In practice, many internal disputes arise from situations where shareholders do not agree to increase capital, particularly where the resolution approving the capital increase is adopted without fully ensuring the participation and voting rights of all shareholders.
I. Common legal risks relating to shareholders not agreeing to a capital increase
During the operation and expansion of production and business activities, increasing charter capital is an inevitable need for many joint stock companies. However, in practice, not all shareholders agree with such decisions. Situations where shareholders do not agree to increase capital, if not handled in accordance with the law and the company charter, may lead to numerous legal risks directly affecting shareholders’ rights and interests as well as the stability of corporate governance.
- Risk of disputes arising among shareholders: Where one or several shareholders do not agree to increase capital, particularly when the resolution approving the increase is passed with a voting ratio close to the statutory threshold, internal corporate disputes are likely to arise. Opposing shareholders may argue that their voting rights, rights to access information, or pre-emptive rights to purchase shares have not been fully guaranteed, thereby leading to complaints or lawsuits requesting annulment of the General Meeting of Shareholders’ resolution.
- Risk that the capital increase resolution may be declared invalid or annulled: If the process for approving the capital increase does not comply with the authority, order, and procedures prescribed by the Law on Enterprise and the company charter, the resolution on capital increase may be declared invalid or annulled by the Court at the request of shareholders who oppose the capital increase. Consequently, the entire capital increase plan may not be legally recognized, thereby disrupting the company’s business plans.
- Risk of infringing the lawful rights and interests of shareholders: In cases where shareholders do not agree to increase capital, if pre-emptive rights to purchase shares are not ensured or appropriate protection mechanisms are not established, the opposing shareholders may face dilution of their ownership ratio and control rights. It creates the risk of infringing lawful rights and interests of shareholders, particularly minority shareholders.
- Risk of legal liability for company managers: Company managers (members of the Board of Directors, the Director/General Director) who intentionally implement a capital increase plan without fully ensuring the rights of shareholders opposing the increase may take personal liability. Such liability may include obligations to compensate shareholders or the company for damages and even administrative sanctions in accordance with law.
- Risk affecting the company’s reputation and operations: Disputes arising from shareholders not agreeing to increase capital, especially where such disputes are resolved before Courts or competent authorities, may negatively affect the company’s image, reputation, and the confidence of investors and partners. In the long term, it may reduce the company’s ability to raise capital and hinder sustainable business development.
II. Understanding situations where shareholders do not agree to increase capital
1. What does it mean when shareholders do not agree to increase capital in the context of corporate governance?
In the context of corporate governance, shareholders not agreeing to a capital increase refers to shareholders voting against or refusing to approve a resolution of the General Meeting of Shareholders regarding an increase in charter capital through issuance of additional shares or other capital mobilization methods in accordance with law.
Such disagreement constitutes the lawful exercise of shareholders’ voting rights and does not constitute a breach of obligations unless the shareholders fail to fulfill capital contribution commitments under agreements or the company charter.
2. What are the common reasons why shareholders do not agree to increase capital?
There are many reasons why shareholders may not agree to a capital increase. The most common reasons include concerns regarding dilution of ownership ratios and corporate control rights; doubts about the feasibility or effectiveness of the proposed use of capital; lack of transparency or insufficient provision of information and documents prior to voting; or conflicts of interest among groups of shareholders.
In certain cases, shareholders’ opposition to a capital increase may also stem from long-term investment strategies or differing governance perspectives.
3. What may happen to the company’s operations when shareholders do not agree to increase capital?
Where shareholders do not agree to increase capital, particularly shareholders holding a significant ownership ratio, the resolution approving the capital increase may fail to obtain the voting ratio required for adoption, thereby delaying or cancelling the company’s capital mobilization plan.
Even where the capital increase resolution is lawfully adopted, shareholders’ opposition may still lead to internal disputes, affect consensus in corporate governance, and slow down implementation of the company’s production and business plans.
4. Is there any way for shareholders who do not agree to increase capital to change their decision?
Shareholders who do not agree to increase capital may change their decision if they are provided with complete information and clear explanations regarding the purpose of the capital increase, the proposed use of funds, and measures to safeguard their lawful rights and interests.
In addition, the company may apply mechanisms such as ensuring pre-emptive rights to purchase shares, adjusting issuance ratios, or negotiating and reaching agreements with opposing shareholders in order to achieve greater consensus. Transparent dialogue and strict compliance with legal procedures are important factors in minimizing conflicts and creating unity in decisions on capital increases.
III. Legal provisions relating to shareholders not agreeing to a capital increase
1. Which legal provisions relate to the rights of shareholders who do not agree to increase capital?
The rights of shareholders who do not agree to increase capital are protected under various provisions of the Law on Enterprise 2020.
