Disputes over shareholder rights and main legal issues to consider

During business operations, disputes concerning the rights and interests of shareholders have become increasingly frequent and complex. Conflicts relating to voting rights, profit allocation, or corporate governance may disrupt business activities if not addressed in a timely manner. Vietnamese laws have established specific provisions to safeguard the lawful rights and interests of shareholders and provide guidance on dispute resolution mechanisms. The article below will help readers gain a clearer understanding of the nature of such disputes, the governing legal framework, and practical measures for effective prevention and resolution. 

I. Current situation concerning disputes over rights and interests among shareholders

Currently, disputes over rights and interests among shareholders have become increasingly prevalent, particularly in companies with complex shareholder structures, disparities between major and minority shareholders, or circumstances where financial interests, voting rights, and dividend entitlements are not implemented transparently. Such conflicts commonly arise from issues relating to profit allocation, corporate governance, or a lack of consensus regarding business strategy decisions.

If not addressed promptly, these disputes may hinder business operations, adversely affect corporate reputation and share value, and result in legal proceedings. Accordingly, identifying and managing risks associated with shareholder disputes is an essential factor in maintaining the stability and sustainable development of an enterprise.

II. Definition of disputes over rights and interests among shareholders

1. What is a dispute over rights and interests among shareholders?

A dispute over rights and interests among shareholders refers to a situation where shareholders, being individuals or organizations owning at least one share in a joint-stock company (Clause 3, Article 4 of the Law on Enterprise 2020, as amended in 2025), have conflicting rights, financial interests, or management rights within the company, thereby leading to internal conflicts and affecting business operations.

2. Which shareholder rights are most likely to lead to disputes?

Based on Article 115 of the Law on Enterprise 2020, as amended by Clause 18, Article 1 of the amended Law on Enterprise 2025, the following rights will often lead to disputes in an enterprise as they directly impact financial interests and corporate control. Specifically:

• Voting and participation rights: Ordinary shareholders are entitled to attend, make a speech, and vote during the General Meeting of Shareholders. Disputes often arise where these rights are restricted or where voting results are challenged as invalid.
• Right to receive dividends: Shareholders are entitled to receive dividends under resolutions of the General Meeting of Shareholders. Conflicts may occur where dividends are distributed disproportionately or payment is delayed.
• Pre-emptive right to subscribe for newly issued shares: Shareholders are entitled to purchase newly issued shares in proportion to their existing ownership ratio; disputes frequently arise where companies issue additional shares without respecting such pre-emptive rights.
• Rights to inspect, supervise, and access information: Groups of shareholders holding at least 5% of shares are entitled to request inspection of reports, meeting minutes, contracts, and company records. Disputes may occur where such rights are denied or information disclosure lacks transparency.
• Right to nominate candidates to the Board of Directors and the Supervisory Board: Groups of shareholders holding at least 10% of shares are entitled to nominate candidates. Conflicts may arise where nomination rights are restricted or nominations are disregarded.

3. In which types of enterprises can disputes over shareholder rights and interests arise?

Disputes over shareholder rights and interests arise only in business entities having shareholders, namely joint-stock companies, because only such entities legally recognize shareholder status. Accordingly, shareholders are individuals or organizations owning at least one share of a joint-stock company, and their rights and obligations arise from such status (Clause 3, Article 4 of the Law on Enterprise 2020, as amended in 2025).

Other forms of enterprises, such as limited liability companies, partnerships, and sole proprietorships, do not involve shareholder relationships because they do not issue shares; thus, disputes concerning shareholder rights do not arise. 

III. Legal regulations governing disputes over rights and interests among shareholders

1. How does current Vietnamese law regulate the lawful rights and interests of shareholders?

Current Vietnamese law, particularly the Law on Enterprise 2020 (as amended and supplemented in 2025), provides detailed regulations on the lawful rights and interests of different categories of shareholders to ensure their participation rights, benefits, and responsibilities within joint-stock companies.

• Ordinary shareholders (Article 115, amended by Clause 18, Article 1 of the amended Law on Enterprise 2025): They are entitled to attend, speak, and vote at General Meetings of Shareholders; receive dividends; enjoy pre-emptive rights to purchase newly issued shares; transfer shares; access shareholder registers, meeting minutes, and the company charter; and receive residual assets upon dissolution or bankruptcy. Shareholder groups holding 5% or more of shares additionally have the right to request meetings, inspect company operations, and nominate candidates to the Board of Directors and Supervisory Board (holding 10% or more of shares).
• Voting preference shareholders (Article 116): They are entitled to a greater number of votes than ordinary shareholders as stipulated in the Charter; only founding shareholders and organizations authorized by the Government may hold such shares; upon expiration of the preferential voting period, such shares are converted into ordinary shares.
• Dividend preference shareholders (Article 117): They are entitled to higher or fixed dividends and to receive residual assets after all liabilities have been discharged; they enjoy rights similar to ordinary shareholders but do not possess voting, attendance, or nomination rights.
• Redeemable preference shareholders (Article 118): They are entitled to require the company to redeem contributed capital; they enjoy rights similar to ordinary shareholders except for restrictions regarding voting, meeting attendance, and nomination rights as prescribed by law and the Charter.
• Founding shareholders (Article 120): Newly established companies must have at least three founding shareholders who collectively subscribe for at least 20% of the total ordinary shares. During the first three years, founding shareholders may freely transfer shares among themselves and may transfer shares to outsiders only upon approval of the General Meeting of Shareholders.

