Asset Disputes over Shares and Capital Contributions in Family-Owned Companies in Vietnam
Ownership and management rights over shares or capital contributions in family-owned companies often carry both emotional and financial value — a key reason why asset disputes in this context are more complex than typical corporate disputes. This article explains how courts and relevant authorities in Vietnam determine, protect, and divide shares and capital contributions within family businesses, highlighting the latest legal updates and practical approaches.
1. Legal nature of shares and capital contributions in family-owned companies
Shares (in joint-stock companies) or capital contributions (in limited liability companies) are assets with economic value. They can be owned, contributed, transferred, mortgaged, or disputed by individuals and legal entities. When disputes arise in family-owned companies, courts examine legal grounds under the Law on Enterprises (provisions on membership rights, transfer conditions, and procedures for changing ownership), as well as evidence proving the origin of the capital and internal agreements between members. These principles are applied in line with current enterprise legislation.
2. Common types of disputes
Disputes among family members over who is the actual owner of certain shares/capital contributions.
Disputes arising from the transfer of shares without notice or without complying with the company’s charter (e.g., priority rights, transfer conditions).
Disputes when shares/capital contributions form part of marital property and the couple subsequently divorces.
Disputes arising from unfulfilled or canceled internal investment or capital contribution agreements. Recent case law has clarified how courts address these transactions, the burden of proof, and their legal consequences.
3. Shares and capital contributions as marital property — division upon divorce
When shares or capital contributions are determined to be marital property, division must first be based on the spouses’ mutual agreement. If no agreement is reached, the court will divide them based on the actual value of the shares at the time of division, considering factors such as each party’s contribution, circumstances, and the lawful interests of the children. Conversion of shares into cash or transfer of shares according to the company’s charter are viable solutions. Recent guidelines and case law emphasize prioritizing mediation, though courts still retain the authority to enforce necessary procedures to safeguard spousal rights.
4. Procedures and evidence typically examined by the court
When initiating a lawsuit over shares/capital contributions, the claimant should prepare:
Documents proving the source of capital (capital contribution agreements, transfer receipts, meeting minutes, capital contribution decisions).
The company charter, enterprise registration certificates, and meeting minutes relating to the transfer or withdrawal of shares.
Evidence of transfer (transfer contracts, documents on changes of membership, notices sent to the company).
Valuation reports (if requesting conversion of shares into money), financial statements, and accounting records.
Recent appellate and high court rulings have clarified criteria for evaluating evidence in member transactions, even establishing precedents in cases where transfers were made by individuals not yet officially recognized as members. Proper collection of evidence is often decisive in securing rights.
5. Transfer restrictions and preemptive rights — key issues in family companies
Many family-owned companies include strict transfer conditions in their charters (such as preemptive rights for existing members, advance notice requirements, or approval conditions). If transfers do not comply with the charter, the transaction may be invalidated, with courts even ordering the annulment of related enterprise registration. Accordingly, when resolving disputes, courts usually compare transfer actions against the company charter and the Law on Enterprises.
6. Dispute resolution pathways: negotiation — mediation — arbitration — court
The primary priority remains internal agreements, negotiation, or mediation. If the parties have agreed to arbitration in their capital contribution contracts, disputes may be referred to commercial arbitration. If resolution fails, litigation before a competent court becomes the final option. Recent case law shows that courts increasingly recognize complex transactions between members and third parties, while carefully reviewing compliance with registration procedures and charter requirements.
7. Practical advice
Keep clear records of all capital contribution and transfer transactions (contracts, minutes, bank transfers).
Draft a detailed company charter specifying preemptive rights and transfer conditions to minimize internal disputes.
Ensure transparent share valuation (consider hiring an independent appraisal organization) when dealing with asset division or assessing legal consequences.
Prioritize mediation and arbitration where possible, to preserve both family relations and business continuity.
Stay updated on legal developments and case law — as higher court rulings and new precedents may shift judicial approaches in particular situations.
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