In a garment joint venture, three small investors hold 6, 5 and 4 percent respectively. Alone, none can demand a meeting or nominate anyone to the Supervisory Board; together they form a 15 percent bloc — enough to open the supervision package, enough to nominate, and large enough that the 60 percent majority must reckon with them on every 65 percent resolution. A minority alliance turns three scattered voices into one negotiating party, and Vietnamese law recognises the pooling mechanism in the very wording of Article 115 of the 2020 Enterprise Law.
The statutory basis: a “shareholder group” may aggregate its holdings
Article 115 of Enterprise Law No. 59/2020/QH14 does not speak of a lone shareholder holding 5 percent; it speaks of “a shareholder or group of shareholders holding 5 percent or more of total ordinary shares”. The words “group of shareholders” are the statutory door for alliances: small shareholders may add their ratios together to reach the thresholds for demanding a General Meeting, requiring a Supervisory Board examination, and, at 10 percent, nominating candidates to the Board of Directors and the Supervisory Board under Clause 5 of Article 115. The company may not refuse to recognise a group merely because its members are unrelated to each other; what it may verify is the aggregated ratio and the authenticity of the grouping for each exercise of rights.
The law, however, recognises the group only at the moment rights are exercised; it creates no standing “alliance entity”. The practical consequence: every time the group uses a right — filing an inspection request, an examination demand, a nomination — the file should include a written grouping confirmation signed by each member, stating each member’s ratio at signing. An alliance that exists only verbally dissolves at the first door, when the company asks for proof of group status.
Drafting the alliance agreement: four indispensable blocks
First, the scope of the voting commitment: list the categories of matters on which members commit to vote uniformly (remuneration budgets, related-party transactions, capital increases, dividends), rather than a blanket “all matters” promise that cannot be enforced. Second, the alliance’s internal decision mechanism: which issues need a majority of members, which need unanimity, who speaks for the group and receives company information on its behalf. Third, information discipline: members must share with the whole group any information received from the company and from the majority side, because divide tactics usually begin with the majority approaching members one by one. Fourth, exit and sanction terms: a member wishing to leave must give notice within a defined period and may not withdraw immediately before a scheduled meeting; breach of the voting commitment sounds in agreed damages, because a court will not annul a General Meeting resolution merely because one shareholder broke a private voting pact.
How majorities split alliances, and how to defend
The classic script has three beats: the majority offers to buy the weakest member’s stake at an abnormally high price; proposes a seat or a consulting contract to the most vocal member; and leaks selective information so members begin suspecting each other of selling out the group. The most effective defence is designed in advance: an internal pre-emption right, so a member wishing to sell must first offer its stake to the remaining members on the same terms as the majority’s offer; a duty to notify the group promptly of any private approach by the majority about buy-outs or appointments; and a voting commitment tied to a listed set of issues, so a bought member cannot quietly switch votes without leaving evidence of a contract breach.
Checklist for forming a minority shareholder alliance
- Tabulate each small shareholder’s ratio from the shareholder register; identify the threshold to reach (5 percent, 10 percent, or above 35 percent to block 65 percent resolutions).
- Sign a written alliance agreement: uniform voting scope, internal decision mechanism, information discipline, exit and sanction clauses.
- Appoint a spokesperson and a common notice address for the group.
- For each exercise of statutory rights, prepare a grouping confirmation with each member’s ratio at signing.
- Record an internal pre-emption right when a member wishes to transfer its stake outside.
Frequently Asked Questions
Can several small shareholders pool their stakes and count them together?
Yes. Article 115 of the Enterprise Law uses the concept of “a shareholder or group of shareholders”, so members’ ratios are aggregated to determine rights: a pooled 5 percent unlocks the supervision package and the meeting demand right; a pooled 10 percent unlocks nomination to the board and the Supervisory Board. When exercising a right, the group should file a grouping confirmation signed by each member with each member’s holding.
What does a shareholder alliance agreement need?
At minimum four blocks: the list of matters subject to uniform voting; the alliance’s internal decision mechanism and spokesperson; the duty to share information among members; and exit terms plus sanctions for breaking the voting commitment. The agreement is a contract under the 2015 Civil Code and binds the signatories in damages, but it does not by itself bind the company — thresholds and procedures for exercising rights still follow the law and the charter.
What if the majority tries to split the minority alliance?
The usual tools are buying out individual members at a premium, offering a seat, or offering a side contract. The counter-design is built in advance: an internal pre-emption right when a member wants to sell, a duty to notify the group of any private approach by the majority, and a voting commitment tied to specific listed issues so switching votes becomes a documented contract breach. A shared information channel also denies rumours the ground they need to grow.
Must an alliance be registered or notified to the company?
No state registration of a shareholder alliance is required. Towards the company, the alliance only needs to prove group status when exercising each specific right, through a grouping document and evidence of each member’s holding from the shareholder register. Even so, notifying the company in advance of the alliance’s existence and its spokesperson usually reduces procedural disputes once the group starts using its rights.
This article has been quality-reviewed by the FLAW AI Legal Council