VI What is a fractional share? If a public company wants to issue shares to pay dividends, who must approve the plan for handling fractional shares? Does the public company’s stock issuance report to pay dividends include a decision to approve the plan to handle fractional shares? Through today’s article, let’s learn about this issue with Pham Consult!
What is a fractional share?
Pursuant to the provisions of Article 3 of Decree 155/2020/ND-CP explains as follows:
Explanation of words
In this Decree, the following terms are understood as follows:
1. Issued shares are shares that have been fully paid by investors and information about the owner is recorded in the shareholder register.
2. Outstanding shares are the number of shares issued minus the number of shares the company repurchases as treasury shares.
3. Treasury shares are shares issued by a joint stock company and repurchased by that company.
4. Fractional shares are capital shares less than 01 share.
5. Fractional shares are shares that represent the share capital formed by combining fractional shares.
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Thus, according to the above regulations, fractional shares are understood as capital shares of less than 01 share.
And fractional shares will be shares representing the share capital formed by combining fractional shares.
If a public company wants to issue shares to pay dividends, who must approve the plan for handling fractional shares?
Pursuant to the provisions of Article 60 of Decree 155/2020/ND-CP stipulates as follows:
Conditions for a public company to issue shares to pay dividends
1. Have a plan to issue shares to pay dividends approved by the General Meeting of Shareholders.
2. Have undistributed after-tax profits based on the most recent annual financial statements audited by an approved auditing organization sufficient to pay dividends. In case a public company is a parent company that issues shares to pay dividends, the profit decided to distribute must not exceed the undistributed after-tax profit on the audited consolidated financial statements. In case the profit decided to distribute is lower than the undistributed after-tax profit on the consolidated financial statements and higher than the undistributed after-tax profit on the parent company’s separate financial statements, the company is only allowed to Carry out distribution after transferring profits from subsidiaries to the parent company.
3. Have a plan to handle fractional shares and fractional shares (if any) approved by the General Meeting of Shareholders or the Board of Directors.
4. Be approved by the State Bank of Vietnam for the request to increase charter capital according to the provisions of law on credit institutions for the issuance of shares of credit institutions or be approved by the Ministry of Finance for Increase charter capital according to the provisions of law on insurance business for the issuance of shares of insurance business organizations.
Accordingly, in order for a public company to issue shares to pay dividends, it must meet the above conditions.
In particular, the plan to handle fractional shares (if any) must be approved by the General Meeting of Shareholders or the Board of Directors.
Does the public company’s stock issuance report to pay dividends include a decision to approve the plan to handle fractional shares?
According to the provisions of Article 61 of Decree 155/2020/ND-CP regulating reporting documents on stock issuance to pay dividends of public companies, including:
(1) Report issued according to Form No. 16, Appendix issued with this Decree.
(2) Decision of the General Meeting of Shareholders approving the issuance plan.
(3) Decision of the Board of Directors approving the implementation of the issuance plan.
(4) The most recent year’s financial statements audited by an approved auditing organization.
(5) Decision of the competent authority of the subsidiary approving the distribution of profits, statement certified by the bank proving the transfer of profits from the subsidiaries to the parent company in case of The profit decided to distribute is lower than the undistributed after-tax profit on the consolidated financial statements and higher than the undistributed after-tax profit on the parent company’s separate financial statements.
(6) Decision of the General Meeting of Shareholders or Board of Directors approving the plan for handling fractional shares and fractional shares (if any).
(7) Written approval of the State Bank of Vietnam on the request to increase charter capital according to the provisions of law on credit institutions for the issuance of shares of credit institutions or written approval of the Ministry of Finance on increasing charter capital according to the provisions of law on insurance business for the issuance of shares of insurance business organizations.
Thus, according to the above regulations, the document reporting on the issuance of shares to pay dividends of a public company includes the Decision of the General Meeting of Shareholders or the Board of Directors approving the plan to handle the fractional shares. shares, fractional shares (if any).
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