In the context of deepening economic integration, investment and business activities through joint-stock companies are becoming increasingly popular. However, not all shareholders fully understand the legal rights afforded to them when they become part owners of a company. So, how are shareholders’ rights regulated under current law? This article by NPLaw provides a detailed analysis of shareholders’ rights as prescribed by law, thereby helping investors and interested parties gain a comprehensive and accurate understanding of the matter.
I. Understanding shareholders’ rights
Currently, as owners of a portion of the company, shareholders are legally entitled to numerous important rights. They are entitled to attend and vote at the General Meeting of Shareholders, receive dividends in proportion to their shareholding, access the company’s financial and operational information, and transfer their shares. In addition, shareholders may claim compensation if their lawful rights and interests are infringed, and in certain circumstances, they may initiate lawsuits against company managers to protect the company’s overall interests.
These rights not only enable shareholders to supervise corporate operations but also ensure that their speech and interests are respected during the company’s development process.
II. Legal provisions on shareholders’ rights
1. What are shareholders’ rights?
Shareholders’ rights are specifically provided in the Law on Enterprise 2020, depending on the type of shares they hold:
1.1. Rights of ordinary shareholders
According to Article 115 of the Law on Enterprise 2020, ordinary shareholders have the following rights to:
- Attend and vote at the General Meeting of Shareholders, directly, through an authorized representative, or by other means as provided by the charter and law. Each ordinary share is corresponding with one vote.
- Receive dividends at the rate decided by the General Meeting of Shareholders.
- Obtain pre-emptive rights to purchase new shares in proportion to their existing holdings when the company issues additional shares.
- Transfer shares to others, except in cases restricted under Clause 3, Article 120 and Clause 1, Article 127 of the Law.
- Access, inspect, and extract information relating to the list of voting shareholders and request correction of inaccurate information.
- Access and copy documents such as the company charter, meeting minutes, and resolutions of the General Meeting of Shareholders.
- Upon dissolution or bankruptcy, receive residual assets in proportion to their shareholding.
Additionally, shareholders or groups of shareholders holding 5% or more of the total ordinary shares (or a lower threshold as stipulated by the charter) hold further rights to:
- Access and extract documents such as minutes and resolutions of the Board of Directors, financial statements, supervisory reports, contracts, and major transactions (except trade secrets).
- Request the convening of a General Meeting of Shareholders if the Board of Directors seriously violates shareholders’ rights or exceeds its authority.
- Request the Supervisory Board to examine the management and operation of the company where deemed necessary, by submitting a written request with specific information on the requesting shareholder(s).
Shareholders or groups holding 10% or more of the total ordinary shares (or a lower threshold per the charter) may:
- Nominate candidates for election to the Board of Directors and the Supervisory Board, according to the procedures prescribed by the charter and resolutions of the General Meeting of Shareholders.
1.2. Rights of shareholders with voting preference shares
Under Article 116 of the Law on Enterprise 2020, shareholders with voting preference shares have:
- The right to multiple votes per share, as specified in the company charter.
- The same rights as ordinary shareholders, except the right to transfer shares, unless pursuant to an effective court judgment or inheritance.
1.3. Rights of shareholders with dividend preference shares
According to Article 117 of the Law on Enterprise 2020, holders of dividend preference shares are entitled to:
- Receive dividends higher than those of ordinary shares, or fixed stable dividends.
- Receive residual assets upon dissolution or bankruptcy, after all liabilities have been settled.
- Other rights as ordinary shareholders, except the rights to vote, attend meetings, or nominate candidates to the Board of Directors and Supervisory Board, unless otherwise provided by law.
1.4. Rights of shareholders with redeemable preference shares
Under Article 118 of the Law on Enterprise 2020, shareholders with redeemable preference shares have the same rights as ordinary shareholders, except:
- They do not have the rights to vote, attend meetings, or nominate candidates to the Board of Directors or Supervisory Board, except in special circumstances provided under Clause 5, Article 114 and Clause 6, Article 148 of the Law.
In summary, the Law on Enterprise 2020 clearly defines these rights to ensure transparency, fairness, and the protection of shareholders’ legitimate interests in participating in the governance and oversight of companies.
2. Must the company charter specify shareholders’ rights?
Under Article 24 of the Law on Enterprise 2020, the company charter must clearly set out shareholders’ rights and obligations, including:
- Rights to vote, receive dividends, transfer and pre-emptively purchase shares;
- Rights to access information, nominate candidates, etc.
The charter also serves to concretize the provisions of the Law on Enterprise 2020 and functions as an internal legal basis for resolving disputes and managing the company.
Thus, it is important to obtain an accurate and complete charter as well as shareholders’ clear understanding helping bring a strong development of the enterprise.
