A shareholder opposing a capital reduction is a common situation in joint-stock companies. The article below outlines the legal regulations governing shareholders who do not agree with a capital reduction and addresses several related issues to help individuals and organizations protect their legitimate rights and interests.

I. Introduction to issues related to shareholders opposing capital reduction

A capital reduction is a sensitive corporate decision because it directly affects the company's asset scale and ownership structure. When a shareholder does not agree with a capital reduction, the company may adjust its charter capital to reflect the actual contributed capital. In such cases, the shareholder may lose their status as an ordinary shareholder and remain liable for obligations arising before the capital adjustment. Furthermore, unpaid shares may not be transferred, and the shareholder’s interests may be affected to a certain extent.

A shareholder has the right to request the company to repurchase their shares if they disagree with the capital reduction or may request an adjustment of the charter capital to protect themselves from financial liabilities arising from a failure to fully contribute capital.

II. Understanding shareholders opposing capital reduction

1. What does it mean for a shareholder to oppose a capital reduction?

Pursuant to Article 4 of the Law on Enterprise 2020 (as amended in 2025), a shareholder is an individual or organization owning at least one share in a joint-stock company.

Pursuant to Clause 34, Article 4 of the Law on Enterprise 2020 (as amended in 2025), charter capital means the total value of assets contributed or committed to be contributed by company members or owners upon the establishment of a limited liability company or partnership, and the total par value of shares sold or subscribed upon the establishment of a joint-stock company.

Accordingly, a shareholder opposing a capital reduction may be understood as a situation where one or more shareholders vote against a proposal to reduce the company’s charter capital submitted by the Board of Directors at a General Meeting of Shareholders.

2. Who has the authority to decide on a capital reduction if shareholders oppose it?

In a joint-stock company, where one or more shareholders oppose a capital reduction, the authority to approve the reduction generally belongs to the following corporate bodies:

- General Meeting of Shareholders (GMS): Pursuant to Clause 1, Article 138 of the Law on Enterprise 2020 (as amended in 2025), the General Meeting of Shareholders is a component of the organizational structure of a joint-stock company and comprises all shareholders with voting rights. It is the highest decision-making body of the company.

Additionally, under Clause 1, Article 148 of the Law on Enterprise 2020 (as amended in 2022), a resolution approving a capital reduction is adopted if it receives affirmative votes from shareholders representing at least 65% of the total voting rights of shareholders attending and voting at the meeting, unless otherwise provided under Clauses 3, 4, and 6 of Article 148 or the company charter. Therefore, even if certain shareholders oppose the proposal, the capital reduction may still be approved if the statutory voting threshold is met.

- Board of Directors (BOD): In certain specific circumstances, the Board of Directors may decide to repurchase no more than 10% of the total number of issued shares of each class within a 12-month period. If such repurchase results in a reduction of charter capital, the Board may approve the transaction without obtaining approval from the General Meeting of Shareholders, unless otherwise stipulated in the company charter, under Clause 1, Article 133 and Point d, Clause 2, Article 153 of the Law on Enterprise 2020 (as amended in 2025).

3. What are the common reasons shareholders oppose a company’s capital reduction?

Shareholders may oppose a capital reduction for various reasons, including:

  • Impact on reputation and financial capacity: A reduction in charter capital may lead business partners, creditors, and customers to question the company’s financial strength and solvency, potentially creating obstacles in commercial transactions.
  • Loss of control (for major shareholders): Major shareholders may fear that the capital reduction will dilute their ownership percentage, reducing their influence and decision-making power within the company.
  • Decrease in share value: Although capital reduction often involves returning capital to shareholders, where the company remains profitable, shareholders may believe that returning capital could reduce future earnings (including dividends) and negatively affect the value of their shares, particularly during periods of business growth.

III. Legal regulations relating to shareholders opposing capital reduction

1. How does the Law on Enterprise regulate situations where shareholders oppose a capital reduction?

- Where shareholders oppose a proposed reduction of charter capital, the matter is resolved based on the voting principles of the General Meeting of Shareholders and the legal mechanisms designed to protect minority shareholders.

