Short answer: YES. Existing shareholders have pre-emptive rights even in a private share offering to a new investor, under Article 125.2(b) referring to Article 124.2 of the 2020 Enterprise Law. The only exception: share issuance serving a company merger or consolidation. The company may not sell directly to the new investor and skip this step. A typical scenario: an FDI joint-stock company (65% Korean, 35% Vietnamese shareholders) privately issues 20% new capital to a Singapore fund; the Vietnamese shareholder worries about dilution.
Scope: joint-stock companies that are NOT public companies. Public companies follow the 2019 Securities Law with a different private placement regime — outside this article scope.
1. Conditions of a private share offering (Art. 125.1, 2020 Enterprise Law)
An issuance qualifies as a “private offering” when:
- It is not offered through mass media;
- It is offered to fewer than 100 investors (excluding professional securities investors) or only to professional securities investors.
2. The mandatory sequence: existing shareholders pre-emptive rights
Step 1 — The General Meeting of Shareholders (GMS) approves the private offering plan (approval voting ratio: check Art. 148 of the 2020 Enterprise Law in the latest consolidated text — this article does not fix a figure without verification; the deciding authority between the GMS and the Board follows the company charter).
Step 2 — Written notice to each shareholder (sent to the address in the shareholder register) at least 15 days before the subscription deadline (Art. 124.2). The notice must fully state: shareholder information, current shares and ratio, entitled shares, offering price, subscription period, legal representative signature, plus a subscription form template.
Step 3 — Shareholders exercise their rights:
- Shareholders subscribing on time buy pro rata;
- A shareholder who fails to return the subscription form on time = waives the pre-emptive right (not “consent” — but the company must have proof the 15-day notice was properly served);
- A shareholder may transfer their pre-emptive right to another person.
Step 4 — Placing the remainder: shares not taken up by existing shareholders may be sold to others (the new investor), but on terms no more favorable than those offered to existing shareholders — unless the GMS approves otherwise (Art. 125.2(c)).
3. The second procedural layer — investment law when the buyer is a foreign investor
When the new investor is foreign, beyond enterprise law the company must register the share purchase BEFORE changing shareholders under Art. 125.3 of the Enterprise Law referring to Art. 21.3 of the 2025 Investment Law, if any of the following applies:
- The purchase increases the ownership ratio in a company doing business in market-access conditional lines;
- The purchase results in foreign investors holding over 50% of charter capital — including top-ups when already above 50%;
- The company holds land use rights in defense/security-sensitive areas.
Registration follows Art. 76 of Decree 96/2026/ND-CP, within 10 working days; market-access conditions are checked under Art. 8 of the 2025 Investment Law.
4. Four common traps
- “A private offering to a new investor needs no sign-off from old shareholders”: WRONG — Art. 125.2(b) makes pre-emptive rights mandatory;
- “No reply from a shareholder = consent”: WRONG — failure to return the form on time = waiver, and the company must prove proper 15-day notice;
- Selling to the new investor on better terms (lower price, sweeter conditions): prohibited under Art. 125.2(c) unless the GMS approves otherwise;
- Forgetting the investment-law layer when the buyer is foreign — register the share purchase before changing shareholders.
Summary timeline
- T0: GMS approves the private offering plan;
- T0 to T-15 days: written notices to each shareholder (address in the shareholder register);
- Subscription deadline: collect forms; non-returning shareholders = waiver; record any pre-emptive right transfers;
- After the deadline: sell the remainder to the new investor on terms no more favorable (unless the GMS approves otherwise);
- In parallel (if the buyer is a foreign investor in scope): register the share purchase before changing shareholders (Art. 76, Decree 96/2026, 10 working days).
FAQs
Can an existing shareholder sell their pre-emptive right to someone else?
Yes. The law allows shareholders to transfer their pre-emptive subscription rights to others.
Can the company sell to the foreign fund at a lower price than offered to existing shareholders?
No, unless the GMS approves otherwise. Art. 125.2(c) prohibits sales on more favorable terms.
When does the 15-day notice period start?
The written notice must reach each shareholder (at the address in the shareholder register) at least 15 days before the subscription deadline. Send early and keep proof of dispatch/receipt.
Does this apply to public companies?
No. This article covers only non-public joint-stock companies. Public companies conduct private placements under the 2019 Securities Law.
Legal sources
- 2020 Enterprise Law (check the latest consolidated text after Law 76/2025, effective 01/7/2025): Art. 124.2 (pre-emptive rights; 15-day notice); Art. 125.1 (private offering conditions); Art. 125.2(b) (pre-emptive rights in private offerings; merger/consolidation exception); Art. 125.2(c) (no-more-favorable-terms rule); Art. 125.3 (foreign investor share purchase registration); Art. 148 (GMS voting ratios — check the original text).
- 2025 Investment Law (Law 143/2025/QH15): Art. 21.3 (share/capital purchase registration cases); Art. 8 (market access).
- Decree 96/2026/ND-CP: Art. 76 (share purchase registration, 10 working days).
Your company is preparing a private share offering to a new investor and needs to get existing shareholders pre-emptive rights right? Reach us via the Contact page of FLAT Law Firm for advice.
The legal content of this article is reviewed by the FLAW AI Legal Council and submitted to the owner for approval; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.
For reference only, not legal advice.