Disputes over redemption rights of shares: causes, risks, and legal solutions under Vietnamese law

In corporate operations, disputes over redemption rights of shares are not uncommon, particularly when shareholders disagree with important decisions of the company. When the right to request the company to redeem shares is not properly resolved, conflicts may easily arise, affecting shareholders’ interests and the stability of the enterprise. The article below clarifies the nature of such disputes, the relevant legal provisions, and effective solutions to minimize legal risks.

I. Current situation relating to disputes over redemption rights of shares 

In practice, disputes over redemption rights of shares are becoming increasingly common, especially in joint stock companies with diverse shareholder structures.

The main cause usually arises from shareholders’ disagreement with significant decisions such as corporate restructuring, changes in shareholders’ rights and obligations, or the company’s development orientation. Some notable situations include:

• The company delays or refuses to redeem shares despite the shareholder having submitted a valid request;
• Disputes regarding the redemption price of shares due to the absence of a clear valuation mechanism or lack of consensus among the parties;
• Lack of transparency in information disclosure, causing shareholders to lack sufficient grounds to exercise their rights;
• Conflicts between minority shareholders and controlling shareholders, increasing the risk of prolonged disputes.

Such situations show that such disputes not only affect shareholders’ legitimate rights and interests but also negatively impact the company’s operations and reputation, requiring appropriate legal and governance mechanisms for effective control.

II. Concept of disputes over redemption rights of shares 

1. What is a dispute over redemption rights of shares ?

A dispute over redemption rights of shares is a disagreement between a shareholder and the company (or among shareholders) regarding the exercise of the right to request the company to redeem shares in accordance with legal provisions.

Pursuant to Article 132 of the Law on Enterprise 2020 (as amended and supplemented in 2025), a shareholder has the right to request the company to redeem shares when such shareholder votes against a resolution on the reorganization of the company or changes to shareholders’ rights and obligations, and submits a valid request within the statutory time limit. Conversely, the company is obligated to redeem the shares within 90 days at an appropriate price (market price or the price determined in accordance with the Charter). Disputes arise when:

• The company fails to perform or delays performing its redeem obligation;
• The parties fail to agree on the redemption price of the shares;
• The implementation does not comply with the prescribed conditions and procedures.

It is an internal corporate dispute arising when the shareholder’s right to request share redemption is not properly guaranteed in accordance with the law.

2. In which cases do disputes over redemption rights of shares commonly arise?

In practice, disputes over redemption rights of shares often arise from the parties’ failure to properly comply with or agree upon the conditions, procedures, and redemption price of shares as prescribed by law. Common cases include:

• Shareholders request the share redemption but the company refuses or delays implementation: According to Article 132 of the Law on Enterprise 2020 (as amended and supplemented in 2025), the company must redeem shares within 90 days; however, in reality, many enterprises fail to comply with this deadline.
• Disagreement on the redemption price of shares: The parties cannot reach an agreement on the market price or the method of determining the price under the Charter, resulting in prolonged disputes.
• Violation of conditions for exercising the redemption request: For example, the shareholder fails to submit the request within the 10-day period or does not fall within the cases entitled to make such request, causing the company to refuse and disputes to arise.
• Lack of transparency in information disclosure: The enterprise fails to provide complete financial information, affecting the determination of the value of shares.
• Disputes between minority shareholders and controlling shareholders: Minority shareholders encounter difficulties in exercising their rights, especially regarding major corporate decisions.

Disputes often stem from non-compliance with legal provisions or a lack of transparency and goodwill among the parties, thereby affecting shareholders’ interests and corporate operations.

3. Are disputes over redemption rights of shares considered commercial business disputes?

Disputes over redemption rights of shares are classified as business and commercial disputes rather than ordinary civil disputes.

Pursuant to Clause 4, Article 30 of the Civil Procedure Code 2015 (as amended and supplemented in 2025), disputes between a company and its shareholders, or among shareholders themselves, relating to the establishment, operation, and management of the company are classified as business and commercial disputes and fall under the jurisdiction of the Court, unless the parties have a valid arbitration agreement.

Meanwhile, disputes over redemption rights of shares arise from the shareholder’s request for the company to fulfill its obligation to redeem shares under the Law on Enterprise 2020 (as amended and supplemented in 2025), and therefore are essentially internal disputes associated with the company’s operations.

