The season for the annual general meeting of public companies has begun and, as in previous years, almost all public companies have to invite shareholders to the meetings. Even, many companies have to cancel their debut shareholder meetings as attendance fails to meet the Point 1, Article 102, the Law on Enterprise which stipulates that a general shareholder meeting is only valid when the attendance is at least 65 percent of the total shares with voting rights. If the attendance falls short of the rate, the company must hold the second meeting with at least 51 percent of total shares with voting rights.” This is an extremely difficult condition for a company to hold the first annual general meeting.
The Vietnam Association of Financial Investors (VAFI) raised its voice on this issue during the last season of general annual meetings after many listed companies failed to meet attendance requirements to continue with their first meetings.
According to VAFI, the aforementioned provision does not have much effect on companies with a small number of shareholders but it is a problem for companies with a large number of stakeholders. Moreover, many shareholders are active traders who do not care much about the status of shareholders and they do not, of course, intend to attend the annual general meeting.
Clearly, public companies have to spend a large sum of money to communicate and inform shareholders of the meeting. Companies must mobilise many people to organise the meeting, especially companies with thousands of shareholders and persuade shareholders to authorise attorneys to satisfy the attendance requirement. This is not always good for corporate governance because shareholders cannot entitle their voting rights to poor-performing board of directors in case of important issues. Last but not least, many companies do not have enough meeting halls to support a large number of shareholders and they have to hire meeting halls. Without sufficient attendance, they have to hire a room for a second or even third time. Thus, the organisation of annual general meetings according to the law affects production and business activities of enterprises
In a recent document submitted to the State Securities Commission (SSC) and the Ministry of Finance by VAFI, Mr Nguyen Hoang Hai, General Secretary of VAFI, said public companies are operated not only under the Law on Enterprise but also according to the Law on Securities, and Vietnam therefore should provide particular conditions for annual general meeting in line with the Law on Securities. Accordingly, the attendance requirement for a general shareholder meeting of public companies should be at least 51 percent of the total shares with voting rights, with specific rate provided in the charter of the holding company.
"The first meeting ineligible to be conducted according to the regulations of paragraph 1 of this Article shall be summoned a second meeting within 30 days from the date of the first planned meeting. In this case, general meeting of public companies conducted regardless of the number of shareholders to attend the meeting and the percentage of shares with voting rights of shareholders to attend the meeting, this is confusing "Mr Hai said.
“In case the first meeting fails to satisfy the attendance requirement, the second will be held within 30 days dating from the meeting date of the first occurrence and will not be subjected to attendance requirement,” Hai added.
Also according to VAFI, to know more about specific conditions in different companies in organising shareholder meetings, the State Securities Commission should send a written request to public companies, requiring them to submit their meeting reports, to build the Law on Securities.
Previously, several businesses have also proposed that e-mail voting should also be allowed for absent people.
Currently, the amendments and supplements to the Law on Securities are expected to be submitted to the National Assembly for consideration and approval in 2010. According to VAFI, if its proposals are approved, the organisation of annual general meeting of public companies will be much easier in 2011.
Hai Hang
Vietnamese