3. Remedies for infringement of shareholders’ rights
When shareholders’ rights are infringed, (such as being deprived of voting rights, losing shares, or being denied access to transparent financial information) the following remedies are available:
3.1. Requesting internal resolution
Shareholders may request the company to convene an extraordinary General Meeting of Shareholders or a Board of Directors meeting to review and annul unlawful resolutions. This is the first step to exercising shareholders’ rights of questioning, voting, and internal supervision.
3.2. Filing a lawsuit in Court
If internal remedies are ineffective, shareholders may initiate legal proceedings to:
- Cancel resolutions that contravene the law,
- Claim damages,
- Recover misappropriated shares,
- Request financial transparency.
3.3. Submitting complaints to regulatory authorities
Shareholders may also report violations to competent authorities such as:
- The State Securities Commission,
- Stock Exchanges,
- Business inspection and supervisory agencies.
These authorities have the competence to impose sanctions, require rectification, and enforce compliance.
3.4. Criminal liability (if criminal acts are involved)
In cases of serious violations such as fraudulently appropriating shares or deliberately causing damage for personal gain, responsible individuals may be subject to criminal prosecution under the Penal Code 2015, with fines ranging from fines to non-custodial reform or imprisonment.
3.5. Administrative or disciplinary measures within the company
The company may also impose internal sanctions against violators, such as:
- Warnings or reprimands,
- Dismissal or suspension from office,
- Withdrawal of voting rights,
- Mandatory compensation to affected shareholders or the company.
Thus, safeguarding shareholders’ rights is not only the responsibility of State authorities but also a fundamental obligation of the company and its shareholders to ensure transparency, fairness, and stability in corporate governance.
III. Questions on shareholders’ rights
1. What are the company’s obligations to maximize the protection of shareholders’ rights?
Under the Law on Enterprise 2020, companies must:
- Ensure transparency of information: Publish full financial statements, shareholder registers, charters, and resolutions; ensure accuracy and timely updates, and corrections as defined by Article 176 of this Law.
- Guarantee equal participation and voting rights: All shareholders, including minority shareholders, may attend, speech, vote, and convene extraordinary meetings if holding 5% or more of shares (Article 115).
- Ensure effective internal supervision: Establish an independent Supervisory Board with rights to access records, conduct inspections, and report to the Board of Directors and shareholders within 7–15 days upon request.
- Protect financial interests: Distribute dividends fairly and punctually; reinvest profits or adjust shareholder benefits only with General Meeting approval (50–75% voting threshold).
- Ensure managerial accountability: Managers (Board of Directors, CEO) must act honestly, prudently, and prioritize the company’s and shareholders’ interests; violations require compensation for damages.
By ensuring transparency, equality, effective supervision, and strict compliance, companies not only protect shareholders’ rights but also enhance reputation, value, and long-term stability building trust, attracting investment, and fostering sustainable development.
2. Does the company have obligations to notify shareholders of important decisions?
The company must notify shareholders of important decisions under the Law on Enterprise 2020:
- Meeting notices: Sent to all eligible shareholders at least 21 days before the meeting, unless the charter provides otherwise (Article 143).
- Resolutions disclosure: After adoption, resolutions must be notified to shareholders within 15 days, either directly or via the company’s website (Article 148).
- Dividend and shareholder benefit notices: The company must clearly inform shareholders of dividend amounts, payment deadlines, and sources of payment.
- Other important updates: Any changes such as share transfers, capital adjustments, charter amendments, structural changes, or major investments must be reported to shareholders and registered with the Business Registration Authority within 10 days of the decision.
Timely and transparent notification of main decisions is not only a legal obligation but also essential for fostering shareholder trust and ensuring corporate transparency and sustainability.
3. Which shareholders’ rights are protected when courts resolve corporate disputes?
When courts adjudicate disputes relating to company operations, the following shareholder rights are protected:
- Right to receive information: Ensure access to accurate and transparent company information.
- Economic rights: Safeguard rights to receive dividends, contribute capital, and claim compensation for damages caused by unlawful acts.
- Management and supervisory rights: Guarantee the ability to participate in governance or demand leadership changes.
- Right to initiate lawsuits and annul illegal decisions: Allow shareholders to challenge or cancel resolutions violating the charter or law.
Thus, judicial intervention ensures full protection of shareholders’ rights, thereby upholding transparency, fairness, and corporate stability.
4. Are shareholders entitled to promotional benefits from the company?
To encourage long-term investment and strengthen brand loyalty, companies may give promotional offers to shareholders such as:
- Discounts or vouchers for products,
- Service credits (e.g., travel or hotel vouchers, onboard credits),
- Invitations to exclusive events or brand experiences,
- Loyalty programs linked to shareholding duration.
Before investing, shareholders should review existing benefit programs and participation requirements to maximize their entitlements.
IV. Legal consultancy on shareholders’ rights
The above summarizes the key legal provisions on shareholders’ rights, provided by NPLaw. Should you have any questions or require further clarification, please contact NPLaw for assistance. With an experienced legal team, we are committed to resolving your concerns and protecting shareholders’ rights effectively.