Disputes over redemption rights of shares are business and commercial disputes and shall be resolved through the corresponding procedures at the Court or Commercial Arbitration.

III. Legal provisions relating to disputes over redemption rights of shares 

1. Conditions for shareholders to exercise the right to request share redemption  

Pursuant to Article 132 of the Law on Enterprise 2020 (as amended and supplemented in 2025), shareholders are entitled to request the company to redeem shares when the following conditions are satisfied:

• They do not approve the resolution of the General Meeting of Shareholders regarding the reorganization of the company or changes to shareholders’ rights and obligations under the Charter;
• They submit a written request to the company, clearly stating shareholder information, the number of shares, the expected price, and the reasons for the request;
• The request must be made within 10 days from the date the resolution is adopted.

Only when fully satisfying the conditions regarding the subject, content, and time limit does the shareholder have the lawful right to request the company to redeem shares.

2. Who has the right to initiate legal proceedings when disputes over redemption rights of shares arise?

When disputes over redemption rights of shares arise, the parties whose lawful rights and interests are infringed are entitled to initiate legal proceedings, including:

• Shareholders or groups of shareholders owning at least 1% of the total ordinary shares: They have the right, either on their own behalf or on behalf of the company, to initiate legal proceedings against members of the Board of Directors, the Director, or the General Director to request the return of benefits or compensation for damages to the company or other shareholders (Clause 1, Article 166 of the Law on Enterprise 2020, amended in 2025).
• The company: When it considers that the shareholder’s redemption request is unlawful or contrary to the Charter.
• Other shareholders or related parties: If their rights and interests are directly affected by the share redemption.

The right to initiate legal proceedings in disputes over redemption rights of shares helps protect shareholders’ interests, ensures the company’s compliance with the law and the company charter, and limits the risk of internal corporate disputes.

3. Methods of resolving disputes over redemption rights of shares 

Disputes over redemption rights of shares may be resolved through the methods prescribed by law, according to Article 317 of the Commercial Law 2005, including:

• Negotiation: The parties (shareholders and the company) directly discuss and reach agreement on the share redemption, redemption price, and implementation conditions.
• Mediation: Through an intermediary party to assist the parties in reaching a settlement.
• Commercial Arbitration: Applicable when the parties have an arbitration agreement.
• Court proceedings: Shareholders may initiate a lawsuit requesting the company to fulfill its obligation to redeem shares according to Clause 1, Article 166 of the Law on Enterprise 2020 (as amended and supplemented in 2025).

The parties may choose one or more dispute resolution methods, with priority given to negotiation and mediation before bringing the matter to Arbitration or the Court in order to save time and costs.

4. What should enterprises do to minimize the risk of disputes over redemption rights of shares ?

To minimize disputes, enterprises must comply with the provisions of the Law on Enterprise 2020 (as amended and supplemented in 2025), specifically:

• Clearly stipulating in the company charter the cases, conditions, and procedures for share redeem   (Article 24).
• Ensuring shareholders’ right to request share redemption in accordance with the prescribed conditions and time limits (Clauses 1 and 2, Article 132).
• Implementing share redemption at the correct price and within the payment period prescribed by law (Clause 3, Article 132).
• Publicly and transparently disclosing resolutions of the General Meeting of Shareholders related to shareholders’ interests (Article 151).
• Maintaining complete records and documents to prove compliance with legal provisions.

Proactively improving internal regulations and complying with the law helps enterprises minimize dispute risks and ensure a balance of interests between the company and shareholders.

IV. Questions related to disputes over redemption rights of shares 

1. Is mediation mandatory before initiating a lawsuit in disputes over redemption rights of shares?

It is not mandatory. Under procedural law, mediation is not a compulsory condition before initiating legal proceedings in disputes relating to redemption rights of shares. Specifically, according to Article 186 of the Civil Procedure Code 2015 (as amended and supplemented in 2025), individuals and organizations have the right to directly file a lawsuit with the Court to protect their lawful rights and interests when such rights and interests are infringed.

Mediation is only an encouraged method and may be conducted before or during the dispute resolution process. After the Court accepts the case, Article 205 of the Civil Procedure Code 2015 (as amended and supplemented in 2025) provides that the Court shall conduct mediation (except for certain cases where mediation is not possible).

Accordingly, disputes over redemption rights of shares do not require mandatory mediation before filing a lawsuit; however, mediation may still be conducted during the litigation process so that the parties may reach a settlement.

