Does an unlisted joint-stock company have to notify the transfer of shares between shareholders to the State agency?
Legal grounds:
- Enterprise Law No. 59/2020/QH14;
- Decree No. 01/2021/ND-CP.
We receive the following question from client:
The company I am working for is a joint stock company established in 2015, has nearly 50 shareholders. This November 2021, there is a shareholder who wants to transfer shares to another shareholder. The shareholders have signed the transfer contract and completed the payment, and already having the company’s confirmation on the contract. However, I don’t know if I have to notify the Department of Planning and Investment about this or not?
The Law on Enterprises and Decree No. 01/2021/ND-CP on current business registration do not provide for registration/notification of changes in shareholder information when transferring shares to the business registration authority. Specifically, Clause 6, Clause 7, Article 127 of the Law on Enterprises provides as follows:
Article 127. Transfer of shares
6. Individuals and organizations that receive shares in the cases specified in this Article only become shareholders of the company from the time their information specified in Clause 2, Article 122 of this Law is fully recorded in the book of shareholder registration.
7. The company must register the change of shareholders in the book of shareholder registration as the request of the relevant shareholder within 24 hours from the date of receipt of the request as prescribed in the company’s charter.
Therefore, according to the above provisions, when the transferee of shares requests to update shareholder information, the company is obliged to change the shareholder in the register of shareholders within 24 hours.
Recipients of share transfer only become shareholders when their information is fully recorded in the register of shareholders. Therefore, the company must strictly comply with regulations to ensure the legitimate interests of the company’s shareholders.
