Shareholders requesting inspection of financial statements: legal basis and implementation procedures

In the context of increasing demands for transparency and corporate governance, a shareholder’s right to request an inspection of financial statements has become an important mechanism for protecting the lawful interests of investors and strengthening corporate accountability. However, in practice, the exercise of such a right still faces various challenges, ranging from legal awareness and applicable conditions to procedural requirements and implementation methods. The following article clarifies the legal basis, conditions, implementation procedures, and common issues arising in practice when exercising such requests.

I. Current situation of shareholders requesting inspection of financial statements

In recent years, shareholders requesting inspection of financial statements have increased significantly, particularly in non-listed joint stock companies and enterprises with complex ownership structures. The primary reasons stem from concerns regarding transparency, indications of inaccurate financial data, undisclosed related-party transactions, or conflicts of interest among shareholder groups.

However, in practice, exercising such a right continues to encounter substantial difficulties. Many enterprises have not fully recognized their legal obligations and may delay or refuse inspection requests on the grounds that statutory conditions have not been satisfied, resulting in complaints, internal disputes, and potential intervention by competent authorities. It highlights the necessity of properly understanding and correctly applying the legal provisions governing shareholders’ rights.

II. Understanding the right of shareholders to request inspection of financial statements

1. What is the right of shareholders to request inspection of financial statements and how can it be understood simply?

The right of shareholders to request inspection of financial statements is a right of access to information and a supervisory right over the company’s financial activities, as recognized under the rights of ordinary shareholders.

Pursuant to Point a, Clause 2, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025), a shareholder or group of shareholders holding at least 5% of the total ordinary shares (or a lower percentage as prescribed by the company’s Charter) has the right to review, access, and extract interim and annual financial statements together with documents relating to the management and operation of the enterprise.

Accordingly, it allows shareholders to inspect and access financial information contained in the company’s financial statements in order to understand how funds, assets, and business results are being managed, thereby supervising company operations and protecting their lawful rights and interests.

2. When may shareholders exercise the right to request inspection of financial statements?

Pursuant to Point a, Clause 2, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025), a shareholder or group of shareholders holding at least 5% of the total ordinary shares (or a lower percentage as prescribed by the company’s Charter) has the right to review, access, and extract interim and annual financial statements together with documents relating to the management and operation of the enterprise.

In practice, shareholders often exercise this right in the following situations:

• Where there are concerns regarding the accuracy or transparency of financial statements;
• Where disputes arise relating to dividends, profits, management, or the use of capital;
• In preparation for voting at the General Meeting of Shareholders or exercising supervisory rights over the Board of Directors and executive management.

3. What is the primary purpose of shareholders requesting inspection of financial statements?

The primary purpose of requesting inspection of financial statements is to ensure transparency and integrity in the company’s financial activities and thereby protect shareholders’ lawful rights and interests. Specifically:

• Verifying the accuracy and reliability of financial figures and ensuring that revenue, expenses, profits, and assets are recorded in accordance with applicable laws and the company’s Charter;
• Supervising the management and use of corporate capital and assets and promptly identifying signs of misconduct, asset dissipation, or abuse of authority by managers;
• Protecting shareholders’ rights, particularly rights relating to dividends, access to information, and participation in making important corporate decisions;
• Serving as a basis for exercising further rights, such as requesting the Supervisory Board to conduct a deeper review, recommending remedial measures, or initiating legal proceedings where rights and interests have been infringed under the Law on Enterprise 2020 (amended and supplemented in 2025).

4. May shareholders authorize another person to exercise the right to request inspection of financial statements?

Pursuant to Point a, Clause 1, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025), ordinary shareholders may exercise their rights directly or through an authorized representative. Accordingly, the right to review, access, and extract interim and annual financial statements under Point a, Clause a, Article 115 may also be exercised through an authorized person.

Legal considerations include:

• Authorization does not alter the ownership threshold requirement (at least 5% of ordinary shares or a lower threshold under the company’s Charter);
• The authorization is a written document and it should clearly specify the scope, content, and duration of authorization;
• The authorized person may only exercise rights within the authorized scope and may not exceed the rights of the shareholder.

III. Legal regulations relating to shareholders requesting inspection of financial statements

1. How does the Law on Enterprise regulate the right to request inspection of financial statements?

The Law on Enterprise 2020 (amended and supplemented in 2025) recognizes the right to request inspection of financial statements as part of shareholders’ rights of access to information and supervision over corporate management and operations.

Specifically, under Points a and c, Clause 2, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025), shareholders or groups of shareholders holding at least 5% of the total ordinary shares (or a lower percentage prescribed by the company’s Charter) are entitled to:

• Review, access, and extract interim and annual financial statements, reports of the Supervisory Board, and related financial documents;
• Request the Supervisory Board to inspect specific matters relating to the company’s management and operation, including financial and accounting matters where necessary.

Additionally, under Point a, Clause 1, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025), shareholders may exercise such a right directly or authorize another person to do so through a lawful authorization document.

2. What procedures and legal steps must be followed when shareholders request inspection of financial statements?

The procedures and legal process for requesting inspection of financial statements are implemented in accordance with Points a and c, Clause c, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025), through the following basic steps:

- Step 1: Determining eligibility conditions

The shareholder or shareholder group must satisfy the ownership threshold requirement (holding at least 5% of the total ordinary shares or a lower threshold prescribed by the company’s Charter). It is a prerequisite condition.

- Step 2: Preparing a written request for inspection of financial statements

The request must be made in writing and should include information of the shareholder or shareholder group (full name, contact address, legal identification documents); number and percentage of shares held; details of the financial statements or financial matters to be inspected; and purpose of the inspection.

- Step 3: Submitting the request to the competent body within the company

The written request shall be submitted to the Supervisory Board or the Board of Directors in accordance with the Law on Enterprises and the company’s Charter for consideration and implementation.