2. Under which principles are disputes over rights and interests among shareholders resolved under the law?

Pursuant to Point h, Clause 2, Article 24 of the Company Charter, the principle governing dispute resolution is stipulated as follows: Procedures for adoption of company resolutions and principles for resolving internal disputes.

It means that internal disputes among shareholders should first be resolved within the company through agreements among the parties and in accordance with valid corporate decisions.

Additionally, the law encourages the parties to:

• Respect contractual arrangements and agreements: The Company Charter and shareholder agreements should be given priority in implementation.
• Prioritize negotiation and mediation: Internal disputes should first be resolved through internal mechanisms before involving external authorities.
• If mediation fails, disputes may be submitted to the People’s Court or resolved through commercial arbitration.

3. How does the law regulate the limitation period for initiating legal proceedings relating to shareholder rights disputes?

Article 184 of the Civil Procedure Code 2015 provides that limitation periods for filing lawsuits and requests in civil matters shall be governed by the Civil Code 2015. Courts shall only consider the application of limitation periods if requested before the first-instance court issues its judgment or decision. Persons entitled to benefit from limitation rules may waive such application unless the waiver is intended to evade legal obligations.

Accordingly, Article 429 of the Civil Code 2015 provides that the limitation period for initiating contractual disputes is three (03) years from the date on which the claimant knew or ought to have known that their lawful rights and interests had been infringed. If a shareholder discovers that their rights have been violated, the limitation period shall commence from that point.

4. Can prolonged disputes over shareholder rights and interests disrupt business operations?

Prolonged disputes among shareholders may directly affect business operations in the following ways:

• Disruption of main decision-making processes: If shareholders fail to reach consensus regarding strategy, voting, or management, resolutions of the General Meeting of Shareholders and the Board of Directors may be delayed.
• Adverse effects on finance and investment: Investment activities, dividend payments, and capital mobilization efforts may be postponed pending dispute resolution.
• Impact on reputation and business relationships: Prolonged internal disputes may undermine investor confidence and negatively affect relationships with customers and business partners.
• Increased legal risks: Unresolved disputes may lead to prolonged litigation, disrupting ordinary business operations and increasing corporate costs.

IV. Questions relating to disputes over rights and interests among shareholders

1. Can disputes over rights and interests among shareholders lead to non-contractual compensation liability?

Pursuant to Article 584 of the Civil Code 2015, if a shareholder’s conduct infringes upon the lawful rights and interests of another shareholder or the company and causes damage, the shareholder causing such damage shall be liable for compensation on a non-contractual basis.

• Grounds for liability: Conducting infringing lawful rights and interests (including property, honour, reputation, and shareholder rights and interests) resulting in damage.
• Exemption from liability: If damage arises from force majeure or entirely due to the fault of the injured party (unless otherwise agreed by the parties or provided by law).
• Cases where property causes damage: The owner or lawful possessor of the property shall take liability for compensation, except where an exemption applies.

2. Are disputes over rights and interests among shareholders considered business or commercial disputes?

Disputes over shareholder rights and interests commonly arise from the exercise of rights and performance of obligations within a joint-stock company, involving matters such as shares, dividends, voting rights, or corporate management.

Under Vietnamese law, such a type of dispute generally falls within the scope of civil disputes relating to ownership rights and property management rights. However, where the dispute concerns the company’s business activities, it may also be considered a commercial dispute if it arises during business operations, under agreements between the company and shareholders, or in connection with commercial interests.

Accordingly, shareholder rights disputes may be resolved under either commercial or civil mechanisms depending on their nature. Under Article 30 of the Civil Procedure Code 2015, the Court’s jurisdiction includes disputes between companies and members, disputes among members, disputes relating to transfer of contributed capital, intellectual property rights, technology transfer, and other business and commercial disputes.

3. How can disputes over rights and interests among shareholders be prevented from the stage of company establishment?

Recommended measures for preventing shareholder rights disputes upon company establishment include:

• Developing a clear Company Charter and shareholder agreements: Clearly defining rights, obligations, voting structures, voting rights, and pre-emptive rights to subscribe for newly issued shares.
• Ensuring transparency in capital contribution and share transfers: Fully recording contributed capital amounts, ownership ratios, and transfer conditions to avoid misunderstandings.
• Establishing internal dispute resolution mechanisms: Through negotiation, mediation, or delegation to the Supervisory Board before referring matters to the Court or commercial arbitration.
• Documenting agreements regarding the rights of founding shareholders and preference shareholders: For example, rights relating to share transfers, voting rights, and dividend entitlement, ensuring consistency with applicable laws and the Company Charter.

4. Can disputes over rights and interests among shareholders be resolved internally without involving a third party?

Disputes over rights and interests among shareholders may be resolved internally without involving a third party where the parties comply with Point h, Clause 2, Article 24 of the Company Charter, under which the company may adopt principles governing internal dispute resolution.

Specifically, shareholders may negotiate, conduct mediation, and apply mechanisms prescribed in the Company Charter to resolve conflicts before bringing the matter before the Court or commercial arbitration.

V. Why you should seek legal advice from NPLaw when facing disputes over rights and interests among shareholders

When disputes concerning shareholder rights and interests arise, NPLaw provides specialized legal consultation under the Law on Enterprises 2020 (as amended in 2025), the Civil Code, and the Civil Procedure Code. Its lawyers assist clients in assessing legal rights and interests, developing dispute resolution strategies, preparing legal documentation, and protecting the lawful interests of shareholders. As a result, disputes can be handled professionally and efficiently while minimizing damage to the enterprise.

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