profit distribution plan.

Important timelines:

• Payment term: Within 06 months from the end of the Annual General Meeting of Shareholders;
• The time of annual General Meeting of Shareholders: Within 04 months from the end of the fiscal year;
• The time limit for making a list of shareholders: At least 30 days before each dividend payment;
• Deadline for sending notice: At least 15 days before dividend payment.

In case a shareholder transfers shares during the time between the completion of the list and the time of dividend payment, the transferor will be the recipient of dividends from the company.

When paying dividends in company shares, do we need to go through procedures for offering shares?

According to Clause 6, Article 135 of the Law on Enterprises 2020, when paying dividends in shares, the company:

• No need to carry out procedures for offering shares according to Articles 123, 124 and 125 of the Law on Enterprise 2020;
• Must register to increase charter capital within 10 days after completing payment;
• Increase capital corresponding to the total par value of shares used to pay dividends;
• Carry out change registration procedures with the business registration agency.

The payment of dividends in shares must be approved by the General Meeting of Shareholders and in accordance with the company charter. The company must ensure the ownership ratio of shareholders according to regulations.

Consulting service on dividend payment procedures at Long Phan

Consulting services on dividend payment procedures for shareholders of joint stock companies at Long Phan are performed by a team of experts with in-depth expertise in corporate law and corporate finance. Long Phan clearly understands the importance of paying dividends in accordance with the law for business operations.

Long Phan will analyze, evaluate and propose optimal solutions for each specific case, ensuring the rights of shareholders and businesses within the framework of the Law on Enterprise 2020. We provide comprehensive consulting services:

• Drafting resolutions of the General Meeting of Shareholders on profit distribution plans
• Prepare a list of shareholders eligible to receive dividends
• Drafting dividend payment notices according to regulations
• Instructions on procedures for registering capital increase when paying dividends by shares
• Consulting on income tax from dividends
• Support in resolving disputes about dividends (if any).

Customers who need detailed advice on procedures for paying dividends to shareholders of joint stock companies, please contact Long Phan via hotline 0906735386. Our team of experts will assist you in following the correct process, ensuring regulatory compliance and protecting the rights of businesses and shareholders.