Luat Viet

:: Question :: I am a shareholder of Joint Stock Company A, I would like to pose a question: “That Company A actively develops new projects out of Resolution of General Shareholders’ Meeting of 2008, including a series of projects in real estate is itillegal?” Which regulations should be complied for the legality in this case? Note that Article 24.4.7 of the Charter of this Company provided that: Board of Management approve all investment out of the operating plan and annual budget of the Company with the value exceeding 10% of annual operating budget.

According to point d, clause 1, Article 96 of the 2005 Enterprises Law, the General Meeting of Shareholders shall include all the shareholders entitled to vote and shall be the highest decision-making authority of a shareholding company, have the right to make investment decisions or decisions on sale of assets valued at fifty (50) or more per cent of the total value of assets recorded in the most recent financial statement of the company, unless the charter of the company stipulates some other percentage;
Based on the above Article, the Law on Enterprises 2005 allows the Charter of the Company to provide a different proportion, for example, the General Shareholders’ Meeting has the right to decide the investment equal to or more than 60% of the total assets printed in the latest financial report of the Company, this proportion shall be compulsory applied. Hence, if the Charter of the Company has no stipulation, it is possible to interpret that all investment decisions with the value equal to or more than 50% the total assets printed in the latest financial report of the Company are within the competence of the General Shareholders’ Meeting.
Together with Article 24.4.7 of the Charter of the Company, the Company’s investment in new projects that are out of the Resolution of the General Shareholders’ Meeting 2008 is legal or not that is absolutely depends on the investment value: (i) if it is equal to or more than 50% the total value of assets printed in the latest financial report (2008), it is within the competence of the General Shareholders’ Meeting; (ii) if it is less than 50% of the total value of assets printed in the latest financial report (2008) but more than 10% annual operating budget, it is not within the competence of GSM but the Board of Management; (iii) if it is less than 10% of the annual operating budget, it shall be decided by the General Director.
In case the investment value of projects is equal or more than 50% of the total value of assets as stated in the latest financial report (e.g. 2008) but has not approved by and/or recorded in the Resolution of the GSM of 2008 yet, such investment shall be approved by the unusual GSM or annual GSM of 2009 to be considered as a valid report and the investment projects shall be implemented continuously. If no approval of the GSM is obtained, individuals who sign such investment projects shall not comply with laws and regulations and they shall bear all responsibilities before the laws.
 

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