Latest criminal sanctions for forging the signature of a major shareholder to transfer shares

During the course of providing corporate legal advisory services, NPLaw has observed that internal disputes relating to changes in share ownership are becoming increasingly complex, particularly those involving the forgery of a major shareholder’s signature for the purpose of transferring shares. The following article clarifies the relevant legal aspects to help clients and enterprises better understand and mitigate associated legal risks.

I. What legal risks do enterprises and individuals face when forging a major shareholder’s signature to transfer shares?

In the governance of a joint-stock company, any change in the ownership structure must strictly comply with applicable corporate laws. If a major shareholder’s signature is forged for the purpose of transferring shares, both the offending individual and the enterprise concerned may face substantial legal consequences. Such conduct commonly takes the form of forging signatures on share transfer agreements, minutes of General Meetings of Shareholders, enterprise registration amendment dossiers, or powers of attorney/ authorization letters, in order to unlawfully transfer ownership of shares.

From a civil law perspective, under Article 127 of the Civil Code 2015, such share transfer transactions may be declared invalid by a court on the grounds of fraud. Consequently, the company may be required to restore the original ownership structure, causing significant disruption to corporate governance and affecting the legality of resolutions previously adopted by the General Meeting of Shareholders.

From a criminal law perspective, if the conduct is intended to unlawfully appropriate shares or assets of substantial value, the offender may also be prosecuted for the Criminal Offence of Fraudulent Appropriation of Property under Article 174 of the Criminal Code 2015.

In addition, the enterprise may take the following risks:

• Disputes over share ownership rights;
• Instability in the internal governance structure;
• Disruptions to management and operational activities;
• Prolonged litigation among groups of shareholders.

II. Detailed analysis of forging a major shareholder’s signature to transfer shares

1. What constitutes forging a major shareholder’s signature to transfer shares?

Forging a major shareholder’s signature to transfer shares refers to an act whereby an individual, who may be a company manager, legal representative, or another shareholder, intentionally creates a signature that was not executed by the major shareholder, to sign documents including Share Transfer Agreements, Meeting Minutes, Resolutions of the General Meeting of Shareholders, or the Shareholder Register. The purpose is to unlawfully deprive the major shareholder of legitimate ownership rights and transfer the shares to another person without the owner’s consent.

Accordingly, the essence of such conduct lies in the use of fraudulent means to unlawfully appropriate or transfer ownership rights over shares.

Note: Under Clause 18, Article 4 of the Law on Securities 2019, a major shareholder is a person holding at least 5% of the total voting shares of a company.

2. What value of shares is required for criminal liability to arise in cases involving forged signatures of major shareholders?

Vietnamese law does not currently prescribe a separate monetary threshold specifically for acts involving the forgery of a major shareholder’s signature to transfer shares. Criminal liability depends on the specific criminal offence applicable to the circumstances of the case.

Pursuant to Point a, Clause 1, Article 174 of the Criminal Code 2015 (as amended and supplemented in 2017) governing the offence of Fraudulent Appropriation of Property, any person who, through fraudulent means, appropriates another person’s property valued at 2,000,000 VND or more may be subject to criminal prosecution.

In the context of a joint-stock company, the value of shares held by a major shareholder generally far exceeds 2,000,000 VND.

Accordingly, the greater the value of the appropriated shares, the more likely it is that a severe criminal sanction will be imposed. 

3. Is asking another person to sign on one’s behalf without authorization considered forgery of a major shareholder’s signature for share transfers? 

Pursuant to Article 138 of the Civil Code 2015 regarding authorization-based representation, any representation in transactions involving the disposition of assets must be established through a valid written power of attorney.

Requesting another person to sign on one’s behalf without an official authorization document is unlawful. In cases the substitute signatory intentionally conceals the absence of authorization and deliberately imitates the original signature to conduct a share transfer transaction for the purpose of appropriating property, such conduct may constitute fraud and be regarded as forging a major shareholder’s signature to transfer shares.

In conclusion, the distinction between signing on behalf of another due to a lack of legal understanding and fraudulent signature forgery depends primarily on the offender’s intent to obtain unlawful benefits and appropriate property.

III. Legal framework governing the forgery of a major shareholder’s signature for share transfers 

1. What does the Criminal Code provide regarding sanctions for forging a major shareholder’s signature to transfer shares?

The Criminal Code 2015 does not provide a separate criminal offence specifically named “forging a major shareholder’s signature to transfer shares”.

