During the capital mobilization process, many joint stock companies conduct additional share issuances, resulting in changes to the ownership ratios of shareholders. If shareholders’ rights and interests are not protected in accordance with the law, it may lead to disputes over ownership ratios upon additional share issuance. Therefore, understanding the relevant legal regulations is essential to minimize risks and protect shareholders’ lawful interests.

I. Current situation relating to disputes over ownership ratios upon additional share issuance

In the practical operation of joint stock companies, issuing additional shares is a common method for enterprises to raise capital, expand production and business activities, or implement new investment projects. However, additional share issuance often changes ownership ratios and voting rights of shareholders, thereby potentially leading to disputes over ownership ratios upon additional share issuance.

In practice, many disputes arise when enterprises fail to ensure the pre-emptive rights of existing shareholders to purchase shares, fail to fully disclose information regarding the issuance plan, or conduct share issuance in violation of the procedures and formalities prescribed by law. In some cases, additional share issuance is even alleged to be intended to decrease the ownership ratio of minority shareholders, leading to conflicts among shareholder groups within the enterprise.

These disputes not only affect the lawful rights and interests of shareholders but may also negatively impact corporate governance and the stability of the enterprise. Therefore, understanding the legal regulations relating to disputes over ownership ratios upon additional share issuance is necessary to prevent and handle potential legal risks.

II. Concept of disputes over ownership ratios upon additional share issuance

1. What are disputes over ownership ratios upon additional share issuance?

Disputes over ownership ratios upon additional share issuance refer to conflicts arising between shareholders or between shareholders and the company concerning changes in shareholding ratios when the enterprise issues additional shares to increase its charter capital.

Pursuant to Article 123 of the Law on Enterprise 2020 (amended and supplemented in 2025), share offering means the company increases the number of shares authorized for sale in order to increase charter capital, and such offering may be conducted in forms such as: offering to existing shareholders, private placement, or public offering.

During this process, if the issuance of new shares changes shareholders’ ownership ratios or fails to ensure shareholders’ rights and interests in accordance with the law and the company charter, disputes relating to ownership ratios of shares within the enterprise may arise.

2. Common causes leading to disputes over ownership ratios when a company issues additional shares

Disputes over ownership ratios upon additional share issuance often arise from various causes relating to shareholders’ rights and the share issuance process under the Law on Enterprise 2020 (amended and supplemented in 2025), including the following common causes:

  • Failure to ensure the share purchase rights of existing shareholders: When the company issues additional shares but does not prioritize offering them to existing shareholders in proportion to their ownership ratios, resulting in shareholders being diluted in their shareholding ratios.
  • Lack of transparency in determining the number of shares to be issued: Unclear or incomplete disclosure of information regarding the share issuance plan may lead to suspicion and disputes.
  • Disagreements regarding changes in ownership ratios: When the issuance of new shares changes voting rights or control over the company, shareholders may develop conflicts regarding their interests.
  • Failure to comply with procedures and formalities for share issuance: Disputes may also arise if the share offering is not carried out in accordance with Article 123 of this Law or is inconsistent with the company charter.

Accordingly, disputes over ownership ratios upon additional share issuance usually stem from failure to protect shareholders’ rights and interests or failure to comply with legal regulations and the company charter during the share issuance process.

3. In which cases do disputes over ownership ratios upon additional share issuance commonly arise?

Disputes over ownership ratios upon additional share issuance commonly arise in the following cases under the Law on Enterprise 2020 (amended and supplemented in 2025):

  • The decision on share issuance is not approved by the competent authority, for example, it is not approved by the General Meeting of Shareholders or the Board of Directors as required (Article 123). 
  • Failure to ensure the pre-emptive rights of existing shareholders when the company offers additional shares, thereby reducing the ownership ratios of current shareholders (Clause 1, Article 124).
  • Information regarding the share issuance is not fully notified to shareholders, causing them to be unable to timely exercise their rights to purchase shares (Clause 2, Article 124).
  • Private offering of shares to new investors, resulting in changes to the ownership structure and control rights within the company (Article 125).

In general, disputes usually arise when share issuance directly affects shareholders’ ownership ratios and interests but is not conducted transparently or in compliance with legal regulations. 

