Luat Viet

:: Question :: An electric construction joint stock company is a State-Owned-Enterprise converting into Joint Stock Company since October 2003, a part of its employees was entitled to buy shares paid by installments within 10 years. Currently, it has become a publicly company and on the way of listing its shares in Stock Exchange Market. Thus, it is necessary to amend its organizational and operational Charter in accordance with Decision No. 15/2007/QD-BTC dated 19 March 2007 issued by the Minister of Finance. According to the Article 8.2 of the standard form of the Company’s Charter (“Standard Charter”):“Shares that have not been paid fully yet shall not be entitled to transfer and benefit dividends”. Hence, how could this Company deal with the shares paid by installments by its employees?

Based on the facts, we understand that in the process of equalization, the State would like to create the advantages for employees who are entitled to buy shares in their Company by paying for such shares by installments within 10 years.
This policy is complied with the provisions of Article 27.2 of Decree 64/2002/ND-CP dated 19 June 2002 on conversion of State-Owned-Enterprises into Joint Stock Companies: “the poor employees working in the equitized enterprises shall be entitled to buy shares at preferential price, to benefit deferment for payment in the first 3 years and pay by installments in the remaining 7 years with no interest rate...”.
On the other hand, the Article 8.2 of the standard form of the Company’s Charter provided that: “Shares that have not been fully paid shall not be transferred or benefit dividend”. In other words, shares that have bought or registered to buy but have not been fully paid for the Company shall not be transferred or benefit dividends. However this Article 8.2 shall not be applicable for such case because:
The shares bought by employees from the States have been fully paid for the Company; the employees are in debt to the State, instead of the Company. Thus, they shall be entitled to be distributed the dividend in accordance with legal regulations.
However, in this case, employees shall be restricted to transfer their shares in the Company. The reason is not due to the un-fulfillment of paying obligation corresponding to the regulation of Article 8.2 of the Sample Charter; however, it is because pursuant to the regulation of Article 27.2 of Decree 64, “The shareholders (employees) of this type of shares shall only be permitted to transfer their shares after at least 3 years since the full payment for the State”.
In accordance with Article 8.2 of the standard form of the Company’s Charter: “All shares shall be freely transferred, unless otherwise stated in this Charter or other legal regulations”. Hence, in the amended Charter of the Company, it is possible to add other regulations to restrict the transference of shares bought buy employees mentioned above.
 

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