Luat Viet

:: Question :: We are a group of small investors holding the shares in a number of public companies. As known, on June 24, 2009, State Securities Commission (SSC) issued Official Letter No. 1234/UBCK-QLPH on checking the charter of public companies. This Official Letter enforces public companies to check their Charter and plan to adjust any regulations contrary to the current law during the annual General Meeting of Shareholders (GMS) of year 2009. After this term, any public company whose charter still contraries to the law shall be punished according to the law. Please kindly advise how the laws deal with this case?

Answer:
According to Article 79 and articles from Article 96 to Article 127 of the 2005 Law on Enterprise (LOE) and Article 28 of the Law on Securities 2006 (LOS), when making and drafting the regulations of their charter, public companies must ensure that such regulations in the Charter must comply with the law and ensure to protect legal rights and interests of shareholders. However, currently, the charter of some public companies does not comply with the laws, especially regarding the regulations regarding right attending GMS of investors.
Clause 1, Article 28 of Law on Securities stipulates: “Public companies must comply with the provisions on corporate management in the Law on Enterprises”. Thus, current regulations in the charters of public companies contrary to law are considered as breach of the LOE and the LOS on corporate management.
Point d, Clause 2, Article 10 of Decree No. 36/2007/ND-CP dated on March 08, 2007 of Government on penalties for administrative offences in securities and securities market sector stipulates: “A fine of from five million to ten million VND shall apply to a public company which fails to comply with the provisions of the LOE regarding corporate management as required by Article 28.1 of the Law on Securities”. Therefore, any public companies delaying in amending, supplementing or refusing to amend, supplement above-mentioned regulation before permitted time limitation (annual GMS year 2009) is considered as breach of LOE and LOS on corporate management. Such breach can be punished in accordance to the law. In addition to that, any public companies committing such breach shall be applied measures of compulsory compliance with law for remedying consequences (to be forced to amend, supplement the charter complying with the law).
 

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