III. Legal regulations relating to disputes over ownership ratios upon additional share issuance

1. Legal conditions for a joint stock company to issue additional shares

Under the Law on Enterprise 2020 (amended and supplemented in 2025), a joint stock company may issue additional shares when it satisfies the following basic conditions:

  • There is a lawful resolution on share offering issued by the General Meeting of Shareholders or the Board of Directors within their respective authority (Article 123).
  • The share offering is conducted in accordance with legally prescribed forms, such as: offering to existing shareholders, private offering, or public offering (Clause 2, Article 123).
  • Registration for change of charter capital is completed within 10 days from the completion of share sale (Clause 4, Article 123).
  • The pre-emptive rights of existing shareholders to purchase shares according to their current ownership ratios are ensured (Article 124).

Accordingly, a joint stock company may only issue additional shares when it fully complies with decision-making authority, offering methods, and shareholders’ rights under the Law on Enterprise 2020.

2. How is the pre-emptive right of existing shareholders to purchase shares regulated by law?

Pursuant to Article 124 of the Law on Enterprise 2020 (amended and supplemented in 2025), when the company issues additional shares, existing shareholders have the pre-emptive right to purchase shares in proportion to their current shareholding ratios. Such a right is exercised according to the following principles:

  • Shareholders are entitled to purchase the number of shares corresponding to their current ownership ratio in the company (Clause 1, Article 124).
  • The company must notify shareholders in writing of the share offering at least 15 days before the deadline for registration to purchase shares expires (Clause 2, Article 124).
  • Shareholders have the right to transfer their pre-emptive right to purchase shares to another person if they do not wish to purchase them (Point c, Clause 2, Article 124).
  • If shareholders do not purchase all offered shares, the Board of Directors may sell the remaining shares to other shareholders or other investors, but such conditions must not be more favorable than those offered to existing shareholders (Clause 3, Article 124).

Therefore, the law provides for the pre-emptive right of existing shareholders to protect their ownership ratios and interests when the company issues additional shares.

3. Methods for resolving disputes over ownership ratios upon additional share issuance

When disputes arise regarding ownership ratios due to the issuance of additional shares, the parties may apply dispute resolution methods in accordance with the principles set out in Article 317 of the Commercial Law 2005, including:

  • Negotiation between the parties: Shareholders and the company may directly discuss and agree on an appropriate solution to ensure the lawful rights and interests of all parties involved.
  • Mediation through an intermediary: The parties may choose an organization, institution, or individual to act as a mediator to assist in resolving the dispute.
  • Resolution through Arbitration or Court: If no agreement can be reached through negotiation or mediation, the parties may request a Commercial Arbitration Tribunal or a competent Court to resolve the dispute in accordance with procedural law.

In general, disputes over ownership ratios arising from additional share issuance may be resolved through various methods, among which negotiation and mediation are often prioritized before bringing the matter before Arbitration or the Court.

IV. Questions related to disputes over ownership ratios upon additional share issuance

1. What is the statute of limitations for initiating a lawsuit related to disputes over ownership ratios upon additional share issuance?

The statute of limitations depends on the specific type of dispute, including:

  • Civil disputes or contractual disputes: Pursuant to Clause 1, Article 429 of the Civil Code 2015, the statute of limitations is 03 years from the date the person with rights knew or should have known that their lawful rights and interests were infringed.
  • Request for cancellation of a General Meeting of Shareholders’ Resolution relating to share issuance: Pursuant to Clause 1, Article 151 of the Law on Enterprise 2020 (as amended and supplemented in 2025), the statute of limitations is 90 days from the date of receipt of the meeting minutes or vote-counting results.
  • Commercial business disputes in specific cases: Pursuant to Article 319 of the Commercial Law 2005, the statute of limitations is 02 years from the time lawful rights and interests were infringed.

It is necessary to correctly determine the legal basis and type of dispute in order to apply the appropriate statute of limitations and avoid losing the right to initiate legal proceedings.

2. If the company fails to fully notify shareholders about the additional issuance, do shareholders have the right to request cancellation of the resolution?

