Sell company shares is a flexible solution to increase capital and expand business scale. By attracting new investors, the company has the opportunity to grow and bring benefits to both parties. However, in this process, disclosing information and protecting the interests of shareholders is very important to ensure transparency and fairness.

1. Legal regulations on buying and selling shares of joint stock companies

1.1 Overview of shares and joint stock companies

According to the provisions of Article 111 of the Enterprise Law 2020, a Joint Stock Company (JSC) is a type of enterprise with the following characteristics:

• The charter capital of a joint stock company is divided into the smallest parts called shares.
• Shareholders in a joint stock company can be organizations or individuals, and the minimum number of shareholders is 03, with no maximum limit.
• Shareholders are only responsible for the company’s debts and other property obligations within the amount of capital they have contributed to the company.
• Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3 of Article 120 and Clause 1 of Article 127 of the Enterprise Law.
• A joint stock company has legal status from the date of issuance of the Business Registration Certificate.
• Joint stock companies have the right to issue different types of shares to raise capital.

1.2 Basic characteristics of a joint stock company

A joint stock company (JSC) has many special characteristics that are different from other types of businesses. Below are the characteristics of a joint stock company:

About the company’s shareholders:

Members of a joint stock company are called shareholders. Shareholders are people who own at least one share in the company.
The law stipulates that the minimum number of shareholders of a joint stock company is 03, and there is no limit on the maximum number. This allows the joint stock company to flexibly expand the number of shareholders according to its needs.

Regarding the company’s charter capital:

The charter capital of a joint stock company is determined at the time of business registration. This is the total par value of the shares registered to buy and recorded in the company’s Charter.

1.3 Types of shares in joint stock companies

According to the provisions of Article 114 of the Enterprise Law 2020, there are the following types of shares:

– Common shares;

– Preference shares. Preference shares have the following types:

+ Voting preference shares: Only organizations authorized by the Government and founding shareholders are entitled to hold voting preference shares

+ Dividend preference shares;

+ Redeemable preference shares;

+ Other preferred shares prescribed by the company charter.

Persons with the right to buy dividend preference shares, redeemable preference shares and other preference shares are prescribed by the company’s charter or decided by the General Meeting of Shareholders.

1.4 Legal status of a joint stock company

According to the provisions of the 2015 Civil Code, to be recognized as a legal entity, an organization needs to meet the following conditions:

• Legally established.
• There is a strict organizational structure.
• Own property independently and be responsible for that property, not dependent on other individuals or organizations.
• Be able to participate in legal relations independently, that is, be able to act, sign contracts, and perform legal acts in your own name.

A joint stock company (JSC) meets the above conditions and has full legal status. The joint stock company is responsible for the company’s debts. In addition, a joint stock company has the right to become a plaintiff or defendant in civil and commercial disputes. A joint stock company also has the right to own its own assets, while shareholders only own shares of the company and do not own the company’s assets.

2. Right to repurchase shares of shareholders in joint stock companies

Companies can buy back shares from shareholders for different reasons:

• At the request of shareholders
• According to company requirements

2.1. Right to repurchase shares at the request of shareholders

According to the provisions of Article 132 of the Enterprise Law 2020, joint stock companies have the right to repurchase shares at the request of shareholders when the following conditions are met.

Shareholders voted not to pass a resolution on reorganizing the company or changing the rights and obligations of shareholders according to the provisions of the company’s charter.

Procedures for repurchasing shares at the request of shareholders are carried out according to the following steps:

• Shareholders’ requests must be sent to the company within 10 days from the date the General Meeting of Shareholders passed a resolution on one of the above issues.
• The company must buy back shares at the shareholder’s request within 90 days from the date of receipt of the request.
• The price of repurchased shares is determined based on the market price or according to the principles stipulated in the company charter.
• In case a price cannot be agreed upon, the parties can request a valuation organization to determine the price.
• The company needs to introduce at least 03 valuation organizations for shareholders to choose from, and the final decision on the valuation organization will be chosen by the shareholders.

Thus, this regulation aims to ensure the rights and interests of shareholders in requesting to buy back shares and determine specific processes and procedures to exercise this right.

2.2 Right to repurchase shares according to the company’s decision

The General Meeting of Shareholders has the right to decide to buy back the following types of shares:

• Buy back no more than 30% of the total number of common shares sold.
• Part or all of the dividend preference shares have been sold.

The Board of Directors can decide to buy back no more than 10% of the total number of shares of each type offered for sale within 12 months.

In addition, the company can buy back shares from each shareholder in proportion to their shareholding in the company. The company’s decision to repurchase shares must be notified by a method guaranteed to reach all shareholders within 30 days from the date the decision is approved by the general meeting of shareholders; Shareholders who agree to resell shares must send the offer to sell their company shares by a method guaranteed to reach the company within 30 days from the date of notification.

The price to buy back shares is decided by the Board of Directors, however:

• The repurchase price for common shares must not be higher than the market value at the time of repurchase.
• The repurchase price for other types of shares must not be lower than the market value, unless the company charter stipulates otherwise or the company and relevant shareholders can agree on the repurchase price.

3. Legal consequences after the company buys back shares

After a company repurchases shares, there are legal consequences related to ownership, share management, shareholder rights, changes in shareholder structure, as well as the obligations and responsibilities of company.

3.1 Ownership and management of shares after acquisition

Shares that have been repurchased become the property of the company and the company becomes the owner of those shares. The company has the right to manage and use the acquired shares in accordance with the provisions of law and the company’s Charter.

3.2 Impact on shareholder rights and changes in shareholder structure

When the company buys back shares, the ownership ratio of other shareholders may be affected and changed. Shareholders who sell their company shares may lose the rights and control related to those shares.

3.3 Obligations and responsibilities of the company after repurchasing shares

The company must comply with legal regulations and the Company’s Charter regarding the ownership and management of repurchased shares. The company is responsible for ensuring the legitimate rights and interests of the remaining shareholders after repurchasing shares. The company must perform other obligations and responsibilities related to the ownership and management of repurchased shares in accordance with the provisions of law and the company’s Charter.

4. Regulations on information disclosure and protection of shareholders’ rights

4.1 Publicize information related to share repurchases

Disclosure of information related to share repurchases: The company is obliged to disclose information about the share repurchase process, including information about the repurchase decision, number of shares repurchased, and purchase price. return, transaction execution time, and other related information. This ensures transparency and fairness in the share repurchase process and facilitates shareholders and stakeholders to monitor and evaluate the company’s decisions and activities.

4.2 Protect the rights of minority shareholders and shareholders suffering losses due to share repurchases

Protecting the rights of minority shareholders and shareholders damaged by share repurchases: The company must ensure that the share repurchase does not cause damage to the legitimate rights and interests of shareholders, especially is a minority shareholder. The company must consider and apply measures to protect the rights of minority shareholders during the process of repurchasing shares, ensuring that these shareholders do not suffer damage to their rights and interests. These measures may include public participation in the decision to repurchase shares, providing complete and accurate information about the decision and progress of the repurchase, and continuing to protect the rights of minority shareholders. number after the transaction is completed.

The process of sell company shares requires compliance with legal regulations, information disclosure and protection of shareholders’ rights. Correctly fulfilling obligations and responsibilities in this process will create a fair and transparent environment for all stakeholders. If you have anything you do not understand or have any questions about, please contact VIET MY LAW AND ACCOUNTING immediately.