What shareholders need to know about disputes over shareholders’ voting rights

Disputes over shareholders’ voting rights are among the most common types of disputes in joint-stock companies, arising when shareholders are unable to fully exercise their rights to participate in decision-making on important corporate matters in accordance with applicable laws and the company’s charter. Such disputes directly affect shareholders’ lawful rights and interests as well as the stability of corporate governance.

I. Overview of issues related to disputes over shareholders’ voting rights

Disputes over shareholders’ voting rights arise when a shareholder’s right to participate in decision-making regarding significant matters of a joint-stock company is restricted, denied, or exercised in a manner inconsistent with the law or the company’s charter. These disputes commonly involve the determination of shareholder status with voting rights, voting ratios, the validity of authorizations, and the procedures for convening meetings and adopting resolutions of the General Meeting of Shareholders (“GMS”) and the Board of Directors.

A comprehensive understanding of issues related to disputes over shareholders’ voting rights serves as an important foundation for protecting shareholders’ lawful rights and interests while ensuring transparency, stability, and efficiency in corporate governance and management.

II. Understanding disputes over shareholders’ voting rights

1. What is a dispute over shareholders’ voting rights?

A shareholder’s voting right is the right to attend meetings, express opinions, and vote on matters within the authority of the General Meeting of Shareholders. Accordingly, each ordinary share carries one vote (Point a, Clause 1, Article 115 of the Law on Enterprise 2020, as amended and supplemented in 2025). For shareholders holding voting preference shares, the number of votes is determined in accordance with the company’s charter and Article 116 of the Law on Enterprise 2020 (as amended and supplemented in 2025).

A dispute over shareholders’ voting rights is a dispute arising from disagreements concerning the determination, exercise, or restriction of shareholders’ voting rights at meetings of the General Meeting of Shareholders, including disputes regarding the number of votes, eligibility to attend meetings, or the legality of voting procedures used to adopt company resolutions.

2. What are the common causes of disputes over shareholders’ voting rights?

• Incorrect determination of voting rights based on share classes: Confusion between ordinary shares and preference shares, particularly in recognizing or extending voting rights attached to voting preference shares contrary to Point a, Clause 1, Article 115 and Article 116.
• Errors in determining voting power: Inaccurate recording of shareholding ratios or lists of shareholders entitled to vote, in violation of regulations governing the shareholder register under Article 122.
• Unlawful restrictions on shareholders’ voting rights: Preventing shareholders from attending meetings, refusing to recognize valid proxies, or depriving shareholders of voting rights without legal grounds, contrary to Point a, Clause 1, Article 115.
• Improper organization of the General Meeting of Shareholders: Violations of regulations concerning the convening of meetings, quorum requirements, and adoption of resolutions under Articles 139 and 145.
• Ambiguous or unlawful provisions in the company’s charter: Leading to differing interpretations and applications of shareholders’ voting rights.

3. How do disputes over shareholders’ voting rights affect corporate governance?

Disputes over shareholders’ voting rights directly affect the effectiveness and stability of corporate governance in the following respects:

• Disrupting the company’s decision-making process: When voting rights are disputed, resolutions of the General Meeting of Shareholders may be subject to requests for annulment if voting procedures violate requirements relating to authority, procedures, or formalities under Clause 1, Article 148 of the Law on Enterprise 2020 (as amended and supplemented in 2025).
• Creating legal risks for the company: The company may take lawsuits seeking the annulment of GMS resolutions under Article 151 of the Law on Enterprise 2020 (as amended and supplemented in 2025), resulting in prolonged disputes and increased legal costs.
• Causing instability in governance structures: Disputes over voting rights often lead to disputes concerning the status of members of the Board of Directors and the Supervisory Board, thereby affecting the organization and operation of the company under Articles 153 and 170 of the Law on Enterprise 2020 (as amended and supplemented in 2025).
• Affecting shareholders’ lawful rights and interests: Unlawful restrictions or deprivation of voting rights infringe upon shareholders’ rights protected under Point a, Clause 1, Article 115 of the Law on Enterprise 2020 (as amended and supplemented in 2025).
• Negatively impacting reputation and business operations: Prolonged disputes may undermine the confidence of investors and business partners and adversely affect the company’s ability to raise capital.

4. Can disputes over shareholders’ voting rights be resolved through internal agreements?

Disputes over shareholders’ voting rights may be resolved through internal agreements, provided that such agreements comply with the Law on Enterprise 2020 (as amended and supplemented in 2025) and the company’s charter.

