Scenario: two foreign investors form a Vietnamese company with a 40-page shareholders’ agreement: veto rights, pre-emptive rights, anti-dilution… But the charter filed with the authorities is a 5-page downloaded template mentioning none of those rights. When disputes erupt, one side waves the agreement claiming veto rights — the other points at the charter: “not in the charter, the company doesn’t recognize it.” Who’s right?
Two documents, two different legal natures
The most common confusion in FDI joint ventures. A shareholders’ agreement is a contract under the 2015 Civil Code — binding only its signatories (contracts’ relative effect). The company charter is the company’s internal organic document — binding the company and all shareholders, including future shareholders who never signed the agreement.
Direct consequence: veto rights in the agreement only “bind” the signing parties. Against the company (an independent juridical person) and later share buyers, only the charter speaks.
On conflict: who wins?
- Against the company and third parties: the charter wins. The company can’t be forced into obligations its charter doesn’t provide just because two shareholders agreed privately. Registration authorities and courts look to the charter for the company’s “rules of the game”.
- Among agreement signatories: the agreement stands as a contract. A party breaching its commitments (e.g., ignoring pre-emptive rights) owes contractual damages to the other — but the victim can’t force the company to act against its charter.
In short: the shareholders’ agreement is strong inter partes (between signatories), weak against the company. The charter is the reverse.
Best practice: make both documents “speak alike”
- Put core terms in the charter: veto rights on key matters, pre-emptive rights, transfer restrictions — anything meant to bind the company and future shareholders goes into the charter. A “thicker” charter beats a 40-page agreement nobody outside the duo recognizes.
- Keep the agreement supplementary: detailed mechanics (pre-emptive pricing formulas, deadlock procedures, non-competes) live in the agreement — flexible, amendable without re-registration.
- Priority clause: state in the agreement how conflicts with the charter resolve, with commitments to vote charter amendments into alignment — plus sanctions for refusing to vote.
- Review on new shareholders: a new shareholder who doesn’t sign a deed of adherence drops out of every agreement commitment — require the adherence deed at transfer.
Frequently asked questions
Does the shareholders’ agreement override the charter?
Not against the company. The agreement is a contract binding only signatories; the charter binds the company and all shareholders. For third parties and authorities, the charter is the recognized “rulebook”.
What happens on breaching the shareholders’ agreement?
The breaching party owes contractual damages under the 2015 Civil Code. But the company can’t be forced to act against its charter.
Are new shareholders bound by the old agreement?
Not automatically. They must sign a deed of adherence/annex on transfer. Without it, agreement commitments don’t bind them.
Where should veto rights go?
In the charter — to bind the company and all future shareholders. In the agreement alone, they bind only the signatories.
This article has been quality-reviewed by the FLAW AI Legal Council Content prepared by the AI Legal Council of FLAT Law Firm for general reference only; it has not been reviewed by a human lawyer for your specific situation.