Shareholder Disputes in Vietnamese Companies

The nature of shareholder disputes: conflicts of interest inside one company

Shareholder disputes (including disputes among members of limited liability companies — this article uses the term “shareholder” for brevity, except where a distinction is needed) differ fundamentally from disputes between two independent businesses. Here, the disputing parties are simultaneously co-owners of the same legal entity: every company decision directly affects the parties’ own pockets, and every act “against” the other side may harm the very company they own.

This is why shareholder disputes rarely end with “one side wins outright, the other loses everything”. Even after winning suit, the winning shareholder must continue living with the losing shareholder in the same company — unless the suit opens an exit: one side sells shares, the company buys back shares, or the company is dissolved. Understanding this nature helps the parties choose the right dispute strategy: the ultimate goal is not “winning the case” but achieving an ownership structure or operating mechanism the parties can accept.

Legally, disputes among shareholders/members and between shareholders and the company relating to the company’s formation, operations, and dissolution are determined by law as business and commercial disputes within court jurisdiction (Clause 4 of Article 30 of the 2015 Civil Procedure Code).

Conflicts among shareholders: typical causes

In our experience, shareholder conflicts typically stem from five groups of causes:

• Strategic disagreement: founding shareholders want to keep the company at a modest, safe scale; new investors want aggressive growth, fundraising, expansion — every major investment decision becomes a “battlefield”.
• Dilution and loss of control: the company issues additional shares, existing shareholders cannot afford to subscribe, ownership ratios are diluted, board seats are lost — raising suspicions about the transparency of the issuance.
• Suspected self-dealing: a shareholder who is also a manager is suspected of using the position for private gain — contracting with relatives’ companies, paying themselves high salaries, using company assets for personal purposes.
• Valuation disagreements when someone wants out: one shareholder wants to sell shares but the parties cannot agree on price — the seller believes the company is highly valuable, the buyer believes the company is struggling.
• Breach of shareholders’ agreement: the parties have a separate agreement (shareholders’ agreement) on veto rights, pre-emptive rights, non-compete commitments — but one side does not comply, while the other argues the agreement has no binding force because it is not in the charter.

One point to emphasize: a shareholders’ agreement signed separately among shareholders is binding on the signatories under general civil law principles, but does not automatically bind the company if its contents are not incorporated into the charter. Many disputes arise precisely from this gap — one side invokes the private agreement, the other invokes the company charter.

Disputes over voting rights and dividend distribution

Voting rights and dividend rights are the two core property rights of shareholders — and the two hottest “fronts” of disputes.

On voting rights: under Article 115 of the 2020 Enterprise Law, each ordinary share carries one vote. Disputes often arise over: shareholders denied the right to attend meetings or having votes miscounted; GMS resolutions passed without proper convening procedures (no meeting notice sent, incomplete meeting documents); shareholders believing resolutions were passed on votes of persons without voting rights. Shareholders may examine and extract meeting minutes and GMS resolutions to verify validity — and groups holding 5% or more of ordinary shares have additional rights: examining Board documents, requesting GMS meetings where the Board seriously violates shareholder rights (Clauses 2 and 3 of Article 115).

Where a GMS or Board resolution is believed to violate the law or the charter, shareholders may request the court to review and annul it. This is an important legal tool for minority shareholders against unlawfully passed majority decisions — but note the limitation period and standing conditions; act early as soon as procedural violations are discovered.

On dividend distribution: shareholders are entitled to dividends at the level decided by the GMS (Point b, Clause 1 of Article 115). Typical disputes: the company has been profitable for years but the GMS (controlled by the majority group) keeps resolving to retain all profits for reinvestment instead of paying dividends — the minority views this as a form of “starving” minority shareholders. Conversely, there are cases where the company pays dividends exceeding actual profits or before fulfilling financial obligations, creating risks for the company itself and its creditors. Every dividend decision must stay within the statutory conditions for dividend distribution.

Disputed share transfers

Share transfer is a fundamental shareholder right — Point d, Clause 1 of Article 115 of the 2020 Enterprise Law recognizes that shareholders may freely transfer their shares, except for restrictions under law (such as restrictions on voting preference shares and founders’ shares for certain periods) and other relevant legal provisions. In practice, however, share transfers are the source of many fierce disputes:

• Disputes over pre-emptive rights: the charter or shareholders’ agreement grants existing shareholders pre-emptive rights when a shareholder wishes to transfer — arguments over whether the offer notice was valid, the pre-emptive exercise period, and whether the offer price was a “good faith” price.
• Transfers to competitors: one shareholder sells shares to the company’s competitor, the remaining shareholders believe this harms the company but no clause prevents it — disputes over the validity of transfer restriction clauses and shareholders’ duty of loyalty.
• Price and payment disputes: the transfer contract records a low price to reduce tax while an oral agreement sets a higher price; the buyer pays late or short; disputes over the timing of ownership transfer and rights to the current period’s dividends.
• “Underground” transfers: transfers without registering changes with the business registration authority, without updating the shareholder register — when disputes arise, it turns out the person named on paper and the true owner are two different people.

