In this article, our Managing Partner Nguyen Van Phuc will express our views on the legal status of the above-mentioned document and set out some relevant points that enterprises need to pay attention to in the process of organizing the GMS. This article was published in the Legal Electronic Magazine on March 7, 2024.
April is the time when companies often hold their legally required General Meetings of Shareholders ("GMS"). Therefore, many legal issues related to the GMS are frequently raised by companies during this period. One of the most notable legal issues that many enterprises are concerned about is the legal status of the internal regulation on the organization of the GMS, a legal document that is often used by enterprises as the basis for organizing a GMS. In this article, we will express our views on the legal status of the above-mentioned document and set out some relevant points that enterprises need to pay attention to in the process of organizing the GMS.
1. Purpose of the internal regulation on the organization of the GMS
With reference to the internal regulations on the organization of the GMS of some listed companies, we acknowledge that such documents are issued to organize the General Meeting of Shareholders, usually the annual GMS. The main contents of this document revolve around the provisions on the conditions, order and procedures for organizing the GMS, the rights and duties of shareholders, the methods of establishing and electing the chairman, secretary and supervisory board, and the corresponding rights and duties of these entities, ...
Based on the above information, it can be concluded that the issuance of the Internal Regulations on the organization of the GMS is aimed at ensuring that the organization of the GMS is in accordance with the law and the actual situation of the company.
2. Legal status of the internal regulation on the organization of the GMS
In practice, the issuance and application of the internal regulation on the organization of the GMS at public and non-public companies are governed by different laws. In particular, for non-public companies, the organization of the GMS is now governed by the Law on Enterprises. The Law on Enterprise 2020 allows companies to regulate matters related to the organization of the GMS in the articles of association, provided that they do not violate the law. For example, provisions on conditions for holding meetings, procedures for holding meetings and voting at the GMS, ... In addition, the Companies Law does not expressly provide that the organization of the GMS must be in accordance with other documents of the company. Therefore, if a non-public company issues a regulation on the organization of the GMS, it will still be applied if it does not contradict the company's Articles of Association and the Law. However, if any existing content is contrary to the above regulations/documents, such content will not be applied. For non-public companies, in addition to the Articles of Association, which is considered the "constitution" of the company, the company also has the right to issue an internal management regulation, which is a document under the approval authority of the GMS, as prescribed in Item l, Clause 2, Article 138 of the Company Law 2020. The regulation on the organization of the GMS is a document that regulates the content related to the organization of the GMS and affects the rights and obligations of the shareholders, therefore, it is considered to be an internal management regulation of the Company. Therefore, in order to ensure its legal validity, the Regulation on the Organization of GMS must be approved by the GMS.
Meanwhile, public companies that are governed by the Law on Securities, are under more specific stipulations on the matter hereof. Accordingly, the law (Law on Securities) classifies the organization of the GMS as a corporate governance matter and stipulates that the GMS must be organized following some specific legal basis. Particularly, Point a Clause 2 Article 41 Law on Securities stipulates that the board of directors, the supervisory board, and the convener of the GMS must fully comply with the order and procedures for convening the GMS in accordance with the Law on Enterprises, the company's Charter and internal regulation on corporate governance; arrange a reasonable place and time for shareholders to attend the GMS. Therefore, it can be concluded that the internal regulation on the organization of the GMS is one of the company’s internal regulations on corporate governance. Similar to the Law on Enterprise, the Law on Securities and its implementating documents also require the internal regulation on corporate governance to be approved by the competent agency of the company. Accordingly, Clause 2 Article 270 of Decree 155/2020/ND-CP stipulates that the internal regulations on corporate governance shall be formulated by the board of directors and then submitted to the GMS for approval. The internal regulations on corporate governance must not contradict to the provisions of the law and the company's Charter. Thus, for a public company, the internal regulation on the organization of the GMS must be approved by the GMS and must not contain any content that is contrary to the law and the company's charter in order to ensure its legal validity.
Another noteworthy point of the internal regulation on corporate governance is that the Securities Law requires public companies to establish the framework for the use of modern information technology in the organization of the GMS, so that shareholders can participate and express their opinions through online meetings and vote by electronic means as provided by the Law on Enterprises or the company's charter. Therefore, public companies issue internal regulations on the organization of GMS not only to meet their requirements, but also to comply with the law.
In conclusion, the issuance and application of internal regulations on the organization of GMS in joint-stock companies, including public and non-public companies, are essential for regulating and instructing the organization of GMS to meet the actual requirements. However, in order to ensure the legal validity of this document, it is recommended that companies comply with the law on the formulation and issuance of the document, including the content and authority to issue the regulation.
Read more at: Giá trị pháp lý của quy chế tổ chức cuộc họp đại hội đồng cổ đông
