WHEN DOES ONE BECOME A SHAREHOLDER OF THE COMPANY UPON RECEIVING A SHARE TRANSFER?

Situation: I have received a share transfer from my friend in company A. When will I officially become a shareholder and be eligible to participate in the meeting and assembly of shareholders.

Answer:

Article 127 of the 2020 Enterprise Law stipulates that shares in a joint-stock company can be freely transferred, except in cases where the law or the company’s charter restricts the transfer of shares. The transfer shall be made into a contract or carried out on the securities market. In case of transfer under an agreement, the documents shall bear the signatures of the transferor and the transferee or their authorized representatives. If shares are transferred on the securities market, the transfer procedures prescribed by securities laws shall apply.

Furthermore, Clause 7 of this Article stipulates that the Company must register the change of shareholders in the shareholder register at the request of the relevant shareholders within 24 hours from the time of receiving the request, by the Company’s Charter. Individuals or organizations that receive shares in share transfer cases only become shareholders of the company from the time their information is fully recorded in the shareholder registry. Information shareholder fully recorded in shareholder registry including main content: a) The company’s name and headquarters address;b) Total number of authorized shares, types of authorized shares and quantity of each type; c) Total number of sold shares of each type and value of share capital contributed;d) Full names, signatures, mailing addresses, nationalities, and legal document numbers of shareholders that are individuals; names, EID numbers or legal document numbers and headquarters addresses of shareholders that are organizations; and dd) Quantity of each type of shares of each shareholder, date of share registration.

According to the aforementioned regulations, the transferee of the shares becomes a shareholder of the company from the moment their information, as required, is fully recorded in the shareholder register. At that point, they will acquire shareholder rights such as the right to attend meetings, the right to vote, and other rights under the law.”

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