Written By PLF Law Firm

2014 Law on Enterprises (“2014 LOE”) provides with a number of regulations while adopting adequate provisions of 2005 Law on Enterprises (“2005 LOE”). PLF, in addition to its previous legal alert in relation to enterprise’s seal and legal representatives, notes further significant changes in term of management and organization of joint stock company (“JSC”) as follows:

Dear Valued Clients

2014 Law on Enterprises (“2014 LOE”) provides with a number of regulations while adopting adequate provisions of 2005 Law on Enterprises (“2005 LOE”). PLF, in addition to its previous legal alert in relation to enterprise’s seal and legal representatives, notes further significant changes in term of management and organization of joint stock company (“JSC”) as follows:

Regarding Management and Organization

According to 2014 LOE, a JSC is entitled to choose its organizational structure according to either of the following models:

  1. The General Meeting of Shareholders (“GMS”), the Board of Management (“BOM”), the Board of Supervision and the Director/General Director; or
  2. GMS, BOM (with at least 20% of independent members and an internal audit division under BOM’s control) and the Director/General Director. These independent members shall be responsible to supervise and audit the JSC’s management and operation without direct managing performance.

2014 LOE facilitates JSC to initially make choice of its legal representative(s) (Chairman and/or Director/General Director). In case of more than one legal representative, the Chairman and the Director/General Director shall automatically be the legal representatives and should be clearly stated the same in its Charter.

2014 LOE, furthermore, adjusts and supplements a number of provisions related to rights and obligations of the GMS, BOM; structure, criteria, rights and obligations of BOM members, independent members and chairman as well as of legal representatives of the JSC. Accordingly, the BOM is entitled to elect, dismiss, and discharge its chairman.

Conditions, modality of convening and conducting the GMS meeting

2014 LOE provides that the GMS is conducted where the number of attending shareholders represents at least 51% and 33% of the voting shares for the first and the second meeting convened by GMS respectively.

Subject to the issues to be approved by GMS, the voting threshold in 2014 LOE is reduced from the current 65% and 75% of votes of attending shareholders to 51% and 65% of votes of attending shareholders as stated in 2005 LOE.

It is noted that 2014 LOE stipulates a broad range of technology applications in the meetings. The shareholders are allowed to attend and vote through online conference, mail, fax or email and such methods of attendance and voting must be clearly stated in JSC’s Charter.

For the watershed changes as mentioned above, a JSC should adjust, supplement its Charter under the GMS’s approval accordingly.

On the occasion of 2015 annual GMS, PLF proposes that the current charter should be amended, supplemented and passed in the 2015 annual GSM for purpose of compliance with 2014 LOE. With many years of experience in researching and drafting Company Charters, PLF is pleased to assist you to handle this performance.  

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