VIETNAM Law and Practice Contributed by: Minh Duong, Phong Nguyen and Justin Gisz, Asia Counsel Vietnam Law Company Limited
4.2 Relationship Between Companies and Minority Investors In Vietnam, there is no official definition of minority investors or minority shareholders, nor is there a set shareholding threshold to determine such classifica - tions. However, the Law on Securities, which governs public companies, defines a major shareholder as one holding 5% or more of the voting shares. This implies that individuals holding less than this threshold are considered minority shareholders. The Law on Enterprises applies to both public and pri - vate companies, and grants basic rights to all share - holders of JSCs. It allows shareholders or groups of shareholders owning 1% or more of the common shares to initiate lawsuits against the company’s directors to seek compensation for losses and dam - ages caused by their negligence or breach of duties. Regarding the right to access information, which is crucial for informed investment decisions, the appli - cable threshold is 5% or a lower threshold as outlined in the company’s charter. Shareholders or groups of shareholders meeting this threshold have the right to access mid-year and annual financial statements, working reports, special contracts and transactions, excluding documents related to business secrets of the company; and to convene the general meeting of shareholders under exceptional circumstances. For the right to nominate candidates for the Board of Directors or Supervisory Board, a higher threshold of 10% or a lower threshold as specified in the charter applies. In LLCs, each equity owner has equal rights, includ - ing the right to initiate lawsuits against the managerial personnel of the company. However, certain special rights – such as the right to convene the equity own - ers’ council and access to important company docu - ments – are only granted to equity owners or groups of equity owners holding 10% or more of the charter capital or a lower threshold as set forth in the charter. Given this situation, minority investors with holdings below the relevant thresholds for certain statutory rights should consider forming alliances to exercise these rights collectively or negotiating with other
shareholders to lower these thresholds in the compa - ny charter. Minority investors may also seek to incor - porate specific rights into the shareholder agreement, such as veto rights or reserved matters, to safeguard their investments. 4.3 Disclosure and Reporting Obligations Private companies in Vietnam are now required to disclose their ultimate beneficial owners (UBOs). UBOs are determined based on controlling interests and power. Specifically, a UBO is an individual who (i) directly or indirectly owns at least 25% of the charter capital or outstanding shares with voting power of a company; or (ii) has control or influence over any key decisions, including the appointment and dismissal of certain key managerial positions, amendment of the company charter, or reorganisation and dissolution of the company. A private JSC is further required to dis - close the details of the corporate shareholder holding 25% or more of outstanding shares with voting power. Any change to UBO information must be then updated within 10 days of the relevant modification. Public companies in Vietnam are subject to stringent disclosure requirements, similar to those in other juris - dictions. These regulations mandate the timely and comprehensive disclosure of material information to shareholders, ensuring transparency and accountabil - ity. Public or listed companies are obliged to publish their disclosure information on the online databases of the SSC and the relevant stock exchange. Aside from the SSC’s databases, there is a compre - hensive online enterprises national database, where all registered company information is publicly acces - sible. Any changes to a company’s registered informa - tion that require official approval are announced to the public through a formal process. Private foreign-owned companies are mandated to submit their audited financial statements to relevant government agencies, including the Tax Department, the Statistics Department and the Department of Finance, within 90 days of the end of each fiscal year. FDI-related reporting obligations also apply to these companies, such as updating the investment national database with the status of investment projects. In the areas of employment and financing, businesses
721 CHAMBERS.COM
Powered by FlippingBook