“Treasury shares” is a widely used term — and the biggest terminology trap in Vietnamese corporate law: an ordinary joint-stock company repurchases shares only to cancel them and reduce charter capital (Article 134, Law on Enterprises); the mechanism of holding and reselling treasury shares exists only for public companies under securities law. This article maps the two regimes: when repurchase is allowed, payment conditions, cancellation procedures, and the most common confusions.
1. The two share repurchase cases
The Law on Enterprises (Law 59/2020/QH14, as amended by Law 76/2025/QH15, effective 1 July 2025) provides two repurchase cases:
a) Repurchase at shareholder request — Article 132
A shareholder who voted against a resolution on company reorganization or on changes to shareholder rights and obligations in the charter may request the company to repurchase their shares. The request must be in writing, stating the shareholder’s name, address, quantity and price, and sent within the statutory deadline from the General Meeting of Shareholders’ adoption of the resolution.
b) Repurchase by company decision — Article 133
A company may repurchase no more than 30% of total sold ordinary shares (and no more than 30% of each class of sold dividend-preference shares, as applicable). Decision-making authority:
- General Meeting of Shareholders decides repurchases of more than 10% of total sold shares within 12 months;
- Board of Directors decides repurchases of up to 10% within 12 months (except repurchases at shareholder request under Article 132).
2. Payment conditions and post-repurchase treatment — Article 134
This is the key provision behind the “terminology trap”:
- The company may repurchase only if it remains able to pay all debts and other asset obligations in full afterward;
- Repurchased shares are deemed unsold shares — the company may not hold them as treasury shares for resale;
- Within 10 days of completing the repurchase, the company must register a charter capital reduction equal to the total par value repurchased;
- Repurchased share certificates must be destroyed;
- If the repurchase reduces total assets by more than 10% as recorded in the latest financial statements, the company must notify creditors within 15 days.
In short: for an ordinary joint-stock company, “repurchase = cancel + reduce capital”. There is no concept of holding treasury shares for later resale.
3. Treasury shares in public companies: when may they be held and resold?
The hold-and-resell treasury share regime applies only to public companies under the Securities Law 54/2019/QH14 and Decree 155/2020/ND-CP (currently in force). Public companies repurchasing treasury shares must follow securities-law conditions, order and procedures, including information disclosure and limits on ratio, price and trading windows.
| Criterion | Ordinary JSC (Law on Enterprises) | Public company (Securities Law) |
|---|---|---|
| Purpose of repurchase | Only to cancel and reduce capital | May hold as treasury shares and resell |
| Holding treasury shares | Not allowed — repurchased shares = unsold shares | Allowed, under securities-law conditions |
| Decision threshold | GMS >10%/12 months; BOD ≤10% | Per securities regulations + charter |
| After repurchase | Capital reduction within 10 days; destroy certificates | Information disclosure; resale by prescribed methods |
Note: public-company treasury share resale thresholds and methods must be checked in detail against Decree 155/2020/ND-CP — do not infer from ordinary-company rules.
4. Terminology traps to avoid
- “Our company buys treasury shares to resell later” — wrong unless the company is public: the law requires cancellation and capital reduction.
- Confusing GMS/BOD authority — the 10%-in-12-months threshold decides who approves the repurchase.
- Forgetting the 15-day creditor notice when assets drop over 10% — procedural breaches can trigger creditor disputes.
- Missing the 10-day capital reduction registration — the licensed charter capital will no longer reflect reality.
FAQs
Can an ordinary joint-stock company hold treasury shares?
No. Repurchased shares are deemed unsold; the company must destroy the certificates and register a capital reduction within 10 days (Article 134, Law on Enterprises).
Who decides on a company share repurchase?
The General Meeting of Shareholders decides repurchases over 10% of total sold shares in 12 months; the Board of Directors decides up to 10% (Article 133).
What governs public-company treasury share resales?
The Securities Law 54/2019/QH14 and Decree 155/2020/ND-CP — check the specific conditions and methods before acting.
Law on Enterprises cited as amended by Law 76/2025/QH15 (effective 1 July 2025). Legal texts in force as of 14 October 2026. See our other corporate legal services articles.
For advice on a share repurchase plan suited to your company type, contact FLAT Law Firm.
Transparency label: FLAW AI Legal Council. This article has been reviewed by the QA Council. Content is general information only and is not legal advice for any specific case.