However, if an individual uses forged signatures or falsified share transfer documents to make a company, business registration authority, or third party believe that a transfer is lawful, thereby appropriating ownership rights over shares or corresponding asset value, such conduct may constitute the offence of Fraudulent Appropriation of Property under Article 174 of the Criminal Code 2015.

The applicable sanction framework is as follows:

• Clause 1: Non-custodial reform for up to 03 years or imprisonment from 06 months to 03 years if the appropriated property is valued from 2,000,000 VND to under 50,000,000 VND.
• Clause 2: Imprisonment from 02 years to 07 years if the appropriated property is valued from 50,000,000 VND to under 200,000,000 VND. 
• Clause 3: Imprisonment from 07 years to 15 years if the appropriated property is valued from 200,000,000 VND to under 500,000,000 VND. 
• Clause 4: Imprisonment from 12 years to 20 years or life imprisonment if the appropriated property is valued at 500,000,000 VND or more. In practice, shares owned by major shareholders often exceed such a threshold.

2. What administrative sanctions apply to filing dossiers containing forged signatures of major shareholders for share transfer purposes?

Where the conduct is limited to the submission of falsified dossiers to State authorities and is detected before criminal consequences arise, Article 43 of Decree No. 122/2021/ND-CP provides that making untruthful or inaccurate declarations in enterprise registration dossiers may result in a monetary fine ranging from 20,000,000 VND to 30,000,000 VND.

As a remedial measure, under Point b, Clause 6, Article 44 of the same Decree, the competent authority may compel the enterprise to register amendments and re-notify all information previously declared inaccurately.

Accordingly, administrative sanctions not only impose fines but also require the restoration of accuracy and transparency within the enterprise registration system.

3. What mitigating circumstances may be applied in criminal cases involving the forgery of a major shareholder’s signature to transfer shares?

Pursuant to Clause 1 Article 51 of the Criminal Code 2015, offenders may be granted mitigating circumstances by the Trial Panel if:

• They voluntarily remedy the consequences, compensate for damages, and restore the status quo (including returning all appropriated shares and compensating the major shareholder for material losses);
• The offence is committed for the first time and falls within a less serious category;
• They make honest declarations and demonstrate genuine remorse;
• They actively cooperate with competent authorities in detecting the offence or resolving the criminal case.

4. Civil liability for non-contractual damages arising from the forgery of a major shareholder’s signature to transfer shares

Pursuant to Clause 1, Article 584 and Article 589 of the Civil Code 2015, any person who infringes upon another person's property and causes damage must compensate for the entire loss suffered.

Accordingly, an individual who forges a major shareholder’s signature to transfer shares is required not only to return the original shares but also to compensate for benefits associated with the possession and exploitation of those shares. Such benefits may include dividends that the major shareholder would otherwise have received during the period in which ownership rights were unlawfully deprived. Furthermore, the offender must reimburse all reasonable expenses incurred by the injured party in preventing, mitigating, and remedying the damage.

In conclusion, civil compensation liability invariably accompanies criminal or administrative liability, ensuring that offenders do not derive any financial benefit from their wrongful conduct.

IV. Questions regarding the forgery of a major shareholder’s signature for share transfers

1. Will a suspect be immediately detained upon the issuance of a handwriting examination conclusion confirming the forgery of a major shareholder’s signature for a share transfer?

At present, there is no legal provision requiring procedural authorities to issue a detention order immediately based solely on a handwriting examination conclusion. Pursuant to Article 119 of the Criminal Procedure Code 2015, an investigating authority may order temporary detention where the accused is suspected of committing a particularly serious offence, or where a less serious or serious offence is involved but there are grounds to believe that the accused may abscond, destroy evidence, or obstruct the investigation.

A handwriting examination conclusion constitutes an important source of evidence for initiating criminal proceedings; however, the decision to impose temporary detention depends on the severity of the case and the personal circumstances of the accused. Nevertheless, where a substantial quantity of shares or assets has been unlawfully appropriated and the case is considered particularly serious, the likelihood of temporary detention being imposed is considerably high.

2. Can a witness to a share transfer agreement be held jointly liable if the major shareholder’s signature is forged?

Liability in such circumstances depends entirely on the witness’s subjective awareness and intent. Under Article 17 of the Criminal Code 2015 regarding accomplices, if a witness knowingly signs a share transfer agreement despite being fully aware that it was created through the forgery of a major shareholder’s signature, thereby assisting in legitimizing the fraudulent transaction, such witness may be prosecuted as an accomplice providing assistance to the principal offender.