- Step 4: Company receives and processes the request

Upon receiving a valid request, the company is responsible for:

• Facilitating shareholders’ review, access, and extraction of financial statements;
• Directing the Supervisory Board to conduct inspection of financial matters within the requested scope.

- Step 5: Notifying results and handling recommendations (if any)

Inspection results shall be communicated to the requesting shareholder. Where violations are identified, shareholders may recommend remedial measures, request convening of the General Meeting of Shareholders, or exercise litigation rights in accordance with applicable laws.

3. What are the common legal consequences if a company intentionally refuses a shareholder’s request to inspect financial statements without legitimate grounds?

Where a company intentionally refuses a request to inspect financial statements submitted by a qualified shareholder under Clause 2, Article 115 of the Law on Enterprise 2020 (amended and supplemented in 2025) without legitimate grounds, the following legal consequences may arise:

• Violation of shareholder rights: Refusing to allow shareholders to review, access, or extract financial statements may constitute infringement of shareholders’ rights of access to information and corporate oversight under the Law on Enterprise 2020 (amended and supplemented in 2025).
• Liability of company managers: Under Article 166 of the Law on Enterprise 2020 (amended and supplemented in 2025), shareholders or groups of shareholders holding at least 1% of total ordinary shares may initiate legal proceedings against members of the Board of Directors, the Director, or the General Director where unlawful refusal results in breach of managerial duties or failure to perform, incomplete performance, delayed performance, or unlawful performance of assigned rights and obligations under law or the company’s Charter.
• Risk of compensation liability: If unlawful refusal causes damage to the company or shareholders, managers may be required to return benefits obtained or compensate for damages under Clause 1, Article 166 of the Law on Enterprise 2020 (amended and supplemented in 2025).
• Increased disputes and governance risks: Obstructing the right to inspect financial statements often leads to prolonged internal disputes and negatively affects corporate reputation, governance quality, and the company’s ability to attract investors.

IV. Questions regarding shareholders requesting an inspection of financial statements

1. When shareholders request an inspection of financial statements, must the inspection results be disclosed to all shareholders?

The inspection results are not automatically required to be disclosed to all shareholders. Disclosure depends on the nature of the inspection results and the authority or entity conducting the inspection, specifically:

• If the inspection results relate to audited financial statements or financial statements approved by the General Meeting of Shareholders, the company is obligated to disclose them to all shareholders in accordance with information disclosure regulations.
• If the inspection is conducted solely to satisfy a request from an individual shareholder or group of shareholders for monitoring and information-gathering purposes, the results are not automatically subject to public disclosure unless the Company Charter provides otherwise or the inspection reveals legal violations or serious misconduct and the matter is submitted to the General Meeting of Shareholders or referred to competent authorities.

2. If shareholders request an inspection of financial statements and discover violations, which authorities have jurisdiction to intervene?

• Supervisory Board: Having authority to inspect and verify violations relating to management and finance; may request the Board of Directors or the Director/General Director to remedy violations and report to the General Meeting of Shareholders under Article 170.
• General Meeting of Shareholders: Reviewing inspection results and deciding corrective measures, including requiring compensation for damages or removing and replacing responsible managers.
• Tax Authority: Intervening where violations involve tax declaration, tax payment, or tax accounting; has authority to conduct inspections and impose penalties under tax laws.
• Business Registration Authority: Handling violations relating to disclosure obligations and financial reporting requirements.
• Competent Court: Qualified shareholders or shareholder groups may initiate legal proceedings against company managers and seek compensation pursuant to Clause 1, Article 166 of the Law on Enterprise 2020 (as amended and supplemented in 2025).
• Investigation Authority: Where violations show signs of criminal conduct (such as accounting fraud or tax evasion), competent investigative authorities may intervene under criminal laws.

3. Under what circumstances may a company lawfully refuse a shareholder’s request to inspect financial statements?

Under the Law on Enterprise 2020 (as amended and supplemented in 2025), a company may only reject a shareholder’s request to inspect financial statements in the following circumstances:

• The shareholder does not satisfy the shareholding threshold requirement, namely ownership of at least 5% of total ordinary shares or a lower percentage specified in the Company Charter under Clause 2, Article 115.
• The request is not made in writing or lacks mandatory information, including shareholder details, ownership ratio, issues to be inspected, and the purpose of inspection under Point c, Clause 2, Article 115.
• The requested content exceeds the lawful scope of inspection and is unrelated to management, operations, or the company’s financial condition.
• The request infringes upon trade secrets or confidential business information, except where otherwise required by law under Point a, Clause 2, Article 115.
• The request shows signs of abuse of shareholder rights, intended to obstruct the company’s normal operations or not serve a lawful supervisory purpose.

V. Looking for a reliable legal expert to support issues relating to shareholders requesting an inspection of financial statements?

During corporate governance, particularly when disputes or difficulties arise regarding shareholders’ rights to request inspection of financial statements, obtaining timely legal advice from NPLAW can help to:

• Clarify shareholders’ rights, eligibility conditions, and the scope of inspection rights under the Law on Enterprises and the Company Charter.
• Determine the legal responsibilities of the Board of Directors, Supervisory Board, and company managers where they unlawfully refuse or obstruct inspection rights.
• Review and improve the Company Charter, resolutions, and internal regulations to reduce legal risks and shareholder disputes relating to supervisory rights.
• Assist in resolving disputes, complaints, or litigation arising from failure to provide, incomplete provision of, or delayed provision of financial statements to shareholders.

The information above is provided for reference purposes only. Should you require detailed advice for a specific case, please contact NPLAW Firm for timely support in compliance with applicable laws and to ensure maximum protection of shareholders’ lawful rights and interests.