Protecting the rights of shareholders in unlisted joint stock companies under Vietnamese law

In addition, the author also uses a number of other methods such as: comparison, synthesis analysis, contrast, information collection... to solve the problems of the research topic.

6. Structure of the thesis

In addition to the introduction, conclusion, and list of references, the thesis consists of three chapters:

Chapter 1 : Basic theoretical issues on shareholder protection in unlisted joint stock companies

Chapter 2 : Current status of Vietnamese law on shareholder protection in unlisted joint stock companies

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Chapter 3 : Some legal solutions to improve the law on shareholder protection in unlisted joint stock companies in Vietnam.

Chapter 1

BASIC THEORETICAL ISSUES ON SHAREHOLDER PROTECTION IN UNLISTED JOINT STOCK COMPANIES

1.1. CONCEPT OF JOINT STOCK COMPANY

1.1.1. Company concept

From an economic perspective, a company is understood as an organization specializing in commercial and service activities (to distinguish it from factories and enterprises which are specialized production units...).

From a legal perspective, a company is understood as an association of many people to carry out a job with the purpose of making a profit. The definition of a company has been proposed by many scientists: "A company is understood as an association of two or more individuals by a legal event, aiming to carry out a common goal"; or the definition of Company Law is "The law that associates individuals through a legal event according to private law to achieve a determined common goal" The Civil Code of the French Republic stipulates "A company is a contract through which two or more people agree to use their accounts or abilities in a common activity to share the profits obtained through that activity" .

According to the above definition, a company has three basic characteristics, which are: (i) Association of many members (individuals, legal entities); (ii) Association through a legal event (such as contracts, charters, regulations); (iii) Having a common purpose (business for profit).

From the above concepts, it is difficult to give a general concept for all types of companies with business activities because of the diversity of types of associations. Currently, in reality, the legal system in the world

Many countries (including Vietnam) have regulated the type of limited liability company with one member (or one owner). However, the sign of association is still the basic characteristic of these types of companies.

In Germany in 1892, there was the Limited Liability Company Law (this law was amended in 1980 and is still in effect). According to the Limited Liability Company Law, limited liability companies first appeared in Germany, then were recognized and developed in France, Italy, Spain, continental European countries and South America. These limited liability companies do not have to disclose and make public their accounts, but they cannot sell shares to the public. This form of limited liability company has become more popular than joint stock companies. At first, the establishment of a company required a license from the state. By 1870, most countries had abolished this procedure. In general, citizens have the right to establish companies and freely conduct business. The state only requires companies to register with the court before conducting business activities. The court carries out business registration for companies and bases it on the results of appraisal by independent auditors.

Currently, there are two corporate law systems in the world: the Anglo-American corporate law system and the Continental European corporate law system. In general, in the legal systems of countries, the development of corporate law is closely linked to the development of commerce.

This shift in perception began in the mid-nineteenth century with the emergence of a view that companies should be viewed as simply private agreements between investors rather than concessions from the state. There were two reasons for ending the view of limiting the establishment of companies: First , if a company had to be established through a law, it would lead to legislative overload and create room for corruption; second , by the end of the nineteenth century, there was increasing competition.

between states over the right to issue corporate charters, in part because of the taxes these corporations levied. As a result, in 1868 the Supreme Court decided that a corporation incorporated in one state could do business in another state.

Nowadays, in the US in particular and in other countries in general, investors are given favorable conditions and are proactive and flexible in establishing, raising capital and operating their companies; company establishment procedures are much simpler.

1.1.2. Types of companies

• Personal company

A personal company is a company that operates based on the trust of its members in terms of personal identity, capital contribution is only secondary. A very important characteristic of a personal company is that there is no separation between the assets of individual members and the assets of the company. The members or at least one member of the company must bear unlimited liability for the debts of the company. Personal companies can exist in the following forms:

- A partnership is a type of company in which all members have unlimited liability for the company's debts.

- Simple joint stock company, is a type of company with at least one member who is unlimitedly responsible for debts, other members are only limitedly responsible within the scope of capital contributed to the company.

- Anonymous company is a type of company in which members who receive capital to do business must bear unlimited responsibility for the company's debts. Members who contribute capital (anonymous) are only responsible for contributing capital to members who receive capital, receive a portion of the company's profits and are not responsible for the company's debts.

A company with no separation of assets between the company and the assets of its members and unlimited liability. Therefore, the law of

Most countries stipulate that a partnership is not a legal entity, but it differs from individuals in that when members transact, they act in the name of the common company. The members of a company with unlimited liability must have the right to jointly manage the company's activities and have the right to represent the company. Usually, the decisions of the company must be approved by all members with unlimited liability, each member has the right to veto the decisions of the company. The association of a partnership is a close association of all members with unlimited liability. The departure from the company or the death of a member of the company can be a reason for the dissolution of the company.

