Vietnam: What are the regulations on transfer of shares under the Law on Enterprises 2020?

12:13, 10/07/2024

On January 1, 2021, the Enterprise Law 2020 issued by the XIV National Assembly of Vietnam at the 9th meeting on June 17, 2020 will come into effect.

Quy định về chuyển nhượng cổ phần, Luật Doanh nghiệp 2020

Vietnam: What are the regulations on transfer of shares under the Law on Enterprises 2020? - Illustrative image.

According to Clause 1, Article 127 of the Law on Enterprises 2020, in Vietnam, shares may be transferred freely except in regulatory cases and other cases of restriction specified in the company's charter. The restrictions on the transfer of shares specified in the company's charter are only applicable if they are written in the certificates of the shares subject to restriction.

Moreover, under Clause 2, Article 127 of the Law on Enterprises 2020, the transfer shall be made into a contract or carried out on the securities market. In case of transfer under a contract, the documents shall bear the signatures of the transferor and the transferee or their authorized representatives. In case shares are transferred on the securities market, the transfer procedures prescribed by securities laws shall apply.

In case of the death of a shareholder that is an individual, his/her heir at law or designated by a will shall become a shareholder of the company. In case a shareholder that is an individual dies without an heir or the heir refuses the inheritance or is disinherited, his/her shares shall be settled in accordance with civil laws.

According to Clause 5, Article 127 of the Law on Enterprises 2020, a shareholder in Vietnam may donate all or part of their shares to other organizations and individuals; use the shares to pay debts. The organization or individual that receives the donation or debt payment will become a shareholder of the company. The organizations and individuals that receive shares will only become shareholders.

The company shall register the changes of shareholders in the shareholder register as requested by relevant shareholders within 24 hours after the request is received.

Further details may be found in Enterprise Law 2020 effective January 1, 2021.

Le Vy

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