Voting in joint-stock companies is one of the methods that is considered a typical voting method that only appears in the joint stock company. This is a legally prescribed method to protect the interests of small shareholders owning a small percentage of shares in the company. However, for this method to maximize its capabilities, small shareholders of the company need to understand and be able to apply this method in certain cases.

1. Cases where the cumulative voting method applies

In clause 3, Article 148 of the Enterprise Law (2020), unless provisions provided in the company’s charter, the method of cumulative voting will be applied in the following scenarios:

  • Vote to elect members of the Board of Directors of the company;
  • Vote to elect members of the Board of Controllers of the company;

According to the above provisions, it can be seen that these are two cases in which the company’s General Meeting of Shareholders is legally allowed to apply the cumulative voting method.

2. The meaning of cumulative voting

The Enterprises Law (2020) stipulates the method of voting with the following purposes:

  • Minimizing the dominance of major shareholders in management and control is essential. Conversely, it helps strengthen the decision-making power and presence of minority shareholders in the Board of Directors and the Board of Controllers of a joint-stock company.
  • Ensure the reconciliation of decision-making, control, and corporate governance among groups of shareholders. The joint-stock company is a type of enterprise for capital, i.e. the ratio of contributed capital is the key factor to determine the dominant decision-making at the company will belong to.
  • Contribute to strengthening fairness, transparency and balancing interests among shareholders and groups of shareholders.

3. Principles of cumulative voting

As above, citing the provisions of  clause 3, Article 148 of the Enterprise Law (2020), according to which the General Meeting of Shareholders votes to elect members of the Board of Directors (“BOD“), the Board of Controllers (“BOC“) of the company will conduct cumulative voting according to the following principles:

Total number of votes of each shareholder = Total number of shares owned X Number of elected members of the BOD or BOC
  • Shareholders have the right to accumulate all the votes for one candidate or have the right to divide the votes into parts and vote for multiple candidates;
  • The winner will be determined by the number of votes with a scale starting from the person with the highest number of votes until the full number of votes is reached members need to be elected according to the provisions of the company’s charter ;
  • In case more than one candidate achieves the same number of votes, the company shall organize re-elections for candidates with an equal number of votes before or after the meeting to unanimously select accordingly with the criteria specified in the company’s election regulations (if any) or the company’s charter.

It should be noted that the total number of candidates for which each shareholder is entitled to vote must not be higher than the number of members of the Board of Directors or the Board of Controllers that the meeting needs to vote.

Thus, although the method of cumulative voting is no new longer for joint-stock companies when the General Meeting of Shareholders elects members of company’s the Board of Directors or members of the Board of Controllers. Not like conventional voting methods, the method of voting will maximize its meaning to increase the presence of minority shareholders. Thereby, these shareholders can fully promote their management role in the company without having to depend on the shareholders, or other groups of shareholders in the company.

The article is based on laws applicable at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable laws and the specific cases that the reader may wish to apply may have changed. Therefore, the article is for referencing only.


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