Because of the above characteristics, personal companies have very few members, they are usually acquaintances. On the other hand, because they have to participate in the management of the company, the members must have business knowledge; in most countries they are businessmen. In terms of economics, personal companies have an advantage in the field of credit loans. Due to the unlimited liability of the members, they can get large loans from banks. On the other hand, due to the unlimited liability, personal companies rarely invest in high-risk areas, which affects the balanced development of the economy and may have unmet social needs. Personal companies are a type of company in which the relationship between members is very close, so the law has few mandatory regulations for them. They can organize their own operating mechanism of the company, do not necessarily have to have a charter of operation, no regulations on legal capital, minimum capital... The most important mandatory regulation is the unlimited liability regime of the members (this must be clearly registered in the business registration). The company is established on the basis of a contract between the members, but the law usually does not require the form of the contract. The contract to establish the company must be recorded in the business registration book and agreed upon.

The most important thing in the contract is the unlimited liability regime of the members who are jointly and severally liable for the debts of the company, which is the moment they are registered in the business register.

• Equity company

Unlike a partnership, a capital contribution company does not care about the personal status of the members of the company, but only cares about the capital contribution of the members and the company. An important feature of these types of companies is that the company is responsible for the debts of the company with the assets of the company. The members of the company are only liable to the extent of their capital contribution to the company. Capital contribution companies have the following characteristics:

(i) A partnership is a legal entity with assets that are different from those of its members; (ii) The company is only liable for the company's debts with its assets. Members are only liable for their capital contributions to the company; (iii) When associating, members are not concerned with their individual status as company members but only with their capital contributions to the company; (iv) Company members can be easily changed; (v) There are more mandatory legal regulations than in a partnership.

The equity company has many advantages, it is favored by business people, because of the limited liability regime. That makes business people willing to invest in areas with high risks and the ability to disperse their investment capital into many different business establishments. The equity company also creates conditions for people who do not understand business to participate in the company's business activities. The equity company creates the ability for good business people to mobilize large investment capital and the purpose of expanding their business. On the other hand, the establishment of the equity company is the basis for the development of the capital market, capital sources in society are easily concentrated in the necessary areas of the economy...

Besides the above advantages, the capital contribution company also has disadvantages: Because it is only responsible for debts with limited assets, the capital contribution company easily poses risks to creditors, especially banks. On the other hand, the company only cares about the capital of the members without caring about the personal status of the members and the number of members is very large. Therefore, it can lead to division between different interest groups, opposing and opposing comrades, members with low status in the company are easily oppressed and exploited. At the same time, the capital contribution company is publicly mobilized, so it is also very easy to defraud the public in raising capital. Therefore, capital contribution companies are subject to very strict regulation by law. Usually, there are two types of capital contribution companies: Joint stock companies and limited liability companies.

The distinction between a limited liability company and a joint stock company is often clearly expressed in the laws of countries following the Continental European Law tradition. The concept of a limited liability company and a joint stock company in Vietnam probably also originates from that system. In countries following the Common Law system, people do not clearly distinguish between these two types of companies. They generally call them corporations, then distinguish them into private companies or closed companies (closed corporations) and open companies or public companies (public corporations). Basically, limited liability companies are regulated in Europe similarly to closed companies in countries following the traditional practice; while joint stock companies are similar to open companies.

In general, limited liability companies or joint stock companies are both capital companies, so they have some common characteristics such as:

(i) A company has legal personality, an entity that exists independently and distinctly from its owners. A company can possess assets throughout its existence, regardless of the death, retirement or bankruptcy of one of its owners. It can own, use and dispose of assets in its own name. It can be a plaintiff or defendant in court.

(ii) Limited liability regime of shareholders or company members. In principle, shareholders (owners) of a company are not responsible with their personal assets for the company's debts or, in other words, their losses are limited to the amount of capital invested in the company.

Based on the provisions of the law, there are many differences between these two types of companies. However, the most basic difference that determines the different characteristics of these two types of companies is the level of "closedness" of the company to the participation of other investors. Closed companies are often established by members of a family or a group of people who know and trust each other. The problem here is that they do not want to give the right to manage the company to others. In contrast to a closed company, a company sells its shares to investors who are not even interested in the company. Most of the large-scale companies in the world are open companies.

1.1.3. Concept of joint stock company according to the laws of some countries in the world

The world's first joint stock companies appeared around the 18th century.

XVIII. However, until the 19th century it was still very rare. The process of capital concentration had developed to a high level, especially after the legal explosion of the industrial revolutions and the formation of joint-stock companies. Until the middle of the 19th century, joint-stock companies had developed strongly and widely in capitalist countries thanks to the development of large-scale mechanical industry and the widespread development of the credit system.

Joint stock companies are regulated by the laws of many countries. Although the concept of shares is approached from many different aspects.