Types of voting capital in enterprises

Voting capital is the capital contribution or shares of shareholders and capital-holding members who have the right to vote directly or through a representative at the General Meeting of Shareholders. This is an important concept in Enterprise Law and corporate governance. Voting capital directly affects the rights and obligations of shareholders in the company. To better understand the types of capital with voting rights, customers can refer to the detailed content below.

What is voting capital?

According to Clause 33, Article 4 of the Law on Enterprises 2020, voting capital is capital contribution or shares, whereby the owner has the right to vote on issues within the decision-making authority of the Board of Members or the General Meeting. shareholders.

In addition, some types of preference shares may also have voting rights in special cases. The percentage of capital ownership with voting rights determines the level of influence shareholders have on important decisions of the company.

Voting capital is different from charter capital in that charter capital includes all types of contributed capital, including non-voting capital. Meanwhile, voting capital only includes capital that has the right to vote at the General Meeting of Shareholders. This distinction is important in determining the rights of shareholders and implementing procedures related to corporate operations.

Legal basis: Clause 33, Article 4 of the Law on Enterprises 2020.

Forms of capital with universal voting rights

Voting capital is a factor that directly affects shareholder rights and important decisions about business operations and investment projects of the enterprise. Capital with voting rights in enterprises includes the following common forms:

Capital contributed by founding shareholders of a joint stock company

Founding shareholders’ contributed capital is one of the most important forms of voting capital in an enterprise. A founding shareholder is a shareholder who owns at least one common share and signs on the list of founding shareholders of a joint stock company.

According to the Enterprise Law, founding shareholders must jointly register to buy at least 20% of the total number of common shares authorized to be offered for sale. This capital contribution forms the basis for the voting rights of founding shareholders at the General Meeting of Shareholders and the Board of Directors. Founding shareholders have the right to decide on many important issues such as electing, dismissing, and dismissing members of the Board of Directors and Supervisory Board.

However, the voting rights of founding shareholders also have certain limitations. Within 03 years from the date the company is granted the Business Registration Certificate, founding shareholders have the right to freely transfer their common shares to other founding shareholders, but can only transfer shares to people who are not founding shareholders if approved by the General Meeting of Shareholders.

Legal basis: Clause 4, Article 4, Article 116, Clause 2, Clause 3, Article 120 of the Law on Enterprises 2020.

Ordinary share capital in a joint stock company

Common stock is the most common form of voting capital in joint stock companies. Each common share corresponds to one vote at the General Meeting of Shareholders. Shareholders who own common shares have the right to participate and vote at the General Meeting of Shareholders.

According to the provisions of the Enterprise Law, common shareholders have basic rights such as attending and speaking at the General Meeting of Shareholders, exercising voting rights directly or through an authorized representative. The number of common shares that shareholders hold determines their proportion of voting rights in the company. This directly affects the ability to participate in important business decisions.

However, the voting rights of common shareholders may also be limited in some cases. Shareholders or groups of shareholders owning 10% or more of the total common shares have the right to nominate people to the Board of Directors and Supervisory Board. This creates a balance of power between shareholder groups and ensures the rights of minority shareholders.

Legal basis: Point a, Clause 1, Clause 5, Article 115 of the Law on Enterprises 2020.

Capital contributions of members in a limited liability company

In a limited liability company (LLC), members’ capital contributions are the main form of voting capital. Each member has a number of votes corresponding to his/her capital contribution, unless otherwise stipulated in the company charter.

According to the Enterprise Law, members of a limited company have the right to attend meetings of the Board of Members, discuss, make recommendations, and vote on issues falling under the authority of the Board of Members. This creates flexibility in corporate governance, suitable to the characteristics of each company.

However, the voting rights of LLC members also have certain limitations. In some cases, the decision of the Board of Members is passed when there are votes representing at least 65% of the total capital contributions of the members attending the meeting in favor. This is to ensure fairness and protect the interests of all members of the company.

Legal basis: Point a, Point b Clause 1 Article 49, Point a Clause 3 Article 59 Law on Enterprises 2020.

Rights and obligations of capital owners with voting rights

Due to the nature of capital with voting rights in the enterprise, capital owners hold the following important rights:

• Right to attend and vote at the General Meeting of Shareholders, deciding on important issues of the company. This voting right corresponds to their voting capital ownership ratio in the company;
• Owners of voting capital have the right to request the convening of an extraordinary General Meeting of Shareholders in certain cases;
• Right to nominate people to the Board of Directors and Supervisory Board if they meet the ownership ratio conditions;
• Right to access information about company operations;
• Right to sue members of the Board of Directors, Director or General Director in case of violation of manager obligations.

However, along with those rights, owners of voting capital must fulfill certain obligations:

• Comply with the Company Charter and legal regulations;
• Implement resolutions of the General Meeting of Shareholders and the Board of Directors;
• Responsible for the debts and other property obligations of the company within the amount of capital contributed to the company.

Legal basis: Point a, Point b, Clause 1, Article 49; Article 115; Article 116; Clause 2, Clause 3 Article 120 Law on Enterprises 2020.

Consulting services on capital with voting rights

Long Phan provides professional consulting services on voting capital for businesses. A team of experienced experts in the corporate sector will assist customers with issues related to management and effective use of voting capital. Long Phan’s consulting services include:

• Consulting on capital structure, supporting capital increase and decrease procedures;
• Consulting on resolving disputes related to voting rights;
• Detailed advice on the process of registering changes to charter capital in compliance with legal regulations;
• Consulting on effective voting capital management strategies to maximize benefits for businesses and shareholders.

Long Phan not only provides consulting services but also accompanies businesses during the process of using the service. We always strive to provide optimal solutions, suitable for the characteristics of each business. Customers can feel completely secure when using Long Phan’s services.

Voting capital plays an important role in enterprise operations. Each type of capital brings its own rights and obligations. Long Phan provides in-depth consulting services on voting capital, supporting businesses in effective management and avoiding legal risks. Please contact us immediately via Hotline 090.673.5386 for support. optimal for your business.