Shareholders’ objection to changes in organizational structure: rights, legal limits, and impacts on enterprises

In the course of corporate restructuring, mergers, or changes in governance models, shareholders’ objections to changes in organizational structure are not uncommon and may directly affect an enterprise’s development strategy. A proper understanding of shareholders’ rights to object, the applicable legal limits, and the company’s corresponding obligations is essential to ensuring legality, internal stability, and the mitigation of prolonged dispute risks.

I. Impacts of shareholders’ objections to changes in organizational structure on enterprises

Shareholders’ objections to changes in organizational structure may have material implications for corporate governance and development strategies. In practice, such objections may delay or impede restructuring, mergers, demergers, or adjustments to management models, thereby affecting the implementation timeline of approved business plans.

At the same time, if not handled in compliance with applicable regulations, shareholders’ objections may lead to internal disputes and protracted litigation, undermining the enterprise’s reputation for partners, investors, and the market.

From a positive perspective, however, shareholders’ objections also enhance oversight mechanisms, compelling enterprises to more carefully assess the legality, transparency, and effectiveness of organizational restructuring decisions.

II. Understanding shareholders’ objections to changes in organizational structure

To accurately assess the legal nature and consequences of shareholders’ objections to organizational restructuring, it is necessary to clarify the concept, legal grounds, and the scope and limits of shareholders’ objection rights under applicable law and the company charter.

1. What does “shareholders’ objection to changes in organizational structure” mean?

A shareholder’s objection to changes in organizational structure refers to the shareholder’s non-consent to decisions relating to the reorganization or restructuring of the company’s management apparatus or operating model, as expressed through voting, written opinions, or other lawful forms in accordance with the Law on Enterprise 2020 (as amended in 2025) and the company charter.

2. On what lawful grounds may shareholders decide to object to changes in organizational structure?

Shareholders may lawfully object to changes in organizational structure where such decisions are likely to adversely affect their lawful rights and interests or those of the company.

In particular, objections typically arise where the proposed restructuring diminishes the value of shares, alters shareholders’ voting or management rights; where the decision-making process is conducted without proper authority or fails to meet statutory and charter-prescribed voting thresholds; where the reorganization plan lacks transparency or a clear economic–legal relationship; or where the restructuring appears to serve the interests of a particular group of shareholders to the detriment of minority shareholders.

3. Why are shareholders’ objections to changes in organizational structure important for corporate development?

Shareholders’ objections serve as an internal check-and-balance mechanism in corporate governance, helping to prevent hasty, opaque, or interest-biased decisions. Through objections, enterprises are required to reassess the legality, feasibility, and economic efficiency of restructuring plans, thereby reducing the risk of internal disputes and long-term harm.

Moreover, shareholders’ objection rights help protect minority shareholders, enhance transparency and managerial accountability, and lay a foundation for stable and sustainable corporate development.

4. What forms of objection may shareholders use when they do not agree with changes in organizational structure?

Where shareholders do not agree with changes in organizational structure, they may express dissent or non-consent through the forms prescribed under Point (a), Clause 1, Article 115 of the Law on Enterprise 2020 (as amended in 2025) regarding voting rights and shareholder consultation, including:

• Attending and speaking at the General Meeting of Shareholders to articulate objections;

• Voting against the proposed resolution at the General Meeting of Shareholders in proportion to the shares held (with voting rights attached to shares), as recorded in the meeting resolution;
• Submitting voting ballots in writing, by email, fax, or post in accordance with law and the company charter to express non-consent to resolutions on organizational restructuring;
• Authorizing another person to attend the meeting and exercise voting rights on the shareholder’s behalf pursuant to a lawful power of attorney;
• In addition, eligible shareholders or groups of shareholders may submit written proposals to include objection-related items in the agenda of the General Meeting of Shareholders prior to the meeting, subject to the time limits and conditions prescribed by law and the company charter.

III. Legal provisions governing shareholders’ objections to changes in organizational structure

From a legal perspective, shareholders’ objections to organizational restructuring are not merely internal corporate matters but are subject to multiple legal provisions designed to safeguard shareholder rights and the legality of corporate governance decisions.

1. Which law governs shareholders’ rights to object to changes in organizational structure?

Shareholders’ rights to object to changes in organizational structure are primarily provided for in Point (a), Clause 1, Article 115 of the Law on Enterprise 2020 (as amended and supplemented in 2025), under which ordinary shareholders have the right to attend, speak at, and exercise voting rights on matters falling within the competence of the General Meeting of Shareholders.

