In today’s rapidly evolving corporate landscape, the mechanisms through which companies engage with their shareholders are increasingly important. One significant method is the adoption of resolutions through collecting written opinions from shareholders during general meetings. This approach not only enhances participation but also fosters a more inclusive decision-making process. By allowing shareholders to express their views in writing, companies can ensure that every voice is heard, contributing to a more comprehensive and democratic governance structure. Moreover, this method can mitigate the challenges associated with physical attendance at meetings, making it easier for shareholders to contribute their insights, regardless of their geographical location or personal circumstances.
- Legal validity of resolutions adopted by collecting written opinions of the GMS
Under the Law on Enterprises 2020, a resolution adopted by collecting written opinions of the GMS (General meeting of shareholders) has the same legal validity as a resolution adopted at a GMS meeting. “Equivalent legal validity” means that such a resolution may serve as a legal basis for corporate governance and management activities, as well as admissible evidence in case of disputes.
It should be noted that, for a resolution adopted by collecting written opinions of the GMS to take effect, it must be approved by more than 50% of the total voting shares of all shareholders entitled to vote in favor of the resolution. The specific voting ratio shall be applied in accordance with the Company’s Charter.
- Matters eligible for adoption by collecting written opinions of the GMS
Not all matters under the authority of the GMS may be adopted by collecting written opinions. Unless otherwise provided in the Company’s Charter, the GMS must be convened in person to decide on the following matters:
- Amendments or supplements to the Company’s Charter;
- The Company’s development orientation;
- Classes of shares and the total number of shares of each class;
- Election, dismissal, or removal of members of the Board of Directors and the Supervisory Board;
- Decisions on investment or sale of assets valued at 35% or more of the total asset value recorded in the Company’s latest financial statements, unless the Charter provides for another ratio or value;
- Approval of the annual financial statements;
- Reorganization or dissolution of the Company.
It can be seen that the matters restricted from adoption by collecting written opinions of the GMS are those of fundamental importance, directly affecting the Company’s organizational structure, strategic direction, and legal existence. Voting on such matters requires in-person discussions, exchanges, and even questioning among shareholders, with the aim of ensuring transparency, publicity, and an accurate reflection of the will of voting shareholders.
- Procedures and timelines to ensure the validity of a resolution adopted by collecting written opinions of the GMS
A GMS decision-making process that violates statutory provisions or the Company’s Charter constitutes a legitimate ground for major shareholders to request the annulment of a GMS resolution.
Unless otherwise provided in the Charter, the procedure for adopting a resolution by collecting written opinions of the GMS must comply with the following steps and timelines:
- Preparation of the list of shareholders entitled to attend the GMS: at least 10 days prior to the date of dispatch of the notice of solicitation.
The list of shareholders entitled to attend the GMS is prepared based on the Company’s register of shareholders and must include at least the following details: (i) full name, contact address, nationality, and legal identification number for individual shareholders; or name, enterprise code or legal identification number, and registered office address for institutional shareholders; (ii) number and class of shares held; (iii) shareholder registration number and date for each shareholder.
- Meeting notification by the Board of Directors (BOD): no later than 10 days prior to the deadline for returning written ballots.
The BOD shall prepare written ballots, the draft GMS resolution, and explanatory materials, and send them to all shareholders entitled to vote.
Each written ballot must include at least the following information: (i) name, registered office address, enterprise code; (ii) purpose of solicitation; (iii) full name, contact address, nationality, and legal identification number for individual shareholders; name, enterprise code or legal identification number, and registered office address for institutional shareholders; or information on the representative of an institutional shareholder; (iv) the matter to be voted on; (v) voting options including “for,” “against,” and “abstain”; (vi) deadline for returning the completed ballot to the Company; and (vii) full name and signature of the Chairperson of the BOD.
- Shareholders entitled to vote must return their completed ballots within the time limit specified in the solicitation notice.
Ballots may be submitted by post, fax, or email.
- The BOD must send the adopted resolution to shareholders within 15 days from the date of completion of the vote count.
The vote counting minutes and the adopted resolution must be delivered to all shareholders, except where the Company has an official website and discloses such documents publicly thereon.
It should also be noted that all related documents including the completed ballots, vote counting minutes, adopted resolutions, and accompanying documents must be retained at the Company’s head office for at least the minimum period prescribed by law.
In conclusion, the adoption of resolutions by collecting written opinions from shareholders represents a progressive and essential step towards enhancing corporate governance. This method not only facilitates broader participation but also aligns with the principles of transparency, accountability, and inclusivity. By actively engaging shareholders in this manner, companies can tap into a wealth of diverse perspectives that can lead to more informed decision-making. Furthermore, as businesses navigate an increasingly complex and dynamic environment, leveraging shareholder insights through written opinions will not only strengthen management-investor relations but also foster a more resilient and adaptive corporate culture. Embracing this practice will be crucial for navigating future challenges, ensuring that companies remain responsive to the needs and expectations of their stakeholders.
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1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
Dinh Phuong Thao