In a joint stock company, shareholders can take control of the company by owning a certain number of shares. This control is very beneficial to shareholders in organizing and operating the company.
What is corporate control?
The characteristic feature of a joint stock company is that the charter capital is divided into equal parts called shares. Shares will be owned by shareholders – individuals and organizations that contribute capital to the company.
The ownership of shares will be calculated as a percentage. The organizational structure of the management apparatus, internal management issues, and rights and obligations of shareholders are mainly resolved based on the value of shares held by shareholders.
The owner of the higher number of shares (the higher the percentage of shares) will have higher rights and obligations.
The right to control the company is not specifically defined in the Enterprise Law. Understandably, the right to control the company is expressed through the rights of shareholders in the company. Accordingly, the higher the share ownership ratio, the greater the control over the company.
For a joint stock company, the right to control the company is expressed through a number of basic rights as follows:
– The right to convene the General Meeting of Shareholders;
– The right to pass resolutions of the General Meeting of Shareholders;
– The right to nominate people to the Board of Directors and the Control Board.
How many shares do you own to control the company?
* Right to convene the General Meeting of Shareholders
According to Clause 1 , Article 148 of the Enterprise Law 2020 , the Board of Directors convenes the Annual and Extraordinary General Meeting of Shareholders. The Board of Directors convenes an extraordinary meeting of the General Meeting of Shareholders in the following cases:
– The Board of Directors considers it necessary for the benefit of the company;
– The number of remaining members of the Board of Directors and Control Board is less than the minimum number of members as prescribed by law;
– At the request of a shareholder or a group of shareholders specified in Clause 2, Article 115 of this Law;
– At the request of the Supervisory Board;
– Other cases as prescribed by law and the company’s charter.
Thus, according to Point b, Clause 1, Article 48, a shareholder or group of shareholders owning 05% of the total number of ordinary shares or more or a smaller percentage as prescribed in the Charter shall have the right to convene a meeting. Extraordinary General Meeting of Shareholders, but only in case the Board of Directors seriously violates the rights of shareholders, the obligations of managers or makes decisions beyond its assigned authority.
Shareholders’ control of the company (Artwork)
* Right to nominate people to the Board of Directors, Supervisory Board
Clause 5, Article 115 of the Enterprise Law 2020 stipulates that a shareholder or a group of shareholders owning 10% or more of the total number of ordinary shares or a smaller percentage as prescribed in the company’s charter has the right to nominate a person to be appointed by the company. to the Board of Directors, the Supervisory Board.
However, this is only the right to nominate people to the Board of Directors and Supervisory Board, the decision on the composition of these agencies is under the authority of the General Meeting of Shareholders on the basis of the approval of the Resolution of the General Meeting of Shareholders.
* The right to pass resolutions of the General Meeting of Shareholders
According to Clause 2, Article 148 of the Enterprise Law 2020, resolutions of the General Meeting of Shareholders are approved when approved by the number of shareholders holding more than 50% of the total votes of all attending shareholders, except for the case specified in Clause 2 of this Article. Clauses 1, 3, 4 and 6 of this Article; The specific ratio shall be prescribed by the company’s charter.
Thus, shareholders owning more than 50% have the right to approve almost all resolutions of the General Meeting of Shareholders.
This right is very important for shareholders, because based on Article 138 of the Enterprise Law 2020, the General Meeting of Shareholders is the highest decision-making body, deciding the most important issues of the company through resolutions such as:
– Through the development orientation of the company;
– Decide on the class of shares and the total number of shares of each type that are entitled to offer for sale; decide on the annual dividend rate of each class of shares;
– Electing, dismissing and dismissing members of the Board of Directors, Supervisors;
In summary, shareholders can control the company to different degrees, specifically:
– Owning from 05% of shares: has the right to convene an extraordinary General Meeting of Shareholders in case the Board of Directors or the Supervisory Board violates their rights and obligations;
– Owning from 10% of shares: have the right to nominate people to the Board of Directors, Supervisory Board;
– Owning 50% or more of the total number of shares: Having the right to pass resolutions of the General Meeting of Shareholders.
According to Luatvietnam.vn