Pursuant to Clause 1, Article 151 of the Law on Enterprise 2020 (as amended and supplemented in 2025), a shareholder or group of shareholders has the right to request the Court or Arbitration to annul a resolution of the General Meeting of Shareholders if the adoption of such resolution:

  • Violates procedures or formalities; or
  • Contains content contrary to law or the company’s Charter.

Time limit for exercising such a right: 90 days from the date the shareholder receives the meeting minutes or the vote-counting results.

Where the company fails to fully notify shareholders of the additional share issuance, thereby affecting the pre-emptive rights of existing shareholders under Article 124 of the Law, shareholders may consider that the resolution relating to the share issuance was adopted unlawfully and request the competent authority to annul it.

Therefore, if the issuance of additional shares is not properly notified or violates statutory procedures, shareholders have the right to request cancellation of the resolution in order to protect their lawful rights and interests.

3. Is the decrease of minority shareholders’ ownership ratio due to additional share issuance considered an infringement of rights?

Not every case where additional share issuance reduces the ownership ratio of minority shareholders is considered an infringement of rights. Under Article 123 of the Law on Enterprise 2020 (as amended and supplemented in 2025), the issuance of additional shares is a lawful corporate activity if implemented in accordance with proper authority and procedures.

However, the law also provides that existing shareholders have pre-emptive rights to purchase shares in proportion to their current ownership ratio under Clause 1, Article 124. If the company fails to ensure this pre-emptive right or conducts the share issuance in a non-transparent manner, thereby affecting the interests of minority shareholders, such conduct may be deemed a violation of shareholders’ rights.

Accordingly, the reduction of minority shareholders’ ownership ratio is only considered an infringement of rights when the company issues shares in violation of legal regulations or fails to protect the pre-emptive rights of existing shareholders.

4. Do shareholders have the right to request access to documents relating to the share issuance plan in order to protect their interests?

Pursuant to Point d, Clause 1, Article 115 of the Law on Enterprise 2020 (as amended and supplemented in 2025), ordinary shareholders have the right to examine, search, and extract information from the shareholders’ register, meeting minutes, and resolutions of the General Meeting of Shareholders.

In addition, shareholders or groups of shareholders holding 5% or more of the total ordinary shares also have the right to examine and inspect accounting books, records, and other documents of the company when necessary to protect their lawful rights and interests under Clause 2, Article 115.

Accordingly, shareholders have the right to request access to documents relating to the company’s operations, including share issuance plans, in order to supervise corporate governance and protect their lawful interests.

5. When a dispute arises, can shareholders request the company to repurchase their shares?

Pursuant to Article 132 of the Law on Enterprise 2020 (as amended and supplemented in 2025), shareholders have the right to request the company to repurchase their shares in certain circumstances. Specifically, shareholders who vote against a resolution of the General Meeting of Shareholders concerning the reorganization of the company or changes to shareholders’ rights and obligations may request the company to repurchase their shares.

The shareholder must submit a written request to the company within 10 days from the date the General Meeting of Shareholders passes the resolution, clearly stating the number of shares and the proposed repurchase price (Clause 2, Article 132).

Therefore, in certain circumstances where shareholders’ interests are adversely affected by a resolution of the General Meeting of Shareholders, they may request the company to repurchase their shares in accordance with Article 132 of the Law.

V. Why you should seek legal consultation from NPLaw regarding disputes over ownership ratios upon additional share issuance

Disputes over ownership ratios arising from additional share issuance often involve shareholders’ rights, procedures for share issuance, and the legality of corporate resolutions under the Law on Enterprise 2020 (as amended and supplemented in 2025). Therefore, consulting experienced legal counsel will help the parties accurately assess the legal situation and choose the most appropriate course of action.

When seeking consultation at NPLaw, clients may receive the following support:

  • Advice on legal regulations relating to share issuance and shareholders’ rights;
  • Review of the legality of resolutions, share issuance plans, and the company’s internal documents;
  • Proposal of dispute resolution methods such as negotiation, mediation, or litigation when necessary;
  • Representation or assistance in working with competent authorities to protect lawful rights and interests.

The above information is provided for reference purposes only. Should you require detailed advice regarding your specific case, please contact NPLaw Firm for immediate consultation.