AMENDING CHARTER OF A JOINT STOCK COMPANY – IMPORTANT LEGAL NOTES

The company charter serves as the foundational legal document, governing all corporate governance and management activities of the enterprise. Throughout the development process, updating this document is an inevitable requirement to adapt to changes in the law as well as practical requirements from business operations. However, depending on the specific type of enterprise, the approval mechanism will have certain differences. Amending charter improperly or without the correct authority may lead to severe legal risks. The following article will clarify a number of key principles to note when amending charter of a joint stock company, ensuring the updated charter is legally sound and compliant.

Timing and basis for amending charter of a joint stock company

The charter of a joint stock company must be updated and amended whenever any changes arise, especially regarding the main and material contents stipulated in Clause 2, Article 24 of the Law on Enterprises 2020, such as the company name, head office address, business lines, charter capital, or management organizational structure.

In practice, the process of amending charter of a joint stock company rarely occurs independently. This activity typically arises simultaneously when the company carries out procedures for registering or notifying changes to the contents of the Enterprise Registration Certificate; or adjusting the Establishment and Operation License with State management agencies.

Authority to approve amending charter of a joint stock company

Regarding authority, the decision on amending the charter of a joint stock company falls under the supreme jurisdiction of the General Meeting of Shareholders (“GMS”) pursuant to Point dd, Clause 2, Article 138 of the Law on Enterprises 2020. Current laws do not allow for any authorization mechanism or decentralization exception for this matter. Governing and management bodies such as the Board of Directors (“BOD”) and the Executive Board are only permitted to draft, recommend, and submit the contents to the GMS for consideration and approval.

Procedures for amending charter of a joint stock company

To ensure the legal validity of the new charter, the company must strictly comply with the procedures for approving the draft amended charter in accordance with the provisions of law.

The BOD is responsible for drafting the changed contents in the charter and incorporating them into the agenda and documents for the GMS meeting. The convener of the meeting is obligated to send this draft attached to the meeting invitation notice to all shareholders in accordance with Article 143 of the Law on Enterprises 2020.

The GMS shall conduct voting to approve the adjusted contents. It should be noted that, as prescribed in Point a, Clause 2, Article 147 of the Law on Enterprises 2020, this matter must imperatively be decided through a direct GMS meeting, unless the current charter contains provisions allowing for the collection of written opinions.

To complete the issuance procedures, the new charter must be signed and explicitly state the full name of the legal representative of the company in strict compliance with the requirements at Point c, Clause 4, Article 24 of the Law on Enterprises 2020.

Notes on the voting threshold for approving contents on amending charter of a joint stock company

The approval ratio for amending the charter of a joint stock company depends strictly on the nature of each content. Unless the company’s Charter stipulates a higher ratio, the passing ratio is regulated as follows, based on Article 148 of the Law on Enterprises 2020 (amended and supplemented in 2025):

– For ordinary matters, the GMS resolution is passed when approved by a number of shareholders representing more than 50% of the total voting shares of all shareholders attending and voting at the meeting.

– In case of amending contents related to material matters such as changes in the class of shares and total number of shares of each class; changes in business lines; changes in the management organizational structure; decisions on investment projects or asset sales of 35% or more; and reorganization or dissolution of the company, the approval ratio by the GMS must reach 65% or more of the total voting shares of all shareholders attending and voting at the meeting.

– If amending charter alters the rights and obligations of shareholders owning preference shares in an adverse manner, the approval is only valid when it is agreed by the shareholders holding 75% or more of the preference shares of the same class attending the meeting.

The new charter will take internal effect on the date it is passed by the GMS, or from a specific time recorded in the corresponding approving Resolution.

The enterprise’s execution of approving the amendment to the Charter with improper authority, non-compliance with the prescribed GMS meeting procedures, or failure to meet the voting threshold is considered a “serious violation”. In such cases, a shareholder or a group of shareholders holding 5% or more of the total ordinary shares has the right to request a Court or an Arbitrator to cancel the GMS Resolution pursuant to Article 151 of the Law on Enterprises 2020. In the event that the Resolution is declared canceled, the new Charter shall be invalidated, directly affecting the legality of relevant transactions, contracts, and decisions.

In addition, public companies and enterprises operating in specialized sectors must comply with further relevant specific regulations and procedures.

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