Specifically, Law allows companies and shareholders to establish principles for resolving internal disputes in the company’s charter under Point h, Clause 2, Article 24 of the Law on Enterprise 2020 (as amended and supplemented in 2025). Based on such provisions, the parties may agree on methods for resolving disputes concerning voting rights through meetings of the General Meeting of Shareholders, resolutions, or written agreements.

However, in disputes involving violations of voting procedures or infringements of voting rights under Point a, Clause 1, Article 115, if no agreement can be reached or if the agreement violates the law, shareholders have the right to initiate legal proceedings before a court or arbitral tribunal to request the annulment of GMS resolutions pursuant to Article 151 of the Law on Enterprise 2020 (as amended and supplemented in 2025).

III. Legal regulations related to disputes over shareholders’ voting rights

1. How does the Law on Enterprise regulate the resolution of disputes over shareholders’ voting rights?

The Law on Enterprises 2020 (as amended and supplemented in 2025) does not contain specific provisions directly governing the resolution of disputes over shareholders’ voting rights. However, mechanisms for resolving such disputes are established through the following provisions:

• Priority given to resolution under the company’s charter: The company’s charter must stipulate principles for resolving internal disputes under Point h, Clause 2, Article 24, serving as the primary basis for resolving disputes between shareholders and the company or among shareholders.
• Protection of shareholders’ lawful voting rights: The voting rights of ordinary shareholders are recognized under Point a, Clause 1, Article 115; any unlawful restriction or deprivation of voting rights may give rise to disputes.
• Review of the legality of voting procedures and resolutions: If the exercise of voting rights violates meeting procedures, formalities, or authority requirements, shareholders may request the annulment of resolutions of the General Meeting of Shareholders under Article 151.
• Resolution through adjudicative mechanisms: If internal resolution is unsuccessful, disputes over shareholders’ voting rights may be submitted to a court or arbitral tribunal in accordance with applicable laws.

2. Which authority has jurisdiction to resolve disputes over shareholders’ voting rights?

When disputes over shareholders’ voting rights arise, Vietnamese law provides the following authorities and mechanisms for resolution:

• Resolution under the company’s charter: Pursuant to Point h, Clause 2, Article 24 of the Law on Enterprise 2020 (as amended and supplemented in 2025), the company’s charter must specify principles for resolving internal disputes between the company and its shareholders or among shareholders. Accordingly, the parties should first rely on the charter to conduct negotiations or internal mediation.
• Competent People’s Court: Disputes over shareholders’ voting rights constitute business and commercial disputes arising between shareholders and the company or among shareholders in the operation of a joint-stock company. Pursuant to Articles 30 and 37 of the Civil Procedure Code 2015, shareholders may initiate court proceedings to protect their lawful voting rights or seek the annulment of resolutions adopted unlawfully by the General Meeting of Shareholders.
• Commercial arbitration: Pursuant to Clause 1, Article 5 of the Law on Commercial Arbitration 2010, disputes may only be resolved through arbitration where the parties have entered into a valid arbitration agreement, whether contained in the company’s charter or in a separate agreement between the shareholders and the company. Arbitral awards are final and binding.

3. How can the procedures for convening and conducting General Meetings of Shareholders help prevent disputes over shareholders’ voting rights under the law?

Under the Law on Enterprise 2020 (as amended and supplemented in 2025), strict compliance with procedures for convening and conducting meetings of the General Meeting of Shareholders (“GMS”) is a crucial measure for preventing disputes over shareholders’ voting rights, specifically:

• Holding meetings of the appropriate type and within statutory deadlines: Annual and extraordinary GMS meetings must be convened within the timeframes prescribed under Clause 1, Article 139, ensuring shareholders have the opportunity to exercise their rights to attend and vote on matters within the GMS’s authority.
• Convening meetings by the proper authority and in accordance with prescribed procedures: Meetings must be convened by authorized persons and in compliance with the procedures set out in Clauses 1, 2, 3, and 4 of Article 140, thereby preventing disputes arising from unlawful convening.
• Accurately determining and publishing the list of shareholders entitled to vote: The convening party is responsible for preparing the list of shareholders entitled to attend the meeting and resolving related complaints under Points a and b, Clause 5, Article 140, thereby minimizing disputes regarding voting rights and voting power.
• Ensuring transparency regarding the meeting agenda, supporting documents, and draft resolutions: The preparation of complete meeting materials and draft resolutions in accordance with Clause 5, Article 140 enables shareholders to review relevant information before voting and reduces challenges to the legality of voting procedures.