Accordingly, shareholders may object by speaking at meetings, voting against proposals in proportion to their shareholdings, submitting written or electronic voting ballots, or lawfully authorizing another person to attend and vote on their behalf.

These forms constitute the legal basis for shareholders to clearly express their dissent with respect to resolutions on changes in organizational structure.

2. What procedures must a company follow when shareholders object to changes in organizational structure?

Where shareholders object to changes in organizational structure, the company must strictly comply with the procedures for convening, organizing, and adopting resolutions of the General Meeting of Shareholders under the Law on Enterprise 2020 (as amended in 2025), including:

• First, determining the legal basis for convening the General Meeting of Shareholders. The Board of Directors is obliged to convene an annual or extraordinary General Meeting of Shareholders where objections arise from a lawful request of shareholders or eligible shareholder groups in accordance with Clause 2, Article 115 and Point (c), Clause 1, Article 140. The meeting must be convened within 30 days from the receipt of a valid request.
• Second, conducting all meeting preparations. The convener must prepare the list of eligible shareholders, formulate the agenda and meeting contents, prepare relevant documents and draft resolutions on organizational restructuring, and send meeting invitations within the prescribed time limits and in the prescribed forms according to Article 140.
• Third, ensuring shareholders’ rights to attend and vote, including those who object. Shareholders may attend in person, authorize representatives, submit voting ballots, or participate electronically in accordance with Article 144. Objections must be recorded through statements, discussions, and votes against the proposed resolutions.
• Fourth, conducting the meeting and voting in proper form. The General Meeting of Shareholders must be conducted in accordance with Article 146, ensuring openness, transparency, and lawful vote counting. Changes in organizational structure  where they involve matters such as amendments to the charter or corporate reorganization must be adopted by the General Meeting of Shareholders according to Clause 2, Article 147.
• Fifth, issuing resolutions and addressing legal consequences. Following voting, the company must issue resolutions of the General Meeting of Shareholders specifying the ratios of votes in favor and against. Where a resolution fails to pass due to a lawful level of opposition, the company may not proceed with the restructuring or must revise the proposal to align with shareholders’ will.

In short, shareholders’ objections are only considered lawfully handled where the enterprise fully complies with statutory procedures and ensures shareholders’ voting rights in accordance with the Law on Enterprise 2020 (as amended in 2025) and the company charter.

3. What difficulties may a company face where numerous shareholders object to changes in organizational structure?

Where numerous shareholders object to changes in organizational structure, the company may have difficulty achieving the statutory and charter-prescribed voting thresholds required to pass resolutions, and may be compelled to reconvene the General Meeting of Shareholders or conduct written consultations, thereby prolonging the restructuring process.

At the same time, prolonged objections may lead to complaints, requests for annulment of resolutions, internal disputes, or court proceedings, adversely affecting corporate governance, reputation, and investment and business opportunities.

IV. Questions on shareholders’ objections to changes in organizational structure

The following are common questions concerning shareholders’ rights, obligations, and the proper exercise of objection rights, helping enterprises and shareholders correctly understand the law and mitigate dispute risks.

1. In which cases may shareholders be deemed to have objected unreasonably to changes in organizational structure?

Shareholders may be considered to have objected unreasonably in the following circumstances:

• First, where a resolution on organizational restructuring has been duly adopted by the General Meeting of Shareholders in accordance with proper authority, procedures, and voting thresholds under the Law on Enterprise and the company charter, yet the shareholder continues to object without clear legal grounds.
• Second, where the shareholder fails to exercise lawful objection rights (by not attending meetings, not voting, or not submitting valid voting ballots) according to Article 115 of the Law on Enterprise 2020 (as amended in 2025), but subsequently challenges or denies the validity of the resolution.
• Third, where objections are not aimed at protecting lawful rights and interests attached to shares, but are intended to delay, obstruct corporate governance or restructuring, or exert personal pressure on the company and other shareholders.
• Fourth, where shareholders abuse objection rights to disrupt meeting order, prevent the adoption of resolutions, or interfere with the enterprise’s normal operations, contrary to principles of corporate governance and majority rule.

In summary, objections are legally protected only where they are exercised in accordance with lawful rights and procedures for the protection of legitimate interests; unfounded or obstructive objections may be deemed unjustified.

