When May a Company Extend the Deadline for Holding Its Annual General Meeting of Shareholders

Extending the deadline for holding the Annual General Meeting of Shareholders (“AGM”) is a legal mechanism that allows a joint stock company to postpone this mandatory annual meeting where a legitimate reason exists. What, then, does the law provide regarding the conditions, the competent decision-making body, and the maximum extension period? This article examines these questions in detail under Article 139 of the Law on Enterprises 2020.

The AGM is a mandatory meeting of particular importance within a joint stock company. The AGM discusses and approves numerous key matters concerning the company for the relevant financial year, including the annual business plan, the annual financial statements, the distribution of dividends for each class of shares, and the reports of the Board of Directors¹ and the Supervisory Board. Holding the AGM within the prescribed deadline is not merely a statutory obligation of the company; it also underpins shareholders’ right to participate in oversight of, and control over, the company’s operations, and enhances transparency and accountability at the management level in corporate governance. In practice, however, not every company complies strictly with the prescribed timeline, for a variety of objective or company-specific reasons. In what circumstances, then, may a company extend the deadline for holding its AGM?

Pursuant to Clause 1, Article 139 of the Law on Enterprises 2020, the AGM must be convened once a year, within four (04) months from the end of the financial year. The Law on Enterprises, however, also provides flexibility by allowing a company to extend the AGM deadline where necessary; unless otherwise provided in the company’s charter, the extended deadline may not exceed six (06) months from the end of the financial year.

To obtain an extension of the AGM deadline, a company must have a genuinely necessary reason for the extension, and the extension must be adopted by way of a decision of the Board of Directors. In other words, a company may not unilaterally decide to extend the time for holding its AGM; such a decision must be made through the Board of Directors — the corporate body vested with the authority to manage the company and to convene the AGM under the Law on Enterprises.

The most critical element in extending the AGM deadline is the reason for the extension itself. The Law on Enterprises 2020 does not specifically define what constitutes a case that is “genuinely necessary” for an extension, nor does it enumerate the circumstances in which an extension is permitted. Instead, the law currently in force vests the Board of Directors with the discretion to assess the relevant factors and causes, and to determine, against the company’s actual circumstances, whether an extension is warranted.

In practice, a number of companies have applied for and obtained an extension of the deadline for holding their AGM. Reasons accepted by the Board of Directors as “necessary” have included: the need for additional time to prepare and review meeting materials; the occurrence of a force majeure event; the company being in the course of restructuring or reorganization; or significant changes to the company’s organizational structure or personnel. Most such extensions are granted with the aim of ensuring that the meeting is fully and properly prepared, so that shareholders may exercise their rights effectively and transparently.

The absence of a specific statutory definition of “necessity” also affords companies flexibility in applying the law, reflecting the particular nature, organizational structure, governance conditions, and practical circumstances of each company. The absence of an enumerated list of qualifying circumstances likewise enables companies to proactively address difficulties as they arise and to maintain stability in their operations, provided only that the extension is genuinely necessary and that the AGM is ultimately held for its intended purpose, and with adequate quality and effectiveness. At the same time, however, this open-ended approach places a demanding burden on the Board of Directors, which must carefully weigh and assess the matter to ensure that the stated reason is genuinely legitimate, necessary, and objective enough to satisfy shareholders — thereby avoiding any abuse of authority that could prejudice shareholders’ lawful rights and interests. Careful scrutiny of the stated reason for extension is therefore of considerable importance: where an extension lacks a reasonable basis, or is abused, this not only undermines transparency in corporate governance but also risks giving rise to disputes between shareholders and the Board of Directors, and erodes shareholder confidence in the company’s governance.

The provisions on extending the deadline for holding the AGM afford companies greater flexibility to prepare for and organize the meeting where objective difficulties or obstacles arise. A company needs only follow the correct order and procedure for holding the meeting and put forward a genuinely necessary reason for the extension. Where properly applied for its intended purpose, this mechanism will enhance the efficiency of corporate governance, strengthen transparency, and increase shareholder confidence in the company’s management.

¹ The corporate management body of a Vietnamese joint stock company. Its structure and powers may differ from a board of directors in Common Law jurisdictions.

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Attorney: Tran Thi My Duyen

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