Law on Enterprises 2020: Regulations on Transfer of Shares

How does the Law on Enterprises 2020 regulate share transfers? - Illustrative image.

According to Clause 1, Article 127 of the Law on Enterprises 2020, shares are freely transferable unless otherwise restricted by law or the company’s Charter. If the company's Charter imposes restrictions on share transfers, these restrictions only take effect when clearly stated on the share certificates of the corresponding shares.

Moreover, Clause 2, Article 127 provides that share transfers may be conducted through contracts or transactions on the stock market:

- In the case of transfers by contract, the transfer documents must be signed by the transferor and the transferee or their authorized representatives.

- In the case of transactions on the stock market, the transfer procedures shall be conducted in accordance with the law on securities.

If a shareholder who is an individual deceases, the heir under the will or the law of that shareholder will become a shareholder of the company. If the individual shareholder has no heir, the heir refuses to accept the inheritance, or the heir is disqualified from inheritance, such shares shall be settled according to the civil law.

Furthermore, Clause 5, Article 127 of the Law on Enterprises 2020 permits shareholders to gift part or all of their shares to other individuals or organizations, and to use shares to pay debts. Individuals or organizations receiving shares as gifts or debt repayments will become shareholders of the company.

The company must register the change of shareholders in the shareholder register at the request of the relevant shareholder within 24 hours from the receipt of the request as stipulated in the company's Charter.

For detailed content, refer to the Law on Enterprises 2020, effective January 1, 2021.

Le Vy

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