A minority investor in a joint venture does not control the dividend decision: the majority can retain all profits for reinvestment indefinitely. A minimum-dividend clause in the SHA pre-locks part of the cash flow — but it must be designed so it does not collide with statutory dividend limits.
Legal basis
- Law on Enterprises 59/2020/QH14
- Civil Code 91/2015/QH13
Why a minimum dividend: the minority’s cash-flow problem
Without protection, the minority’s only cash event is an exit — possibly decades away. A minimum dividend (a fixed percentage of after-tax profit, or a floor tied to revenue/gross profit) turns the financial right into periodic cash and disciplines management: retained profit needs a concrete investment case instead of being the default. The clause also reduces the incentive to extract value through majority-side salaries and management fees instead of evenly shared dividends.
Statutory limits no agreement can override
Under the Law on Enterprises 59/2020/QH14, dividends may be paid only when the company has fulfilled tax and other financial obligations, made required fund allocations, and — after payment — can still pay debts and liabilities falling due. An SHA cannot compel a dividend when these conditions fail, so the clause must be drafted as “at least X% of lawfully distributable profit”, not an unconditional money figure. Dividends paid in breach can be clawed back, with involved managers jointly liable.
Designing a clause that works in practice
The formula should anchor to audited after-tax profit, less mandatory deductions (reserve funds, accumulated losses to be covered) and a retention basket for specifically approved investment projects. Add: a payment deadline after adoption of the annual financial statements, default interest on late dividends, a minority right to independent audit where related-party dealings may have “adjusted” profit, and a consequence if the majority repeatedly votes down the agreed dividend (a put of the minority’s shares at independent valuation).
Related reading on flaw.vn: article FDI-LC-4594 covers the general framework of this topic — this article deals only with the specific angle in its title.
Frequently asked questions
What should be recorded?
Through an SHA/charter clause fixing a minimum payout tied to distributable profit (for example a percentage of after-tax profit after mandatory deductions), with a payment deadline and sanctions. The promise operates only within statutory limits: dividends require the Law on Enterprises 59/2020/QH14 conditions on tax, fund allocation and solvency to be met.
Ratio?
No. Every agreement yields to the statutory conditions: if paying would leave the company unable to pay due debts, or tax obligations are unfulfilled, payment is prohibited and dividends already paid can be recovered. A properly drafted minimum-dividend clause limits itself to “lawfully distributable profit”.
Violation?
First demand performance of the SHA (a breach notice), use information/audit rights to verify true profit, and table the matter at the general meeting. If the majority deliberately blocks payment, the minority can sue for performance/damages under the Civil Code 91/2015/QH13 and trigger any SHA exit put.
Enforcement?
Default interest on overdue dividends, a duty to disclose the plan for retained profit, and above all a put option: if the company fails to pay the minimum dividend for consecutive years without an approved investment case, the minority may sell all its shares to the majority at independent valuation. That is the sanction that gives the clause real teeth.
This article has been quality-reviewed by the FLAW AI Legal Council