2. What notifications must a company make where shareholders object to changes in organizational structure?

Where shareholders object to changes in organizational structure, the company must issue notices relating to the General Meeting of Shareholders in accordance with the Law on Enterprise 2020 (as amended in 2025) to safeguard shareholders’ rights and the legality of resolutions, including:

• Sending meeting invitations at least 21 days prior to the meeting date (unless the company charter prescribes a longer period), specifying the time, venue, agenda, and matters to be discussed, including organizational restructuring items, to shareholders’ registered contact addresses pursuant to Clause 1, Article 143;
• Enclosing meeting materials with the invitations, including detailed documents on the proposed restructuring, draft resolutions, explanatory memoranda, and other necessary materials to enable shareholders to review, discuss, and decide at the meeting in accordance with Clause 1, Article 143;
• Publishing or distributing voting ballots where the law and the company charter permit written or pre-meeting voting, enabling shareholders to express support, opposition, or abstention on the proposed restructuring.

These notification measures ensure that shareholders have full access to information and opportunities to object or express views on changes in organizational structure in the proper exercise of their rights.

3. What risks may shareholders face if they object to changes in organizational structure without proper grounds?

Where shareholders object to changes in organizational structure without proper grounds, they may face the following legal and practical risks:

• First, lack of legal protection. Where objections are not based on lawful rights and interests attached to shares or are not exercised in compliance with statutory procedures under the Law on Enterprise 2020 (as amended in 2025) and the company charter, such claims may not be upheld by courts or competent authorities.
• Second, risk of being deemed to have abused shareholder rights. Shareholders are not permitted to exercise voting or objection rights in a manner that obstructs the company’s normal operations or causes damage. Where objections are prolonged and delay important governance decisions, shareholders may be liable for damages if resulting harm can be established.
• Third, adverse impacts on the shareholder’s own standing and economic interests. Unfounded objections may undermine the shareholder’s credibility within the company, strain relations with other shareholders, and indirectly affect share value and long-term returns.

Accordingly, shareholders should carefully assess the legality and reasonableness of objections and ground their actions in applicable law and the company charter.

4. How can shareholders substantiate their rights and interests when objecting to changes in organizational structure?

To substantiate their rights and interests when objecting to organizational restructuring, shareholders should focus on three legal pillars:

• First, lawful exercise of objection rights: Demonstrating entitlement under Article 115 of the Law on Enterprise 2020 (as amended in 2025), including rights to attend, speak at, and vote against proposals at the General Meeting of Shareholders or through valid voting ballots.
• Second, legal violations in the restructuring process: Identifying non-compliance with one of the two mandatory governance models prescribed under Article 137 of the Law on Enterprise 2020 (as amended in 2025), such as incorrect model selection, failure to meet requirements regarding the Supervisory Board, independent members of the Board of Directors, the Audit Committee, or unlawful designation of the legal representative.
• Third, direct infringement of shareholders’ rights and interests: Demonstrating that unlawful restructuring directly impairs voting rights, governance rights, or economic interests attached to shares.

Where these three elements are satisfied, shareholders have a solid legal basis to seek annulment of resolutions, require remedial measures, or initiate legal proceedings to protect their rights.

5. What should shareholders bear in mind to avoid being deemed to have objected unlawfully to changes in organizational structure?

Shareholders should note that objections are lawful only when exercised within the framework of duly convened and conducted General Meetings of Shareholders. Specifically, shareholders must object within meetings convened and organized in compliance with Article 146 of the Law on Enterprise 2020 (as amended in 2025), ensuring openness, transparency, and lawful vote counting.

Moreover, for matters relating to organizational restructuring that must be approved at a meeting (such as charter amendments or corporate reorganization), shareholders may only object through voting at the General Meeting of Shareholders pursuant to Clause 2, Article 147 of the Law on Enterprise 2020 (as amended in 2025). Any objections made outside these procedures may be deemed legally invalid.

V. Looking for reputable legal expertise to support issues relating to shareholders’ objections to changes in organizational structure?

If you are encountering issues relating to shareholders’ objections to changes in organizational structure, consulting legal professionals with in-depth expertise in corporate law is crucial to mitigating risks and safeguarding lawful interests. NPLAW, with extensive experience in advising on and resolving internal corporate disputes, can assist in assessing procedural legality, the validity of resolutions, and shareholder rights, and in formulating lawful and effective solutions tailored to each specific case.

The above information is provided for reference purposes only. For case-specific advice, please contact NPLAW for prompt consultation.