Legal consequences in the event that a shareholder fails to pay, or fails to fully pay, for the shares subscribed upon the establishment of a joint-stock company
The full and timely payment of the subscribed shares constitutes a mandatory obligation of shareholders upon the incorporation of a joint stock company. Under the Law on Enterprises 2020, any failure to fulfill this obligation not only gives rise to the shareholder’s liability but also places the company in a position where it must undertake legal procedures relating to its charter capital, and may be subject to administrative sanctions if it fails to comply with the applicable regulations. Further details are discussed in the article below.
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1. Regulations on the time limit for payment of subscribed shares
Pursuant to Point a, Clause 1, Article 111 of the Law on Enterprises 2020, a joint stock company is an enterprise in which the charter capital is divided into equal portions called shares. Individuals and organizations owning at least one share are referred to as shareholders of the company[1].
Shareholders shall subscribe for shares upon the incorporation of the company and are obliged to fully pay for the number of shares subscribed within 90 days from the date of issuance of the Enterprise Registration Certificate, unless a shorter time limit is stipulated in the company’s charter or the share subscription agreement in accordance with Clause 1, Article 113 of the Law on Enterprises 2020.2. Liability of shareholders for failure to pay in full or to pay for registered shares
2. Liabilities of shareholders for failure to fully pay or failure to pay for subscribed shares
2.1. In case a shareholder fails to pay for the subscribed shares
– Pursuant to Clause 3, Article 113 of the Law on Enterprises 2020, upon the expiry of the 90-day period from the date the Enterprise Registration Certificate is issued, if a shareholder fails to pay for the subscribed shares, such person shall no longer 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 for the financial obligations of the company arising prior to the time the company registers the adjustment of its charter capital, corresponding to the total par value of the subscribed shares.[2]
2.2. In case a shareholder fails to fully pay for the subscribed shares
– Where a shareholder only partially pays for the subscribed shares upon the expiry of the payment deadline, such shareholder shall only be entitled to voting rights, dividend rights, and other rights corresponding to the number of shares actually paid. At the same time, the shareholder shall not be permitted to transfer the right to purchase the unpaid portion of shares.
– Similar to the case of non-payment, a shareholder who fails to fully pay shall still be liable for the financial obligations of the company arising prior to the time the company registers the adjustment of its charter capital, corresponding to the total par value of the subscribed shares.
Accordingly, the failure to fully pay or to pay for the subscribed shares directly affects the company’s capital structure; therefore, the shareholder must bear all corresponding liabilities arising in respect of the total number of shares subscribed. This provision reflects the strictness of corporate law in ensuring stability and transparency in the operation of joint stock companies.
3. Measures to be taken by the company in cases where shareholders fail to fully pay or fail to pay for subscribed shares
– Pursuant to Clause 3, Article 113 of the Law on Enterprises 2020, in cases where shareholders fail to pay or fail to fully pay for the subscribed shares, such shares shall be deemed unsold shares, and the Board of Directors shall have the right to offer them for sale.
– Within 30 days from the expiry of the share payment deadline, the company must reduce its charter capital[3] due to the failure of shareholders to fully pay as subscribed, unless all unpaid shares have been fully sold within the aforementioned period; concurrently, the company must register changes to the information of founding shareholders.
4. Procedures for registration of changes in charter capital and changes in information of founding shareholders in cases where founding shareholders fail to pay or fail to fully pay for subscribed shares
– Pursuant to Clause 1, Article 44 of Decree No. 168/2025/ND-CP, the company must prepare the following documents and submit them to the Business Registration Office under the Department of Finance of the province or centrally affiliated city where the company’s head office is located:
a) Application for registration of changes to enterprise registration contents;
b) A copy or the original of the resolution of the General Meeting of Shareholders regarding 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 for increase, in case of charter capital increase;
d) A copy of the written approval from the investment registration authority regarding capital contribution, share purchase, or capital contribution purchase by foreign investors or foreign-invested economic organizations, in cases where procedures for registration of capital contribution or share purchase are required under the Law on Investment (if any).
– Pursuant to Clauses 2 and 3, Article 50 of Decree No. 168/2025/ND-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 subscribed shares. The dossier includes:
a) Notice of changes to enterprise registration contents;
b) List of founding shareholders of the joint stock company, excluding those who have not paid for the subscribed shares.
5. Notes on administrative penalties for failure to carry out procedures for adjusting charter capital in cases where shareholders fail to pay or fail to fully pay for subscribed shares
– Enterprises should note that failure to carry out procedures for adjusting charter capital in cases where shareholders fail to pay or fail to fully pay for subscribed shares constitutes a violation of law and may result in administrative penalties.
– Pursuant to Point a, Clause 3, Article 46 of Decree No. 122/2021/ND-CP, a joint stock company that fails to adjust its charter capital and update the list of founding shareholders in accordance with actual circumstances may be subject to administrative fines ranging from VND 30,000,000 to VND 50,000,000.
– In addition to monetary fines, the enterprise is also compelled to carry out procedures for registration of changes to enterprise registration contents, including adjustment of charter capital and updating shareholder information. This is a mandatory obligation to ensure transparency regarding capital contribution and ownership structure in accordance with the Law on Enterprises.
This article is prepared by Vy Nguyen with consultation from Lawyer Y Huynh.
This article is intended for general informational purposes only and does not constitute legal advice for any specific case. The legal provisions cited herein are effective at the time of publication but may be amended, supplemented, replaced, or expired at the time of reference. Accordingly, readers are advised to seek professional legal advice before application.
For any inquiries or requests for legal services, please contact CBI Law Firm for assistance.
[1] Clause 3, Article 4 of the Law on Enterprises 2020
[2] Clause 4, Article 113 of the Law on Enterprises 2020
[3] Point c, Clause 5, Article 112 of the Law on Enterprises 2020
