MAJOR SHAREHOLDERS, 5 RIGHTS UNDER THE LATEST REGULATIONS

Major shareholders is a familiar concept in corporate administration and stock market management, especially in the sublimation period of the market, however, there are also many “controversies” about shareholders’ mistakes. So, what are the rights and responsibilities a major shareholder have in coporate?

1.         Who are major shareholders?

According to the provisions of the Law on Securities, a major shareholder is defined as a shareholder owning 5% or more of the voting shares of an issuer.

This is the percentage of ownership that makes the opinions of shareholders or groups of shareholders have a significant influence on corporate governance issues.

2.         What rights do major shareholders have?

Unless determined by a smaller percentage in accordance with the Company’s Charter, major shareholders have a some notable rights as follows:

For the shareholder or group of shareholders that holds at least 5% of the ordinary shares, rights to

–           Access, extract the minutes of meetings, resolutions and decisions of the Board of Directors, mid-year and annual financial statements, reports of the Board of Controllers, contracts and transactions subject to approval by the Board of Directors and other documents except those that involve the company’s business secrets;

–           Demand that a GMS be convened in the cases specified by regulations;

–           Request the Board of Controllers to investigate into specific matters relevant to the company’s administration where necessary.

It should be noted that, the request shall be made in writing and contain the full names, mailing addresses, nationalities, legal document numbers of shareholders that are individuals; names, EID numbers or legal document numbers, headquarters addresses of shareholders that are organizations; quantities of shares and time of shares registration of each shareholder, total quantity of shares of the group and their holdings in the company; the matter that needs investigating and the purposes of investigation;

–           Other rights prescribed by Laws and the company’s charter.

For the shareholder or group of shareholders that holds at least 10% of the ordinary shares

Is entitled to nominate candidates for the Board of Directors and the Board of Controllers as follows:

–           The ordinary shareholders shall hold a meeting to nominate candidates for the Board of Directors and the Board of Controllers and inform the participating shareholders before the opening of the GMS;

–           The number of candidates depends on the quantity of members of the Board of Directors and the Board of Controllers and shall be decided by the GMS. In case the number of candidates nominated is smaller than the permissible number, the remaining candidates shall be nominated by the Board of Directors, the Board of Controllers and other shareholders.

3.         Some notable obligations of major shareholders:

Owning a number of shares corresponding to voting rights has a significant degree of influence, major shareholders to avoid violations should pay attention to fully comply with their obligations as prescribed by law. Particular:

–           Obtaining approval by the General Meeting of Shareholders or the Board of Directors for contracts and transactions between the company and major shareholders.

–           Disclosing information for share purchase and sale transactions leading to becoming or no longer being a major shareholder of a public company.

–           Making mandatory tender offer and registering with SSC for securities transactions that lead directly or indirectly to owning 25% or more of the voting shares or the percentage of ownership reaching/exceeding the specified levels in 01 public company.