Conversely, if the witness was also deceived and genuinely unaware that the signature had been forged, he or she shall not take criminal liability.

Accordingly, individuals should exercise extreme caution before acting as witnesses to transactions involving assets of substantial value.

3. Will the shares transferred through the forgery of a major shareholder’s signature be confiscated?

Pursuant to Clause 1, Article 127 of the Civil Code 2015, a civil transaction entered into as a result of deception may be declared invalid. Furthermore, under Clause 2, Article 131 of the Civil Code 2015, once a civil transaction is declared invalid, the parties must restore the original status quo and return to each other what they have received.

Accordingly, shares appropriated through the forgery of a major shareholder’s signature for the purpose of transfer will not be confiscated and remitted to the State budget. Instead, the court will order the restoration of lawful ownership rights to the shareholder whose signature was forged.

4. What should the family of an accused person do to apply for bail in a case involving the forgery of a major shareholder’s signature for share transfer purposes?

Pursuant to Article 121 of the Criminal Procedure Code 2015 (as guided by Article 21 of Joint Circular No. 01/2026/TTLT-VKSNDTC-BCA-BQP), family members wishing to apply for bail on behalf of an accused person must prepare the following documents:

• An application for bail submitted by at least two relatives who possess good moral character, stable income, and a clear place of residence. Such an application must be certified by the Commune-level People's Committee where the guarantors reside.
• Supporting documents evidencing the accused’s personal background and materials demonstrating that the consequences of the offence have been remedied.

The bail application dossier should then be submitted to the Investigating Authority, the Procuracy, or the Court handling the case for consideration and decision.

5. If the shares have been returned to the major shareholder, can the criminal case be dismissed?

The return of shares to the major shareholder does not automatically constitute grounds for the dismissal of a criminal case.

If procedural authorities determine that the act of forging a signature for the purpose of transferring shares satisfies the constituent elements of the offence of Fraudulent Appropriation of Property under Article 174 of the Criminal Code 2015, or another applicable criminal offence, the voluntary return of shares and remediation of consequences will generally be considered only as mitigating circumstances under Point b, Clause 1, Article 51 of the Criminal Code, which recognizes the offender’s voluntary compensation for damage or remedial actions. Furthermore, the offence of Fraudulent Appropriation of Property does not fall within the category of offences that may only be prosecuted upon the request of the victim under Article 155 of the Criminal Procedure Code 2015.

Accordingly, even where the victim has recovered the shares and submits a petition requesting leniency or withdrawal of complaints, the Investigating Authority, Procuracy, and Court may still continue criminal proceedings if the conduct is deemed to have infringed upon economic management order and exhibits clear criminal elements.

Nevertheless, voluntarily returning the appropriated assets, remedying the consequences, and actively cooperating with investigating authorities are highly significant factors that may enable the accused to obtain a reduced sentence, benefit from a lighter penalty bracket, or potentially qualify for a suspended sentence where all statutory conditions are satisfied.

6. How can the rights of a shareholder whose signature has been forged be protected while he or she is residing overseas?

Where a major shareholder is residing abroad and cannot personally return to Vietnam to protect his or her interests, such shareholder may execute a Power of Attorney (duly legalized through consular legalization procedures) authorizing a lawyer in Vietnam to represent him or her in resolving the dispute.

In particular, to preserve evidence regarding unauthorized internal meetings or unlawful share transfers conducted by company insiders, the authorized representative in Vietnam should proactively request a Bailiff to prepare a Bailiff’s Record recording meetings, electronic transactions, emails, and other relevant events.

A Bailiff’s Record constitutes an extremely important source of evidence and carries significant evidentiary value before the courts, enabling procedural authorities to promptly prevent the dissipation of assets associated with cases involving the forgery of a major shareholder’s signature for share transfers.

V. Is your business looking for experienced lawyers to advise on legal risks arising from the discovery of forged major shareholder signatures used for share transfers?

NPLaw provides comprehensive legal services, including the review of legal documentation, representation of clients in dealings with the Investigation Police Agency and Business Registration Authorities, and the protection of clients’ rights and interests before competent courts. Our objective is to minimize legal risks, recover misappropriated assets, and restore the lawful management and control rights of shareholders.

Allow our experienced legal professionals to accompany and support your business in safeguarding its valuable achievements and legitimate interests.

The information provided above is for reference purposes only. Should you require detailed legal advice tailored to your specific circumstances, please contact NPLaw for prompt consultation and assistance.