Question:
Our company has held an Extraordinary General Meeting of Shareholders to approve amendments to the Enterprise Registration Certificate and an increase in charter capital. Can this meeting be considered the Annual General Meeting of Shareholders? If not, is the company required to hold an additional Annual General Meeting of Shareholders?
Answer:
Under the Law on Enterprises 2020, the Annual General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders are two types of meetings with different purposes and characteristics. Therefore, an Extraordinary General Meeting of Shareholders held to approve amendments to the Enterprise Registration Certificate and an increase in charter capital cannot be considered an Annual General Meeting of Shareholders.
As a general rule, the General Meeting of Shareholders must be held annually once a year. In addition to the Annual General Meeting of Shareholders, the company may hold Extraordinary General Meetings of Shareholders when necessary.
The Annual General Meeting of Shareholders must be held within 04 months from the end of the fiscal year. Where necessary, the Board of Directors may extend this period, but the meeting must be held no later than 06 months from the end of the fiscal year, unless otherwise provided by the company’s Charter.
The agenda of the Annual General Meeting of Shareholders includes important matters relating to the company’s operations and governance, including:
- Approval of the company’s annual business plan;
- Approval of the annual financial statements;
- Report of the Board of Directors on corporate governance and the performance of the Board of Directors and each of its members;
- Report of the Board of Supervisors on the company’s business results and the activities of the Board of Directors and the Director/General Director;
- Report on the self-assessment of the performance of the Board of Supervisors and the Controllers;
- Approval of dividends for each class of shares;
- Other matters falling under the authority of the General Meeting of Shareholders.
In addition, the meeting venue of the General Meeting of Shareholders is determined as the place where the chairperson attends the meeting and must be located within the territory of Vietnam.
Accordingly, the fact that the company has held an Extraordinary General Meeting of Shareholders to approve amendments to the Enterprise Registration Certificate and an increase in charter capital does not relieve the company of its obligation to hold the Annual General Meeting of Shareholders. The company must still hold the Annual General Meeting of Shareholders within the prescribed period and consider the matters falling within the authority of the Annual General Meeting of Shareholders.
Conclusion
An Extraordinary General Meeting of Shareholders held to approve amendments to the Enterprise Registration Certificate and an increase in charter capital cannot replace the Annual General Meeting of Shareholders. The company must still hold the Annual General Meeting of Shareholders annually within the statutory time limit and consider the matters falling within the authority of the General Meeting of Shareholders in accordance with applicable law.
Failure to hold the Annual General Meeting of Shareholders within the prescribed period may give rise to legal risks and affect the company’s compliance in corporate governance and management.
If your company requires legal advice on the organization of Annual General Meetings of Shareholders or Extraordinary General Meetings of Shareholders, the procedures for convening and conducting such meetings, or a review of the validity of resolutions of the General Meeting of Shareholders, please contact SB Law for timely and appropriate support from our team of lawyers and legal experts