2. What is the statute of limitations for initiating legal proceedings in disputes over redemption rights of shares?

Pursuant to Article 155 of the Civil Code 2015, the statute of limitations for initiating legal proceedings concerning civil rights and obligations in general is 03 years from the date on which lawful rights and interests are infringed. In the context of disputes over redemption rights of shares, the commencement date for calculating the statute of limitations is:

• The date on which the shareholder submits the request for share redemption but the company fails to perform, or performs contrary to legal provisions (for example, failing to redeem within the 90-day period under Article 132 of the Law on Enterprise 2020, amended in 2025).
• The date on which the violation of shareholders’ rights arises due to the company’s unlawful refusal or delay.

If the shareholder does not initiate legal proceedings after the 03-year limitation period expires, the right to sue shall no longer be valid, except for special cases provided by law (for example, where the shareholder was unaware of the infringement because it was concealed).

Shareholders should initiate legal proceedings promptly once the company fails to fulfill its share redemption obligation in order to ensure the protection of their lawful rights and interests.

3. Can the company refuse a request for share redemption in all circumstances?

The company cannot refuse a request for share redemption in all circumstances. Pursuant to Articles 132 and 133 of the Law on Enterprise 2020 (as amended and supplemented in 2025):

• Cases where redemption is mandatory:
• The shareholder does not agree with the resolution regarding the reorganization of the company or changes to shareholders’ rights and obligations.
• The company must redeem the shares at the market price or at the price determined according to the principles set out in the company charter, within 90 days from the date of receiving the request.
• If the parties cannot agree on the price, both parties have the right to request an independent valuation organization; the company must introduce at least 03 valuation organizations for the shareholder to choose from.
• Cases where the company may decide to redeem:
• The Board of Directors or the General Meeting of Shareholders has the right to decide on share redemption, but only within the statutory shareholding limits: Not exceeding 30% of the sold ordinary shares or as separately decided by the General Meeting of Shareholders.
• The redemption price must not be higher than the market price for ordinary shares; for other classes of shares, if the company charter does not provide for a price lower than the market price, the market price must be applied.

The company cannot refuse redemption in all circumstances, especially where shareholders exercise their rights in accordance with the law; refusal or limitation is only permitted based on the shareholding ratio, class of shares, and the company charter.

4. Do disputes over redemption rights of shares affect the company’s charter capital?

Disputes over redemption rights of shares may directly affect the company’s charter capital for the following reasons:

• When a shareholder requests the company to redeem shares according to Article 132 of the Law on Enterprise 2020 (as amended and supplemented in 2025), the company must make payment based on the agreed price or the market price. Such results in a reduction in the number of outstanding shares and a corresponding reduction in charter capital if the redemption are cancelled.
• Disputes over redemption rights of shares may temporarily suspend the recording or transfer of shares or lead to disputes regarding the valuation of shares, thereby causing difficulties in accurately determining charter capital.
• If the dispute is prolonged, financial reporting, profit distribution, and shareholders’ voting rights may also be affected, creating legal and financial risks for the company.

Disputes over redemption rights of shares are not merely issues concerning the interests between shareholders and the company, but also directly affect charter capital, and therefore must be handled promptly and in compliance with the law to protect the interests of the company and other shareholders.

V. Why should you seek legal consultation from NPLaw in cases of disputes over redemption rights of shares 

When disputes over redemption rights of shares arise, handling the matter independently may lead to legal misunderstandings, prolonged disputes, and financial risks. NPLaw’s lawyers can support enterprises and shareholders by:

• Accurately assessing the legal position: Determining the rights and obligations of shareholders and the company based on the Law on Enterprise 2020 (as amended and supplemented in 2025) and relevant guiding documents.
• Developing a dispute resolution strategy: Advising on appropriate methods of negotiation, mediation, or initiating legal proceedings before the Court/Commercial Arbitration.
• Supporting valuation and procedural review: Ensuring that the share redemption price, documents, and meeting minutes are implemented in compliance with the law, thereby avoiding legal risks.
• Protecting minority shareholders’ rights: Advising on how to exercise rights and ensuring that minority shareholders are not placed at a disadvantage.
• Minimizing financial risks and impacts on charter capital: Advising on measures to prevent disputes from disrupting operations, capital management, and profit distribution of the company.

The above information is for reference purposes only. Should you require detailed advice for your specific case, please contact NPLaw Law Firm for immediate consultation.