A shareholder not receiving declared dividends, or disagreeing over whether to distribute at all, how much, and in cash or in shares — these are among the most common internal corporate disputes. What rights do shareholders have, what conditions must the company meet before distributing, and through which channels are disputes resolved? This article analyzes the issue under the Law on Enterprises 59/2020/QH14 (as amended by Law 76/2025/QH15, effective 01/7/2025).
1. Starting point: there is no inherent right to dividends
Dividends arise only when two conditions coincide: (i) the company meets all 3 statutory conditions under Article 135.2, and (ii) the General Meeting of Shareholders has decided the distribution level (Article 115.1(b): ordinary shareholders receive dividends at the level decided by the General Meeting of Shareholders). A shareholder cannot sue for distribution before the GMS has approved it — the most common source of disputes: minority shareholders want distribution, the controlling group wants to retain earnings for reinvestment. In multi-member LLCs, the Members Council decides.
2. Three mandatory conditions before paying dividends (Article 135)
Under Article 135.2, dividends on ordinary shares are determined based on realized profits and paid out of retained earnings; the company may pay dividends only when all three conditions are met:
- (a) tax obligations and other financial obligations have been fulfilled as prescribed;
- (b) funds have been appropriated and accumulated losses fully offset as prescribed by law and the charter — with unrecovered accumulated losses, no distribution even in a profitable year;
- (c) immediately after paying the declared dividends, the company remains able to fully pay its due debts and other asset obligations.
Terminology note: Law 76/2025/QH15 amended the dividend definition in Article 4.5 of the Law on Enterprises, replacing “net profit” with “after-tax profit”. This article uses “after-tax profit” in its explanations; some lookup versions of the statutory text (Article 135.2) still read “realized net profit” — the wording of the statute is not altered here, but it should be read and interpreted under the new term.
3. Forms, deadlines and payment procedures (Article 135)
- Forms: dividends are paid in cash, company shares or other assets per the charter (Article 135.3); cash must be in Vietnamese Dong — dividends may not be paid in foreign currency;
- Deadline: full payment within 06 months from the end of the annual General Meeting of Shareholders (note: counted from the end of the meeting, not from the fiscal year-end or the date profits arose);
- Procedure: the Board of Directors prepares the shareholder list and determines the dividend level, deadline and form no later than 30 days before each payment; payment notices are sent to shareholders no later than 15 days before payment (Article 135.4);
- Mid-period transfers: a shareholder transferring shares between the record date and the payment date — the transferor receives the dividend (Article 135.5);
- Share dividends: paying dividends in shares does not require an offering procedure; the company registers the corresponding charter capital increase within 10 days (Article 135.6).
4. Declared but unpaid dividends: what can shareholders do?
After 06 months from the end of the annual GMS, if the company is able to pay but still does not, shareholders may:
- (a) petition or complain to the Board of Directors and the Supervisory Board;
- (b) sue in court for payment plus late-payment interest under Article 357 of the Civil Code (agreed rate up to 20% per year; 10% per year if not agreed);
- (c) a group holding 5% or more may request the Supervisory Board to conduct an inspection (Article 115.2).
Limitation period: 3 years (Article 429 Civil Code). Internal corporate disputes fall within court jurisdiction (commercial disputes) under the Civil Procedure Code 92/2015/QH13.
5. Challenging the legality of a dividend resolution
Examples: distributing before accumulated losses are offset, distributing beyond retained earnings, or a defective GMS meeting procedure. A group holding 5% or more may request a court or arbitration to annul the resolution (including dividend resolutions) within 90 days from receipt of the resolution (Article 151 of the Law on Enterprises).
Disputes among shareholders — e.g., majority shareholders passing a share-dividend resolution to dilute minorities, or deliberately withholding dividends to force minorities to sell — combine the annulment tool (Article 151) with damages claims where managers breached their statutory duties.
6. Multi-member LLCs: separate rules
Under Article 68 of the Law on Enterprises, a multi-member LLC may distribute profits only when: the business is profitable, tax and financial obligations are fulfilled, and due debts remain payable after distribution. Wrongful distributions must be returned by the receiving members (Article 69).
7. Tax note: verify the current texts before applying
Dividend taxation depends on the recipient (individual or enterprise) and the form of payment (cash or shares), with different withholding mechanisms. Tax rules changed significantly during 2025–2026; before computing any specific tax liability, verify the currently effective texts directly rather than relying on secondary-source figures.
Frequently asked questions
Can a shareholder demand dividends at any time?
No. Dividends are received at the level decided by the General Meeting of Shareholders (Article 115.1(b)); without a resolution and without the 3 conditions (Article 135.2), no payable amount arises.
Are dividends calculated on revenue?
No. Dividends are calculated on realized after-tax profit, paid out of retained earnings.
When does the 06-month payment deadline run from?
From the end of the annual General Meeting of Shareholders (Article 135.4).
Can a company with accumulated losses pay dividends?
No. Condition (b) of Article 135.2 requires prior losses to be fully offset.
Can cash dividends be paid in foreign currency?
No. Article 135.3 requires cash to be in Vietnamese Dong.
Sources
- Law on Enterprises 59/2020/QH14 (effective 01/01/2021; amended by Law 03/2022/QH15 and Law 76/2025/QH15, effective 01/7/2025): Article 4.5 (dividend definition — “after-tax profit”), Article 115.1(b) and 115.2, Article 135 (dividend payment), Article 151 (annulment of resolutions), Articles 68–69 (LLC profit distribution);
- Civil Code 91/2015/QH13: Article 357 (late-payment interest), Article 429 (3-year limitation);
- Civil Procedure Code 92/2015/QH13 — jurisdiction over internal corporate disputes.
Conclusion
Dividend disputes revolve around three questions: has the company met the 3 distribution conditions, has the GMS decided the level, and was the payment procedure lawful. Shareholders should master the key timelines — 06 months for payment, 30 days for the shareholder list, 15 days for notices, 90 days to seek annulment — to protect their rights in time, rather than letting disputes erode investment value.
Are your shareholders facing a dividend or profit-distribution dispute? Contact FLAT Law Firm for advice.
For reference only; not legal advice. This content was prepared by AI and will undergo quality review by the AI Legal Council of FLAT Law Firm before any publication consideration; it is not the legal opinion of a licensed human lawyer. Laws and regulations may change; verify the current legal texts before applying them.
