Responsibility of the joint stock company when an investor transfers shares

Responsibility of the joint stock company when an investor transfers shares include many obligations according to the provisions of the Enterprise Law and the Investment Law. The company must ensure shareholders’ freedom of transfer, support procedures, update the register and report changes in capital structure. This article will analyze in detail the legal responsibility of the joint stock company during the share transfer process.

Regulations on transfer of shares in joint stock companies

Share transfer is one of the important activities in the management and ownership structure of a joint stock company. Regulations on share transfer not only ensure the rights of shareholders but also maintain stability and transparency in company management. Shareholders have the right to freely transfer their shares to others, except in cases where the company charter has regulations restricting the transfer of shares.

The transfer of shares follows the principles of voluntariness, openness and transparency. The consequence of transferring shares is to change the owner of the transferred shares but does not change the charter capital and assets of the joint stock company. The condition for the parties to complete the transfer of shares is that the parties must comply with their rights and obligations in the transfer contract.

Legal basis: Clause 1, Article 111, Clause 1, Article 127 of the Law on Enterprises 2020.

Principles for transferring shares

Principles for transferring shares in joint stock companies are specifically stipulated in Article 127 of the Law on Enterprises 2020. Basic principles in this activity include:

• Shares are freely transferable, except in cases where the company charter has regulations restricting the transfer of shares and the cases specified in Clause 3, Article 120 of this Law.
• The transfer is carried out by contract in the usual way or through transactions on the stock market.
• In case of transfer by contract, the transfer documents must be signed by the transferor and transferee or their authorized representatives.
• For shares registered for trading on the Stock Exchange, the transfer is carried out in accordance with the provisions of securities law.
• Shareholders have the right to donate part or all of their shares to others and use their shares to repay debt. In this case, the person who is given or receives debt in shares will be a shareholder of the company.

Legal basis: Article 127 of the Law on Enterprises 2020.

Common forms of share transfer

Common forms of share transfer include:

• Transfer through contract: Applicable to unlisted shares, both parties agree and sign a transfer contract
• Transfer on the stock exchange: Applicable to listed shares, complying with the provisions of the Securities Law.
• Transfer through inheritance: Occurs when a shareholder dies, the shares are transferred to the heirs according to the provisions of law.

For unlisted joint stock companies, the transfer of shares is carried out by contract. Transfer documents must be signed by the transferor and transferee or their authorized representatives. In case of transferring shares of a company listed or registered for trading on the Stock Exchange, the transfer shall be carried out in accordance with the provisions of securities law.

Legal basis: Article 127 of the Law on Enterprises 2020.

Responsibility of the joint stock company when an investor transfers shares

Responsibility for providing information and procedural support

Joint stock companies are responsible for providing complete and accurate information about their financial situation and business activities to shareholders and potential investors. The responsibility of the joint stock company is to support shareholders in carrying out share transfer procedures, including confirming information about shares and shareholders. This responsibility ensures transparency and facilitates share transfer transactions.

The company needs to provide a sample share transfer contract, instructions on how to fill in the information and necessary documents. At the same time, it is the responsibility of the joint stock company to confirm the transfer of shares when requested by the shareholder or transferee. Providing information and procedural support must be done quickly and accurately to ensure the legitimate rights and interests of relevant parties.

Responsibility for updating the shareholder register

According to Article 122 of the Law on Enterprises 2020, joint stock companies are responsible for establishing and maintaining a shareholder registration book. When there is a change of shareholders, the joint stock company’s responsibility is to promptly update the new shareholder’s information in the register. This update must be made within 24 hours of receiving a valid request.

The shareholder register must include the following information:

• Name and address of the company’s headquarters;
• Total number of shares authorized to be offered for sale, types of shares authorized to be offered, and number of shares authorized to be offered for each type;
• Total number of shares sold of each type and value of contributed capital;
• Full name, contact address, nationality, legal document number of individual for individual shareholders;
• Name, business code or legal document number of the organization, head office address for institutional shareholders;
• Number of shares of each type of each shareholder, date of share registration.

Responsibility for reporting changes in shareholder structure

Joint stock companies are responsible for reporting changes in shareholder structure to competent state agencies. According to Article 175 of the Law on Enterprises 2020, companies must report changes in the structure of shareholders who are foreign investors according to regulations. The report must be made within 10 days from the date of the change.

For listed companies or public companies, reporting changes in shareholder structure must comply with the provisions of the Securities Law. The responsibility of the joint stock company at this time is to disclose information about changes in major shareholders and internal shareholders according to regulations. Timely and accurate reporting and disclosure of information ensures the transparency of the stock market and the interests of investors.

Process and procedures for transferring shares of investors

Transferring shares by investors is an important process in joint stock company management, affecting the ownership structure and management of the company. To ensure the transfer takes place legally and effectively, investors need to clearly understand the process and procedures that need to be followed.

The process of transferring shares usually includes the following steps:

Step 1: Shareholders find partners and agree on transfer terms.

Step 2: Both parties sign a share transfer contract.

Step 3: Submit transfer documents to the joint stock company.

Step 4: The company reviews and confirms the transfer, updating the necessary legal documents

Step 5: Update information in the shareholder register

Step 6: Carry out registration procedures to change business registration content

After completing the above steps, the company will issue a new share ownership certificate to the transferee. For listed shares, the transfer is carried out through the trading system of the Stock Exchange. In this case, the process will comply with the provisions of the law on securities and the trading regulations of the Stock Exchange.

Legal basis: Article 51 of Decree 01/2021/ND-CP on Business Registration.

Consulting services on share transfer at Long Phan

Long Phan provides professional legal consulting services on share transfer. Our team of experienced experts will support customers throughout the entire transfer process. Long Phan’s services include consulting on legal regulations, supporting contract drafting and carrying out transfer procedures. Specifically:

Long Phan provides the following services:

• Consulting on necessary conditions to transfer shares;
• Provide detailed information about current legal regulations related to share transfer and responsibilities of joint stock companies
• Drafting share transfer contracts;
• Check customer transfer contracts to ensure legality and complete information.
• Instruct clients on the steps to take to notify the company of a share transfer and update the shareholder register.
• Provide information on tax obligations related to share transfers
• Support the implementation of procedures with state agencies, ensuring compliance with the responsibility of the joint stock companies according to legal regulations.

Long Phan provides high quality consulting services, meeting the diverse needs of customers in the field of share transfer. At the same time, Long Phan also constantly updates the latest legal knowledge to ensure accurate and effective advice for customers. We will accompany customers throughout the share transfer process, from the preparation stage to the completion of the transaction.

Transfer of shares is a common activity governed by the Enterprise Law. The responsibility of the joint stock company in this activity is to support investors when transferring shares, complying with the law and the company charter. Long Phan provides professional consulting services and comprehensive support on procedures for transferring shares. Customers who need advice, please contact Long Phan via Hotline 0906.735.386 for detailed support.