Conditions for Passing Resolutions of the General Shareholders Meeting

The conditions for passing Resolutions of the General Shareholders Meeting are the requirements that a resolution must meet to be valid. Resolutions will be passed based on the following factors: shareholder attendance rate, voting rate, deadlines, content, etc. Shareholders and the corporate legal department themselves must clearly understand and comply with these conditions to avoid risks leading to disputes. The following article by Long Phan will guide your business through all these regulations.

General Meeting of Shareholders

What is a Resolutions of the General Shareholders Meeting?

According to Clause 1, Article 138 of the Law on Enterprises 2020, the General Shareholders’ Meeting consists of all shareholders with voting rights and is the highest decision-making body of a joint-stock company.

A resolution of the General Shareholders’ Meeting is a document recording the decisions made by the General Shareholders’ Meeting in a joint-stock company. Decisions are passed following certain procedures at the meeting according to legal regulations and the company’s charter. This document is crucial for the management and operation of a joint-stock company.

Content of the Resolutions of the General Shareholders Meeting

The content of the resolution of the General Shareholders’ Meeting typically reflects important decisions and issues discussed at the meeting, including:

• Approving the company’s development direction.
• Deciding on the types of shares and the total number of shares of each type available for sale; setting the annual dividend rates for each type of share.
• Electing, dismissing, or removing members of the Board of Directors and Supervisors.
• Deciding on investments or sales of assets valued at 35% or more of the total assets as stated in the company’s most recent financial report, except where the company’s charter stipulates a different percentage or value.
• Deciding to amend or supplement the company’s charter.
• Approving the annual financial statements.
• Deciding to repurchase more than 10% of the total shares sold of each type.
• Reviewing and handling violations by Board members or Supervisors that cause harm to the company and its shareholders.
• Deciding on the reorganization or dissolution of the company.
• Deciding on the budget or total remuneration, bonuses, and other benefits for the Board of Directors and Supervisory Board.
• Approving the internal governance regulations; the operating regulations of the Board of Directors and Supervisory Board.
• Approving the list of independent audit firms; deciding on the independent audit firm to perform the company audit, and dismissing the independent auditor if necessary.
• Other rights and obligations as stipulated by the Law and the company’s charter.

The specific content of a Resolutions of the General Shareholders Meeting will reflect the issues the company is facing and the decisions needed to promote the company’s development and success.

For detailed provisions, see Clause 2, Article 138 of the Law on Enterprises 2020.

Conditions for Passing Resolutions of the General Shareholders Meeting

The conditions for passing Resolutions of the General Shareholders Meeting are specified by law in Article 148 of the Law on Enterprises 2020 as follows:

Number of Shareholders Attending and Voting:

• The General Shareholders’ Meeting is valid if more than 50% of the total voting shares are represented by attending shareholders. The specific rate is determined by the company’s charter.
• If the first meeting does not meet the required conditions as specified in Clause 1 of this Article, a second meeting notice must be sent. This notice must be sent within 30 days from the date of the first planned meeting unless otherwise specified by the company’s charter. The second General Shareholders’ Meeting can proceed if at least 33% of the total voting shares are represented by attending shareholders. The specific rate is determined by the company’s charter.
• If the second meeting also fails to meet the required conditions as specified in Clause 2 of this Article, a third meeting notice must be sent. This notice must be sent within 20 days from the date of the second planned meeting unless otherwise specified by the company’s charter. The third General Shareholders’ Meeting can proceed regardless of the total number of voting shares represented by attending shareholders.

Thus, the General Shareholders’ Meeting is conducted based on specific representation rates, and the number of attending and voting shareholders can significantly impact the legality and effectiveness of the resolutions passed at the meeting.

Voting at the general meeting

Approval Rates

Article 148 of the Law on Enterprises 2020 sets specific conditions for resolutions at the General Shareholders’ Meeting of a joint-stock company. These conditions clearly outline the necessary voting percentages for decisions to be approved and other related content.

Voting Rates:

• Resolutions on significant issues such as types of shares, changes in business lines, organizational structure, major investment projects, or company reorganization or dissolution must be approved by at least 65% of the total votes of all participating and voting shareholders at the meeting. However, this specific rate may be stipulated by the company’s charter.
• Other resolutions must achieve at least 50% of the total votes of all participating and voting shareholders at the meeting.

Election of Members to the Board of Directors and the Supervisory Board:

• Elections are conducted using a cumulative voting method, with each shareholder having votes corresponding to the number of shares they own, unless otherwise specified by the company’s charter.

Resolutions in the Form of Written Opinions:

• If a resolution is passed in the form of written opinions, it must receive at least 50% of the total votes of all eligible shareholders, or a percentage specified by the company’s charter.
• According to Article 145 of the Law on Enterprises 2020, resolutions in this form need to achieve at least 50% of the total votes of all eligible shareholders. This ensures that decisions are made based on the majority support of shareholders and reflect the general opinion of the shareholder community.

Notification of Resolutions:

• Resolutions of the General Shareholders’ Meeting must be notified to the shareholders entitled to attend within 15 days from the date the resolution is passed.
• If the company has an electronic information portal, this notification may be substituted by posting on the company’s electronic information portal.

Changes to Rights and Obligations of Preferred Shareholders:

• Resolutions of the General Shareholders’ Meeting that alter the rights and obligations of preferred shareholders can only be passed if at least 75% of the total preferred shares of that type are held by approving shareholders present at the meeting, or if 75% of the total preferred shares of that type are held by approving shareholders in case the resolution is passed by written opinion.

This provision not only clarifies the necessary conditions for passing decisions but also ensures transparency and fairness in the management and decision-making process at the General Shareholders’ Meeting of a joint-stock company.

Voting Methods:

Resolutions of the General Shareholders’ Meeting are passed in two ways:

1. Voting at the General Shareholders’ Meeting; or
2. Written opinions from shareholders.

However, resolutions on the following issues must be passed by voting at the meeting (unless otherwise specified by the company’s charter):

• Amendments or supplements to the company’s charter;
• Company development directions;
• Types of shares and the total number of each type of shares;
• Election, dismissal, or removal of members of the Board of Directors and the Supervisory Board;
• Decisions on investments or sales of assets valued at 35% or more of the total assets as stated in the company’s most recent financial report, except where the company’s charter specifies a different percentage or value;
• Approval of the annual financial statements;
• Reorganization or dissolution of the company.

Legal Basis: Article 147 of the Law on Enterprises 2020.

Consultation on Issues Related to Resolutions of the General Shareholders Meeting

To provide the best support to our clients regarding the conditions of the General Shareholders’ Meeting, Long Phan offers consulting services covering the following tasks:

• Specific advice on the conditions required to pass resolutions at the General Shareholders’ Meeting.
• Clarification of regulations regarding the passage of resolutions and the rules for canceling resolutions of the General Shareholders’ Meeting.
• Guidance and support for clients on the necessary procedures if there is a need to cancel a resolution of the General Shareholders’ Meeting.
• Other services as requested by the client.’

Consulting on Resolutions of the General Shareholders Meeting

A resolution of the General Shareholders’ Meeting is a document that reflects the decisions made at the meeting of shareholders in a joint-stock company. Depending on the content of the issue, the conditions for the percentage of votes required to pass the resolution will vary. The information provided by Long Phan details the conditions for passing resolutions at the General Shareholders’ Meeting. For more detailed information and to resolve any questions effectively, please contact us at hotline 0906.735.386. Thank you.