Vietnam shareholder agreement: terms worth putting in writing

A Vietnam shareholder agreement is a private contract between the owners of a company. It sets rules that the Law on Enterprises 2020 (Law 59/2020/QH14) leaves open, and it works best when it follows the law and the company charter. This guide separates the terms the law already backs from the terms that rest on your contract alone.

What the law says about a shareholder agreement

The Law on Enterprises 2020 came into force on 1 January 2021. We searched its English text for the words "shareholder agreement" and found none. The law does not define the document or set a form for it.

Two other rules fill the gap. Article 3 of the Civil Code 2015 says people and legal persons may set their rights and duties by free and voluntary agreement. It adds that agreements neither banned by law nor against social morality bind the parties. Article 401 says a valid contract may be changed or cancelled only as the parties agree or as the law provides.

So a shareholder agreement is a normal civil contract. It binds the people who sign it. It sits beside the charter, and the charter is the document the company itself must follow.

Sources: Law on Enterprises, Law No. 59/2020/QH14, 17 June 2020, English translation (faolex.fao.org, vie228956); Civil Code, Law No. 91/2015/QH13, Articles 3 and 401, English translation (apolatlegal.com).

Terms the Enterprise Law already backs

Some shareholder rights come straight from the statute. You do not need a contract to create them, but you can write them down so everyone reads them the same way.

Voting. In a joint stock company, each ordinary share equals one vote (Article 115).
Information. A holder of at least 5 percent of ordinary shares, alone or in a group, may inspect board minutes, annual financial statements and other papers. Business secrets are excluded. The charter may set a lower percentage.
Board nominations. A holder of at least 10 percent, or a lower charter threshold, may nominate candidates to the Board of Directors and the Board of Controllers.
Calling a meeting. The same 5 percent holders may demand a general meeting if the board seriously violates shareholder rights or acts beyond its powers.
Duties. Shareholders must pay for subscribed shares in full and on time, and must not withdraw capital in ordinary shares except through a purchase by the company or others (Article 119).

An agreement can repeat these points and add steps, such as a deadline for sending documents. It should not take away a right the statute gives.

Sources: Law on Enterprises 2020, Articles 115 and 119 (faolex.fao.org, vie228956).

Terms that depend on the charter

The law lets the charter change some numbers. These are the terms to check first, because the charter is what the company registers and follows.

Article 24 lists what a charter contains. The list includes the share classes, the rights and duties of shareholders, how decisions are passed, how internal disputes are settled, how profit is shared and when shareholders may ask the company to buy back shares.

Article 148 sets default voting levels for general meeting resolutions. Matters such as share types, changes to business lines or a major asset sale need votes from at least 65 percent of participating votes, unless the charter names a different ratio. Other resolutions need more than 50 percent, again unless the charter says otherwise. Board members are elected by cumulative voting unless the charter says otherwise.

Share transfers follow the same pattern. Article 127 says shares move freely, except for the founder rule and any limits in the charter. A limit in the charter applies only if it is written on the share certificate. Under Article 120, founding shareholders may sell to outsiders in the first three years only if the general meeting accepts the sale.

If a vote level or a transfer limit matters to you, put it in the charter and mirror it in the agreement. A promise that appears only in a private contract may bind the signers, but it does not change how the company counts votes.

Sources: Law on Enterprises 2020, Articles 24, 120, 127 and 148 (faolex.fao.org, vie228956).

Terms that rest on contract alone

Many terms investors ask for are not set out in the Enterprise Law. We did not find the following in its English text. They live in the agreement, and Article 3 of the Civil Code is what supports them.

Deadlock steps. What happens if two equal holders cannot agree on a vote.
Tag-along and drag-along rights. A tag-along lets a small holder join a sale by a large one. A drag-along lets a large holder require the others to sell on the same terms.
Right of first offer. A promise to offer shares to the other parties before selling outside. Article 115 gives shareholders a priority right to buy additional shares in proportion to their holdings, but a first offer on a transfer is a separate promise.
Reserved matters. A list of decisions that need a named holder to agree, such as a new loan or a new product line.
Dividend policy. The law says dividends follow the rate the general meeting decides. An agreement can state how the signers will vote on that rate.
Exit and buy-back price. A formula or a valuer for setting the price of shares when someone leaves.

A contract term cannot override a rule the law makes mandatory. For example, the three-year founder limit and the one-share-one-vote rule stay in force whatever the agreement says.

Sources: Civil Code 2015, Article 3 (apolatlegal.com); Law on Enterprises 2020, Articles 115, 120 and 148 (faolex.fao.org, vie228956).

A short drafting checklist

Use these steps before you sign.

Name each party, the company and the number and class of shares each holds.
Check the charter first. If a vote level or transfer limit is in the charter, copy it exactly.
Mark which terms repeat the statute and which are your own bargain.
Say how disputes are settled. The charter must set rules for internal disputes under Article 24.
Say what happens to the agreement if the charter is changed.
Keep a signed copy with the company records, since shareholders may inspect the charter and minutes under Article 115.

Foreign investors often want an English version next to the Vietnamese one. If two versions exist, state which one controls. Ask a Vietnamese licensed lawyer to review the final text. This guide is general information about public legal texts, not legal advice.

Sources: Law on Enterprises 2020, Articles 24 and 115 (faolex.fao.org, vie228956).