In corporate practice, shares that are not recorded in the shareholder register are a common source of disputes, directly affecting voting rights, dividend entitlements, and shareholder status. Clarifying the legal basis of such unrecorded shares in the shareholder register is of critical importance in safeguarding the lawful rights and interests of relevant parties.
I. Overview of issues relating to unrecorded shares in the shareholder register
In a joint stock company, the shareholder register serves as a main legal basis for determining shareholder status as well as the rights and obligations attached to shares.
However, in practice, there are numerous instances where shares are not recorded in the shareholder register. These situations may arise from incomplete share transfer procedures, errors in internal management, or disputes among shareholders. Such matters not only directly affect voting rights, dividend rights, and participation in corporate governance, but also pose significant legal risks to the enterprise.
Identifying and analyzing issues relating to unrecorded shares is therefore essential to properly determine shareholder status, protect lawful interests of the parties involved, and mitigate potential disputes in practice.
II. Understanding unrecorded shares in the shareholder register
1. What are unrecorded shares in the shareholder register?
Unrecorded shares in the shareholder register refer to cases where an individual or organization has contributed capital, acquired shares through transfer, or otherwise has a lawful basis for share ownership, but the company has not updated or recorded the owner’s information and corresponding number of shares in the shareholder register in accordance with the Law on Enterprise.
In such circumstances, the shareholder may have difficulties in exercising shareholder rights, as the shareholder register is the primary legal basis for the company and relevant parties to recognize shareholder status.
2. What are the common causes of unrecorded shares?
Shares not recorded in the shareholder register may arise from various causes. The most common is where a share transfer has been completed in substance but has not been recorded by the company due to delays or omissions in internal administrative procedures.
Additionally, disputes over the validity of share transfer agreements, failure to fulfill capital contribution obligations, errors in maintaining and updating the shareholder register, or intentional failure to record ownership in order to restrict a shareholder’s rights are also common causes.
3. How to distinguish unrecorded shares from shares under transfer?
The distinction depends on the legal status of the transfer transaction and whether recording procedures have been completed.
For shares under transfer, the parties are still in the process of executing the transaction, such as concluding agreements, making payments, or fulfilling conditions, so ownership has not yet been legally transferred to the transferee.
By contrast, unrecorded shares typically involve situations where ownership has already arisen or should have been recognized, but the company has not updated the shareholder register, resulting in a discrepancy between actual ownership and legal recognition.
4. How do unrecorded shares differ from shares with incomplete transfer procedures?
Shares with incomplete transfer procedures refer to transactions that have not satisfied legal or charter-based requirements regarding form, procedures, or obligations, and therefore ownership remains with the transferor.
Meanwhile, unrecorded shares generally involve cases where ownership has been established or should have been recorded, but is delayed or omitted due to internal management issues or disputes.
Such a distinction is crucial in determining shareholder status, the right to request recognition, and the legal liabilities of relevant parties.
III. Legal framework governing unrecorded shares in the shareholder register
1. What does the Law on Enterprises provide in such cases of unrecorded shares in the shareholder register?
Under Article 122 of the Law on Enterprise 2020, the shareholder register is the legal basis for determining shareholder status, shareholding quantity, and corresponding rights and obligations. The company is responsible for establishing, maintaining, and promptly updating the register upon any changes in share ownership.
Where shares are not recorded, the shareholder may not be formally recognized by the company, and therefore may face limitations in exercising shareholder rights, despite having a substantive basis for ownership.
2. What conditions must be met for ownership recognition?
To obtain recognition of share ownership in such cases, the claimant must demonstrate a lawful basis for ownership.
Such evidence may include fulfillment of capital contribution obligations, a valid and effective share transfer agreement, payment records, and documents evidencing the intent to transfer ownership. Based on these, the shareholder may request the company to update the register under Article 122 of the Law on Enterprise 2020, or initiate legal proceedings to protect their lawful rights if the company fails to comply.
3. What risks arise if the issue is not resolved?
If unrecorded shares remain unresolved, several legal risks may arise.
- Firstly, the shareholder may be unable to exercise fundamental rights under Article 115 of the Law on Enterprise 2020, such as voting rights, dividend entitlements, and access to corporate information.
- Secondly, the company may face internal disputes, prolonged litigation, and the risk of having resolutions of the General Meeting of Shareholders annulled due to incorrect determination of shareholder status under Article 151.
In the long term, failure to address such issues undermines corporate governance transparency and the company’s legal credibility in the market.
IV. Questions on unrecorded shares in the shareholder register
1. What is the company’s legal liability?
Under Article 122 of the Law on Enterprise 2020, a joint stock company must establish, manage, and accurately update the shareholder register.
Failure to record or delay in recording lawful ownership may constitute a breach of corporate governance obligations and an infringement of shareholders’ rights. Depending on the severity, the company and its managers may take civil liability, including obligations to remedy consequences and compensate affected shareholders.
2. What are the rights and obligations of unrecorded shareholders?
In principle, such shareholders have the right to request recognition of ownership upon providing sufficient legal evidence.
However, until formally recorded, their ability to exercise rights such as voting, receiving dividends, and participating in corporate governance may be practically restricted. They also take the obligation to comply with legal and charter requirements regarding proof of ownership and procedures for recognition.
3. How should shareholders act in cases of internal disputes?
Shareholders should proactively collect and preserve evidence of ownership, including transfer agreements, payment documents, capital contribution records, and related materials.
They may first seek resolution through negotiation or internal mediation. If unsuccessful, they are entitled to initiate court proceedings or pursue other dispute resolution mechanisms to protect their lawful rights.
4. What is the procedure for filing a claim with competent authorities?
Current enterprise law does not provide a specific administrative complaint procedure for such cases. The most effective legal remedy is to initiate a lawsuit against the company before a competent court under Article 166 of the Law on Enterprise 2020.
The litigation process follows the Civil Procedure Code 2015 (as amended in 2025), including:
- Filing a lawsuit with the competent People’s Court, accompanied by supporting documents such as share transfer agreements, payment evidence, and corporate resolutions (if any);
- Court acceptance of the case upon valid submission and payment of advance court fees;
- Adjudication through evidence collection, mediation, and trial to determine shareholder status and rights.
In the absence of a specialized administrative mechanism, court proceedings remain the most direct and legally binding method to compel recognition and protect shareholder rights.
5. Is the company required to notify shareholders in such cases?
Current law does not prescribe a specific mandatory notification mechanism for unrecorded shares. However, based on the Law on Enterprise 2020, shareholders have the right to receive full and timely information regarding matters affecting their rights and interests (Point đ, Clause 1, and Point a, Clause 1, Article 125).
Accordingly, where such issues arise, the company should be responsible for providing explanations and guidance to affected shareholders to ensure transparency and minimize disputes.
V. Are you looking for a reliable legal expert for issues relating to unrecorded shares?
Issues relating to shares not recorded in the shareholder register are often complex and require in-depth knowledge of corporate law and dispute resolution practice. Consulting experienced legal professionals enables shareholders and companies to identify appropriate solutions and effectively protect their lawful rights and interests.
The above information is for reference purposes only. For detailed advice tailored to your specific case, please contact NPLaw for prompt assistance.