IV. Questions regarding disputes over shareholders’ voting rights

1. What evidence will a court consider when resolving a dispute concerning shareholders’ voting rights?

When resolving disputes concerning shareholders’ voting rights, courts typically examine the following legal evidence under the Law on Enterprise 2020 (as amended and supplemented in 2025) and related procedural laws:

• The company’s register of shareholders, which serves as the primary legal basis for determining shareholder status, share classes, and voting entitlements under Article 122.
• Share certificates or documents evidencing lawful ownership of shares, including share certificates, share transfer agreements, payment records, and documents confirming completion of share transfers under Article 121.
• The company charter, which provides internal rules governing voting rights, voting thresholds, meeting attendance, and proxy voting under Point h, Clause 2, Article 24.
• Meeting-related documents, including notices of meetings, lists of eligible shareholders, ballot papers, minutes, and resolutions of the General Meeting of Shareholders under Article 146.
• Proxy authorization documents, where shareholders exercise their rights through representatives, with the court reviewing the validity of such authorizations under Point a, Clause 1, Article 115.
• Evidence of procedural violations relating to meetings and voting, including documents demonstrating violations of meeting convening procedures, quorum requirements, or voting methods that adversely affect shareholders’ voting rights, as recorded in meeting minutes under Article 150.

2. From what point is the limitation period calculated for claims relating to shareholders’ voting rights disputes?

The limitation period for initiating a claim concerning shareholders’ voting rights generally begins on the date the shareholder knew or should have known that his or her lawful rights and interests had been infringed, which is often the date on which the relevant GMS resolution was adopted or announced.

• Article 429 of the Civil Code 2015: The limitation period for civil disputes is three (3) years from the date the claimant knew or should have known of the infringement.
• Articles 151 and 152 of the Law on Enterprise 2020 (as amended and supplemented in 2025): Shareholders or groups of shareholders may request a court or arbitration tribunal to annul GMS resolutions that violate the law or the company charter.

Applicable limitation periods include:

• Three (3) years for claims generally seeking protection of shareholders’ voting rights.
• Ninety (90) days from the date the shareholder receives or becomes aware of the GMS resolution, where annulment is sought due to procedural or substantive violations.

3. How are disputes concerning voting rights handled when shares are frozen or pledged?

Disputes involving voting rights attached to frozen or pledged shares are resolved based on the legal status of the shares at the time the voting rights are exercised.

• Pledged shares: The pledge of shares does not automatically deprive a shareholder of voting rights unless the pledge agreement expressly provides otherwise. In resolving disputes, the competent authority will review the pledge agreement, the company charter, and information recorded in the shareholders’ register.
• Frozen shares: Where shares are frozen under a court order or a decision of a competent authority, the shareholder’s voting rights may be suspended or restricted in accordance with the terms of the freezing order. Exercising voting rights contrary to such restrictions may constitute grounds for seeking annulment of a GMS resolution.

4. What should minority shareholders do to avoid disputes concerning voting rights?

To reduce legal risks and avoid disputes concerning voting rights, minority shareholders should proactively take the following measures:

• Verifying and updating information in the shareholders’ register under Article 122 of the Law on Enterprise 2020 (as amended and supplemented in 2025) to ensure that ownership interests and shareholder status are accurately recorded.
• Understanding their voting rights under Article 115, particularly the rights to attend, discuss, and vote at General Meetings of Shareholders.
• Requesting complete meeting documents, including agendas, supporting materials, ballot papers, and draft resolutions, within the prescribed timeframe.
• Executing valid proxy authorizations when unable to attend meetings personally, ensuring compliance with the company charter and applicable laws.
• Retaining evidence relating to voting activities, including meeting notices, shareholder lists, meeting minutes, and vote-counting results.
• Exercising their rights to lodge complaints or seek annulment of GMS resolutions when violations of voting procedures are identified under the Law on Enterprise 2020 (as amended and supplemented in 2025).

V. Are you looking for a reputable legal expert to assist with disputes concerning shareholders’ voting rights?

In the course of corporate governance, particularly when disputes arise concerning shareholder representation and voting rights, timely legal advice from NPLAW’s lawyers can help:

• Clarify shareholders’ rights, the scope of authority, and conditions applicable to shareholder representation under the Law on Enterprises 2020 (as amended and supplemented in 2025) and the company charter.
• Determine the legal responsibilities of representatives, the Board of Directors, and the Supervisory Board when shareholder representation rights are improperly recognized or exercised.
• Review and improve the company charter, resolutions, and internal regulations to minimize disputes and legal risks.
• Assist in resolving disputes relating to representative status, voting rights, and the validity of General Meeting of Shareholders’ resolutions.

The foregoing information is provided for reference purposes only. Should you require in-depth legal advice regarding a specific situation, please contact NPLaw for timely, accurate, and practical assistance.