  • Pursuant to Clause 1, Article 138 of the Law on Enterprise 2020 (as amended in 2025), the General Meeting of Shareholders is the highest decision-making body of a joint-stock company.
  • Pursuant to Clause 2, Article 148 of the Law on Enterprise 2020 (as amended in 2022), a resolution on capital reduction is approved if shareholders representing more than 50% of the total voting rights of shareholders attending and voting at the meeting vote in favor.

Accordingly, even where one or more shareholders object, the capital reduction may still proceed if the required voting threshold is satisfied.

- Right to require share repurchase: Pursuant to Point b, Clause 5, Article 112 of the Law on Enterprise 2020, as supplemented by Point b, Clause 17, Article 1 of the amended Law 2025, a company may reduce its charter capital through the repurchase of issued shares in accordance with Articles 132 and 133, specifically:

  • Repurchase at the shareholder’s request: A shareholder who votes against a resolution on the reorganization of the company or changes to shareholders’ rights and obligations specified in the company charter may request the company to repurchase their shares.
  • Repurchase by decision of the company: The company may repurchase up to 30% of the total issued ordinary shares and part or all of the issued dividend preference shares.

2. What legal steps must a company take when shareholders oppose a capital reduction?

When shareholders oppose a reduction in charter capital, the company must undertake the following legal procedures to ensure compliance and protect stakeholders’ rights:

- Step 1: Convening the general meeting of shareholders and approving the capital reduction resolution

  • Pursuant to Clause 1, Article 147 of the Law on Enterprise 2020 (as amended in 2025), resolutions within the authority of the General Meeting of Shareholders may be adopted either through voting at a meeting or through written consultation.
  • Under Clause 2, Article 148 of the Law on Enterprise 2020, a capital reduction resolution is approved if shareholders representing more than 50% of the total voting rights of attending and voting shareholders vote in favor.
  • Accordingly, even where a shareholder objects, the capital reduction may proceed if the statutory majority requirement is met.

- Step 2: Repurchasing shares at the request of dissenting shareholders

  • Pursuant to Point b, Clause 5, Article 112 and Clause 1, Article 132 of the Law on Enterprise 2020 (as amended in 2025), a shareholder who votes against a resolution relating to corporate reorganization or changes in shareholder rights and obligations may request the company to repurchase their shares. The request must be submitted within 10 days from the date the General Meeting of Shareholders adopts the resolution. The company must repurchase the shares at market value or at a price determined in accordance with the company charter within 90 days from receipt of the request.
  • If the parties cannot agree on the price, they may engage a valuation organization. The company must propose at least three valuation firms, and the shareholder’s selection shall be final.

3. What conduct may constitute a violation if the company proceeds with a capital reduction despite shareholder opposition?

The following acts may constitute violations where a company continues implementing a capital reduction despite shareholder objections:

- Unlawful capital reduction: A company reduces its charter capital without obtaining the approval threshold required under Clause 2, Article 148 of the Law on Enterprise 2020, as amended in 2022. In such circumstances, the resolution approving the capital reduction may be declared invalid or subject to cancellation.

- Violation of solvency requirements: The company may only reduce its charter capital if it remains capable of fully satisfying all debts and other property obligations after returning capital to shareholders. If the company intentionally reduces capital without satisfying these financial conditions, such conduct may be regarded as an unlawful disposal of assets causing harm to creditors and shareholders, pursuant to Point a, Clause 5, Article 112 of the Law on Enterprise 2020, as amended in 2025.

- Unequal return of capital: If the company reduces capital through capital repayment but does so unfairly among shareholders, such conduct may infringe shareholders’ lawful rights and interests under Clause 5, Article 112 of the Law on Enterprise 2020, as supplemented in 2025.

IV. Questions regarding shareholders opposing capital reduction

1. How may a shareholder who opposes a capital reduction vote at the meeting?

Pursuant to Point a, Clause 1, Article 115 of the Law on Enterprise 2020 (as amended in 2025), ordinary shareholders have the right to attend and speak at General Meetings of Shareholders and to vote directly, through authorized representatives, or by other means permitted by the company charter or applicable law. Each ordinary share carries one vote.