Specifically, Article 115 provides for the fundamental rights of ordinary shareholders, including the rights to attend, speak at, and vote during meetings of the General Meeting of Shareholders. In addition, Article 151 provides for the rights of shareholders or groups of shareholders to request annulment of resolutions of the General Meeting of Shareholders where the procedures, formalities, or contents of such resolutions violate the law or the company charter.
Furthermore, Article 140 regarding the convening of meetings of the General Meeting of Shareholders is also an important legal basis for ensuring shareholders’ full participation in the decision-making process relating to capital increases.
2. What procedures must be followed where shareholders do not agree to increase capital under the current Law on Enterprise?
Under the Law on Enterprise 2020, increasing charter capital through issuance of additional shares falls under the authority of the General Meeting of Shareholders (Point b, Clause 2, Article 138). Where shareholders do not agree to the capital increase, the company may still adopt the resolution if the voting ratio prescribed under Article 148 is satisfied.
However, the process must fully comply with procedural requirements, including: Lawful convening of meetings; provision of complete documents to shareholders; ensuring shareholders’ voting rights; and preparing meeting minutes and resolutions in accordance with regulations. Failure to comply with these steps may lead to disputes and legal risks.
3. What are the common violations relating to shareholders not agreeing to increase capital?
In practice, common violations relating to shareholders not agreeing to increase capital include: Failure to notify or insufficient notification to shareholders regarding the capital increase; restriction or deprivation of voting rights of opposing shareholders; failure to ensure pre-emptive rights to purchase shares in accordance with Article 124 of the Law on Enterprise 2020; or issuance of resolutions approving capital increases without satisfying the statutory voting ratio requirements.
Such violations may constitute grounds for shareholders to request annulment of the capital increase resolution and claim compensation for damages (if any).
IV. Questions relating to shareholders not agreeing to a capital increase
1. Can shareholders who do not agree to increase capital cause disputes within the company?
Shareholders who do not agree to increase capital may absolutely become a cause of internal corporate disputes, particularly where the resolution approving the capital increase is adopted with a voting ratio close to the statutory threshold or where opposing shareholders believe that their lawful rights and interests have not been adequately protected.
Such disputes commonly relate to the legality of resolutions of the General Meeting of Shareholders, pre-emptive rights to purchase shares, or the right to receive adequate information prior to voting.
2. What consequences may arise when shareholders do not agree to increase capital?
Where shareholders do not agree to increase capital, the company may take various consequences such as delays in capital mobilization plans, disruption of production and business activities, legal expenses arising from dispute resolution, and negative impacts on the reputation and image of the enterprise.
In the long term, such disagreement may also undermine trust among shareholders and destabilize the company’s governance structure.
3. How does the law regulate notification to shareholders who do not agree to increase capital?
The Law on Enterprise 2020 requires companies to fully and promptly notify all shareholders of the contents of meetings of the General Meeting of Shareholders, including plans for increasing charter capital. Pursuant to Clause 1, Article 143 of the Law on Enterprise 2020, the person convening the meeting of the General Meeting of Shareholders must send notices of invitation to all shareholders entitled to attend the meeting at least 21 days before the opening date of the meeting, unless the company charter prescribes a longer period.
Such notices must be sent in compliance with the statutory time limits, forms, and contents prescribed by law and the company charter, thereby ensuring that shareholders who do not agree to the capital increase have sufficient information to consider, vote, and protect their lawful interests.
4. If shareholders do not agree to increase capital but the company still proceeds with the increase, who will take legal liability?
Where shareholders do not agree to increase capital but the company still proceeds with the increase on the basis of a lawfully adopted resolution, the company shall not take legal liability merely because certain shareholders objected to the decision. However, if the capital increase violates regulations regarding authority, order, procedures, or infringes upon shareholders’ lawful rights, the company managers (members of the Board of Directors, the Director/General Director) and the company itself may take corresponding legal liability under Clause 2, Article 165 of the Law on Enterprise 2020.
5. If shareholders do not agree to increase capital, what obligations must the company fulfill under the law?
Where shareholders do not agree to increase capital, the company must still fully comply with its legal obligations, including: Respecting shareholders’ voting rights; ensuring pre-emptive rights to purchase shares (if applicable); providing complete and truthful information relating to the capital increase; and complying with the order and procedures for adopting resolutions under the Law on Enterprise 2020, as amended in 2025, and the company charter. Full compliance with these obligations constitutes the basis for safeguarding the legality of the capital increase decision.
V. Are you looking for a reputable law firm to assist with issues relating to shareholders not agreeing to a capital increase?
In the context where decisions on increasing charter capital may easily lead to disputes, particularly where shareholders do not agree to the capital increase, cooperating with a reputable law firm is a necessary solution to minimize legal risks for enterprises and shareholders. Lawyers specializing in enterprise law may assist in advising on lawful capital increase procedures, assessing legal risks, representing parties in dispute resolution, and protecting the lawful rights and interests of relevant parties.
The above information is for reference purposes only. Should clients require detailed advice regarding specific cases, please contact NPLaw Firm for immediate consultation.
