Shares are properties of shareholders as well as considered as evidence for the shareholders’ ownership status in Joint Stock Companies (“JSC”). The transfer of ownership whether a portion or all of the shares from the shareholder to another individual/ organization is known as a share transfer. Transferring shares provides numerous benefits and opportunities for both the transferor and the transferee, therefore, share transfers regularly happen in JSC.
Therefore, to promote the electric vehicle business and attract foreign businesses to invest in the electric vehicle charging station development industry in Vietnam, the State has had several regulations and standards so that enterprises trading electric vehicles can build charging stations at public parking lots, apartment buildings and rest stops.
Through this article, BLawyers Vietnam will present 03 notes when transferring shares in JSC.
1. Shares transfer right
By law, a shareholder is an organization that owns at least one share of a JSC will have the right to freely transfer its shares to others. However, this right will be limited in the following circumstances: :
- Within 03 years from the issuance date of the Certificate of Enterprise Registration, the shares of founding shareholders may be transferred to other founding shareholders and may only be transferred to a person that is not a founding shareholder if the transfer is accepted by the General Meeting of Shareholders; and
- In case the charter of JSC regulates the restrictions on the transfer of shares. However, this regulation is only applicable if it is written in the certificates of the shares.
Of note, the founding shareholder means a shareholder that holds at least an ordinary share and has his/her signature on the list of shareholders that are also founders of JSC.
2. Form of shares transfer
Under regulations, share transferring shall be performed by contracts or via transactions on the stock market.
In the case of transferring via contracts, the documents which recognize and relate to the transfer must be signed by both the transferor and the transferee, or their authorized representatives.
In the case of a transfer via a transaction on the stock market, the order, procedures, and recognition of ownership shall comply with laws on securities.
3. Tax obligations for share transferring
When conducting share transferring, the transfer individual/organization must declare and pay tax pursuant to the laws . Since shares are one of the types of assets belonging to securities, therefore, the tax liability to be paid when transferring shares will be determined as tax liability when transferring securities in accordance with tax laws. Specifically as follows:
(i) The share transfer is conducted by an individual
When individuals transfer shares, the taxable income is determined by the transfer price each time. Therefore, the payable personal income tax is calculated as follows :
Personal income tax payable = Price of each transfer x 0.1% tax
In which, the securities transfer price is determined as follows:
- The transfer price of securities of JSC traded at the Stock exchange is the transaction price at the Stock exchange. The executed price is based on the order-matching result of prices from transactions at the Stock exchange.
- The transfer price of securities in cases other than the above is the price written on the transfer contract or actual transfer price or the price in the accounting book transferor when the latest financial statement is made before the time of transfer according to regulations of law on accounting.
(ii) The share transfer is conducted by organizations:
When enterprises/organizations transfer securities, the corporate income tax (CIT) will be calculated as follow :
Corporate income tax payable = (the transfer price – the purchasing price of the transferred securities – transfer expenses) x 20%
- The securities selling price shall be determined as follows:
+ For listed securities and JSC’s unlisted securities registered for trading at a securities trading center, it is the actual securities selling price (order-matching price or agreed price) announced by the stock exchange or securities trading center.
+ For securities of JSC other than those mentioned above, it is the transfer price indicated in the transfer contract.
- The securities purchasing price shall be determined as follows:
+ For listed securities and JSC’s unlisted securities registered for trading at a securities trading center, it is the actual securities purchasing price (order-matching price or agreed price) announced by the stock exchange or securities trading center.
+ For securities purchased through an auction, it is the price indicated in the notice of share auction-winning results issued by the share-auctioning organization, and in the pay receipt.
+ For securities other than those mentioned above, it is the transfer price indicated in the transfer contract.
- Transfer expenses are actual expenses directly related to the transfer with lawful evidencing documents and invoices such as legal procedures necessary for the transfer; charges and fees paid for carrying out transfer procedures.
Date: 16 December 2022
Writer: Tuyen Pham
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