Pursuant to Clause 1, Article 147 of the Law on Enterprise 2020 (as amended in 2025), the General Meeting of Shareholders adopts resolutions either at meetings or through written consultation.

Pursuant to Clause 2, Article 148 of the Law on Enterprise 2020 (as amended), a capital reduction resolution is adopted if approved by shareholders holding more than 50% of the voting rights of shareholders attending and voting at the meeting.

Therefore, shareholders who oppose the capital reduction may vote against the proposal at the General Meeting of Shareholders. If the resolution is nevertheless adopted, they may request the company to repurchase their shares pursuant to Clause 1, Article 132 of the Law on Enterprise 2020 (as amended in 2025).

2. What legal issues may arise when shareholders object to a capital reduction?

Potential legal issues include:

  • Disputes regarding procedures for adopting resolutions;
  • Requests for compulsory share repurchase by the company;
  • Disputes over ownership percentages and voting rights resulting from the capital reduction.

In general, shareholder opposition may lead to internal disputes and legal challenges concerning the company’s capital reduction process.

3. Which organizations have authority to resolve disputes when shareholders object to a capital reduction?

Pursuant to Clauses 1, 4, and 5, Article 30 of the Civil Procedure Code 2015, commercial and business disputes, including disputes between a company and its shareholders or among shareholders relating to the company’s establishment, operation, restructuring, dissolution, merger, consolidation, division, separation, asset transfer, or organizational restructuring, fall within the jurisdiction of the courts.

Under Article 317 of the Commercial Law 2005, disputes may be resolved through:

  • Negotiation;
  • Mediation;
  • Arbitration; or
  • Court proceedings.

Pursuant to Article 2 and Clause 1, Article 5 of the Law on Commercial Arbitration 2010, disputes may be resolved through arbitration where a valid arbitration agreement exists.

Accordingly, disputes arising from shareholder objections to capital reduction may be resolved by either the courts or commercial arbitration tribunals.

4. What consequences may arise if a capital reduction is approved without a shareholder’s consent?

Where the resolution satisfies the statutory voting threshold under Clause 2, Article 148 of the Law on Enterprises 2020 (as amended), the company may lawfully proceed despite dissenting votes.

However, if the capital reduction is implemented unlawfully, consequences may include:

  • Cancellation of the resolution: Shareholders may request the court or arbitral tribunal to invalidate all or part of the resolution pursuant to Article 151 of the Law on Enterprise 2020 (as amended in 2025).
  • Administrative sanctions: The company may be fined under Article 47 of Decree No. 122/2021/ND-CP, with fines ranging from 20,000,000 VND to 100,000,000 VND depending on the circumstances, and may be required to adjust its charter capital to reflect the actual contributed capital.
  • Criminal liability: Where the unlawful capital reduction is conducted for the purpose of misappropriating assets and causes particularly serious damage, responsible individuals may face criminal prosecution for Abuse of Trust to Appropriate Property under Article 175 of the Criminal Code 2015 (as amended in 2017), carrying a maximum penalty of 20 years’ imprisonment.

5. Which legal provisions may a company violate if it fails to protect the rights of shareholders who object to a capital reduction?

Pursuant to Clause 1, Article 132 of the Law on Enterprise 2020 (as amended in 2025), shareholders who voted against a resolution concerning corporate reorganization or changes to shareholder rights and obligations under the company charter are entitled to request the company to repurchase their shares.

The request must be submitted in writing and include the shareholder’s name, address, number and class of shares, proposed sale price, and reasons for the request. It must be sent to the company within 10 days from the date the General Meeting of Shareholders adopts the relevant resolution.

V. Are you looking for a reputable legal professional to assist with issues relating to shareholders who object to capital reduction?

The foregoing information is intended to address common questions regarding shareholders who object to capital reduction. With a team of experienced lawyers and legal specialists, NPLaw provides reliable and professional legal services aimed at protecting clients’ legitimate rights and interests. If you require legal assistance, please contact NPLaw for advice and support.

The information above is provided for reference purposes only. Should you require detailed advice regarding a specific matter, please contact NPLaw for prompt professional consultation.