Legal consequences in the case that a shareholder fails to fully pay for the shares subscribed upon the establishment of a joint stock company
The full and timely payment of the shares subscribed is a mandatory obligation of shareholders upon the establishment of a joint stock company. Under the Law on Enterprises 2020, failure to perform this obligation not only gives rise to the shareholder’s liabilities but also places the company in a position where it must carry out relevant legal procedures concerning its charter capital, and it may be subject to administrative penalties if it fails to comply with the applicable regulations. Please refer to the article below for a detailed discussion.
Illustrative
1. Regulations on the time limit for payment of subscribed shares
According to point (a), clause 1, article 111 of the Law on Enterprises 2020, a joint stock company is an enterprise whose charter capital is divided into equal portions, known as shares. Individuals or organizations that own at least one share are referred to as shareholders of the company[1].
Shareholders register to subscribe for shares upon the establishment of the company and are obliged to fully pay for the subscribed shares within 90 days from the date on which the Enterprise Registration Certificate is issued, unless the company’s charter or the share subscription agreement stipulates a shorter time limit, in accordance with Clause 1, Article 113 of the Law on Enterprises 2020.
2. Liabilities of shareholders for failure to fully pay or to pay for subscribed shares
2.1. Case where a shareholder fails to pay for the subscribed shares
– According to clause 3, Article 113 of the Law on Enterprises 2020, upon the expiry of the 90-day period from the date on which the company is granted the Enterprise Registration Certificate, if a shareholder fails to pay for the shares he or she has subscribed to purchase, such person shall not be recognized as a shareholder and shall not be entitled to transfer the right to purchase such shares to any other organization or individual.
– However, such organization or individual shall remain liable, to the extent of the full par value of the subscribed shares, for the company’s financial obligations arising prior to the date on which the company registers the adjustment of its charter capital in accordance with the law[2].
2.2. Case where a shareholder fails to fully pay for the subscribed shares
– Where, upon the expiry of the prescribed payment period, a shareholder pays only part of the subscribed shares, such shareholder shall be entitled to voting rights, dividend rights, and other rights only in proportion to the number of shares actually paid. At the same time, such shareholder shall not be entitled to transfer the right to purchase the unpaid portion of the subscribed shares.
– Similar to the case where the shareholder fails to make any payment, a shareholder who fails to fully pay for the subscribed shares shall remain liable, to the extent of the full par value of all subscribed shares, for the company’s financial obligations arising prior to the date on which the company registers the adjustment of its charter capital.
Therefore, a shareholder’s failure to fully pay or complete non-payment of the subscribed shares directly affects the company’s capital structure; therefore, such shareholder must bear full liability corresponding to the total number of shares subscribed. This regulation reflects the strictness of enterprise law in ensuring stability and transparency in the organization and operation of joint stock companies.
3. Company’s measures in cases where shareholders fail to fully pay or fail to pay for subscribed shares
– According to clause 3, Article 113 of the Law on Enterprises 2020, in cases where a shareholder fails to pay or fails to fully pay for the shares he or she has subscribed to purchase, such shares shall be deemed unsold shares, and the Board of Directors shall be entitled to offer such shares for sale.
– Within 30 days from the expiry of the time limit for payment of the subscribed shares[3], the enterprise must carry out procedures to reduce its charter capital due to the shareholders’ failure to pay or fully pay for such shares, except in cases where all unpaid shares have been fully sold within such time limit; concurrently, the enterprise must register changes to the information of its founding shareholders in accordance with the law.
4. Procedures for registration of changes to charter capital and founding shareholder information in cases where founding shareholders fail to pay or fail to fully pay for subscribed shares
– According to clause 1, Article 44 of Decree No. 168/2025/NĐ-CP, the company is required to prepare the following documents and submit them to the Business Registration Office under the Department of Finance of the province or centrally governed city where the company’s head office is located:
a) An application for registration of changes to enterprise registration contents;
b) A certified copy or the original of the resolution of the General Meeting of Shareholders on the change of charter capital;
c) The original or a copy of documents evidencing capital contribution or share purchase corresponding to the portion of charter capital registered to be increased, in cases where the company registers an increase in charter capital;
d) A copy of the written approval issued by the Investment Registration Authority regarding capital contribution, share purchase, or acquisition of capital contribution by foreign investors or economic organizations with foreign investment capital, in cases where procedures for registration of capital contribution, share purchase, or acquisition of capital contribution are required under the Law on Investment (if any).
– According to clauses 2 and 3, Article 50 of Decree No. 168/2025/NĐ-CP, the enterprise is responsible for notifying changes to the information of founding shareholders within 30 days from the expiry of the deadline for full payment of the subscribed shares. The dossier shall include:
a) A notice of changes to enterprise registration contents;
b) A list of founding shareholders of the joint stock company, which shall exclude information relating to founding shareholders who have failed to pay for the subscribed shares.
5. Notes on administrative sanctions for failure to carry out procedures for adjustment of charter capital due to shareholders’ failure to pay or failure to fully pay for subscribed shares
– Enterprises should pay particular attention to the fact that failure to carry out procedures for adjusting charter capital in cases where shareholders fail to pay or fail to fully pay for the subscribed shares constitutes a violation of law and may result in administrative sanctions.
– According to point a, clause 3, Article 46 of Decree No. 122/2021/NĐ-CP, a joint stock company that fails to adjust its charter capital and update the list of founding shareholders in accordance with actual capital contribution status may be subject to an administrative fine ranging from VND 30,000,000 to VND 50,000,000
– In addition to monetary penalties, the enterprise may also be compelled to carry out procedures for registration of changes to enterprise registration contents, including the adjustment of charter capital and the updating of shareholder information. This constitutes a mandatory obligation to ensure transparency regarding capital contribution and ownership structure in accordance with the Law on Enterprises.
This article is provided for general informational purposes only and shall not be construed as legal advice for any specific case. The legal provisions cited herein are effective as of the date of publication but may have been amended, supplemented, replaced, or rendered invalid at the time of reference. Accordingly, readers are advised to seek professional legal counsel before applying the information contained herein.
For any inquiries or requests for legal services consultation related hereto, please contact CBI Law Company Limited for assistance.
[1] Clause 3 Article 4 Law on Enterprise 2020
[2] Clause 4 Article 113 of Law on Enterprise 2020
[3] Point c Clause 5 Article 112 of Law on Enterprise 2020