For limited liability companies, the law further requires offering the capital contribution to remaining members before transferring to outsiders — breaching this procedure is grounds for disputing the transfer transaction’s validity.

Requiring the company to buy back shares: an exit for dissenting shareholders

When conflict with the majority becomes irreparable and no buyer for the shares can be found, the law gives shareholders an important “exit”: the right to require the company to buy back their shares.

Under Clause 1 of Article 132 of the 2020 Enterprise Law, a shareholder who voted against a resolution on the company’s reorganization or on changes to shareholder rights and obligations as provided in the company charter may require the company to buy back their shares. The request must be in writing, stating the shareholder’s name and address, the number of shares of each type, the intended sale price, and the reasons for the buyback request, sent to the company within 10 days from the date the GMS passes the resolution. Within 90 days from receiving the request, the company must carry out the buyback.

In practice, disputes around this right typically focus on: whether the shareholder truly “voted against” (provable via meeting minutes); whether the resolution falls within “company reorganization or changes to shareholder rights and obligations” — the most disputed point, as the boundary is not always clear; how the buyback price is determined when the parties disagree (the law provides market price or a price set by a valuation organization, but practical application still has obstacles); and whether the company has sufficient financial resources — because the company may only buy back while ensuring full payment of debts and other property obligations after the buyback.

For limited liability companies, members have a similar right under Article 51 of the 2020 Enterprise Law: a member who voted against a resolution amending the charter relating to member rights and obligations, on company reorganization, or other cases under the charter may require the company to buy back their capital contribution.

A strategic note: the buyback right is a double-edged sword. On one hand, it is a lawful exit for minority shareholders; on the other, if the company is financially strained, being forced to spend on a buyback may worsen the situation — and the remaining shareholders may view it as an act of “obstruction” rather than good faith. Calculate carefully before using it.

Litigation between shareholders: the legal path and its limits

When negotiations fail, shareholders may sue. Common claim types in shareholder disputes:

• Claims to annul resolutions of the GMS or Board where passed contrary to law or the charter — the minority shareholder’s main tool.
• Damages claims against managers or shareholders whose violations harmed the company or shareholders (e.g., self-dealing transactions, dissipation of company assets).
• Disputes over shareholder status: disputes over who is the lawful share owner — often arising from incomplete transfer procedures, asset contributions not yet re-titled, or nominee-held shares.
• Asset division and dissolution claims: in total deadlock, one side may request the court to resolve the company’s dissolution.

However, shareholder litigation has practical limits to weigh. First, proceedings drag on while the company must keep operating — open disputes damage the company’s reputation, key staff leave, partners grow wary. Second, court judgments typically resolve only the “branches” (annulling one resolution, ordering one payment) without resolving the “root” — the conflict of interests — so after the case, the parties must sit down together again. Third, litigation, assessment, and valuation costs in shareholder disputes are often very large relative to the direct disputed value.

Therefore, in many cases, the wise strategy is “sue to negotiate”: filing suit to create legal pressure, forcing the other side to the negotiating table with a serious ownership-restructuring plan — one side buying out the other’s capital, or jointly finding a new investor to replace. A lawyer experienced in shareholder disputes must be not only good at litigation but also skilled at designing “exits” for both sides.

Mediation and arbitration in shareholder disputes

Not every shareholder dispute must go to court. A well-drafted shareholders’ agreement usually has its own dispute resolution clause — requiring negotiation within a defined period, then mediation, and only then arbitration or courts. Following this sequence is not only a contractual obligation but also helps the parties preserve a relationship at a level where cooperation can continue.

Commercial arbitration is worth considering for high-value shareholder disputes or those with foreign elements, provided there is a valid arbitration agreement between the disputing parties. Its advantages are confidentiality — internal company disputes are not publicly exposed as in court proceedings — and the ability to choose arbitrators versed in enterprise law. Legal update: the 2010 Law on Commercial Arbitration has been amended and supplemented by Law No. 81/2025/QH15, effective from 01/07/2025; it must be clearly distinguished from Resolution 81/2025/UBTVQH15 of the National Assembly Standing Committee (an instrument on court organization), to avoid citation confusion.

One important note: an arbitration agreement in a shareholders’ agreement binds only the signatories. If the dispute involves the company and the company is not a signatory to the arbitration agreement, bringing the company into arbitral proceedings may face jurisdictional obstacles — requiring careful lawyer assessment before choosing.

Frequently asked questions

Useful links

When you should talk to a lawyer

• You are a minority shareholder and believe your rights are being infringed by the majority through unlawful resolutions.
• The company has paid no dividends for years without justified reasons, or pays dividends improperly.
• You want to transfer shares but are blocked by pre-emptive rights or other shareholders’ obstruction.
• You want to use the right to require the company to buy back shares and need to assess conditions, procedures, and price.
• You discovered GMS/Board resolutions passed in breach of procedure and need to seek annulment.
• Shareholder conflict has reached the point of needing an ownership-restructuring plan or a comprehensive legal exit.