Unlike a limited liability company, shares in an unlisted joint stock company transfer far more freely, and that very freedom makes foreign investors careless. There is no statutory pre-emptive fence, but there are other traps: founding shareholder shares still inside the transfer restriction period, a sloppily kept shareholder register, and shares already pledged to a bank that the seller never mentions. Understanding the share transfer mechanism is what turns money spent into real shareholder rights rather than a purchased dispute.
The Legal Framework You Need
Under Article 127 of the Law on Enterprises 59/2020/QH14, shares are freely transferable, except in the case provided at clause 3 of Article 120 of this Law and where the company charter contains restrictions on share transfers. Specifically, ordinary shares of a founding shareholder, within three years from the date the company is granted its Enterprise Registration Certificate, may be transferred only to another founding shareholder, or to a non-founding person with the approval of the General Meeting of Shareholders (clause 3, Article 120); voting preference shares may not be transferred to another person, except transfers under an effective court judgment or decision or by inheritance (clause 3, Article 116). Transfers are made by contract or through market transactions; for unlisted companies the direct contract is the norm. The transferee becomes a shareholder from the moment their details are fully recorded in the company shareholder register.
On the state filing side, a joint stock company does not register each shareholder change with the business registration authority the way a limited liability company does, save for notifications concerning founding shareholders and foreign shareholders under Decree No. 168/2025/ND-CP. In parallel, a foreign investor buying shares must still consider capital purchase registration under the Law on Investment 143/2025/QH15 and Decree No. 96/2026/ND-CP where the company sits in a conditional market-access sector or foreign ownership would exceed 50 percent of charter capital. The two layers are independent and neither replaces the other.
Applying the Rules to a Real Deal
The most frequently asked question is whether a share transfer contract needs notarisation. Enterprise law does not require it; the contract is effective when properly signed, supported by a handover record and entry in the shareholder register. Even so, in high-value deals parties often voluntarily notarise the contract or certify signatures to strengthen evidence, and ask the company to stamp-confirm the contract and issue a share ownership certificate to the buyer. That is a prudence choice, not a statutory duty.
What deserves deep diligence is the transfer history of the very shares being bought: whether each past transfer had a contract and a register entry, who owns dividends already declared, and whether the shares are frozen under an enforcement decision or a court interim measure. The charter may also restrict transfers for certain shareholder groups, and any shareholders agreement will govern drag-along and tag-along rights around the deal. Buying unlisted shares means buying an illiquid asset, so the exit route should be designed on the way in, not improvised later.
Illustrative example: A Thai family office bought 40 percent of an unlisted packaging company in Binh Duong. The register showed two individual shareholders, but diligence found one of them had informally sold half his holding years earlier without a register update. The buyer suspended closing, required the company to regularise the register with a confirmatory transfer deed, and only then paid; the clean-up took five weeks but removed a latent ownership dispute from the cap table.
Procedure and Documents to Prepare
First: inspect the shareholder register, the charter and the transfer history of the shares, including any pledge or freeze status. Next: determine whether the shares fall under the founding shareholder restriction or are voting preference shares. After that: assess foreign investor share purchase registration under investment law before formal signing. Then: sign the share transfer contract with ownership warranties, a handover record and a register-entry condition. Finally: pay through the investment capital account, complete the register entry, receive the share certificate and file the foreign shareholder notification.
- inspect the shareholder register, the charter and the transfer history of the shares, including any pledge or freeze status.
- determine whether the shares fall under the founding shareholder restriction or are voting preference shares.
- assess foreign investor share purchase registration under investment law before formal signing.
- sign the share transfer contract with ownership warranties, a handover record and a register-entry condition.
- pay through the investment capital account, complete the register entry, receive the share certificate and file the foreign shareholder notification.
Common Risks and How to Prevent Them
The first risk is buying shares that are pledged or disputed without the register revealing it, dragging the buyer into a third-party lawsuit. The second risk is ignoring the three-year founding shareholder restriction, which can void part of the transfer. The third risk is paying without a register entry, leaving the buyer out of pocket yet not a shareholder in the company eyes. The safeguard is to tie disbursement to the register entry milestone, obtain written company confirmation and independently verify share history.
For unlisted shares, the decisive moment is neither signing nor payment, but the moment the buyer’s details are fully entered in the shareholder register. Tie each payment tranche to a specific registration milestone, and keep the company’s written confirmation as proof that the transaction is complete.
Frequently Asked Questions
What is the procedure for buying shares in an unlisted JSC?
The standard sequence is share and charter diligence, clearing any transfer restrictions, completing foreign investor share purchase registration where legally required, signing the transfer contract, paying through the investment capital account, and finally recording the buyer in the shareholder register. Under the Law on Enterprises 59/2020/QH14, shareholder status arises from the register entry, so that last step, not the signing date, is the legally decisive moment of the whole transaction and should be verified in person at the company office.
Does a share transfer contract need to be notarised?
No, it is not mandatory. Vietnamese enterprise law does not require notarisation of a share transfer contract in an unlisted joint stock company; a written contract signed by the parties is effective. Still, for a high-value deal, notarising the contract or certifying signatures is worthwhile evidence reinforcement, especially where the seller is an individual. Parties should also have the company confirm the transfer, stamp the filed copy and issue the buyer a share ownership certificate, completing the documentary chain that proves shareholder rights.
Where is the change of shareholders registered?
Unlike a limited liability company, a joint stock company does not register every shareholder change at the business registration authority. Instead, the company keeps its own shareholder register and only notifies changes in statutory categories, such as founding shareholders and foreign-investor shareholders, under Decree No. 168/2025/ND-CP. The buyer must therefore verify directly at the company: cross-check the shareholder register, share ownership certificates and the latest general meeting minutes, rather than relying solely on public information on the national business registration portal.
