The capital contribution for the establishment of a business or for increasing charter capital is a legal right of organizations and individuals, clearly stipulated in the Law on Enterprise 2020 and its guiding documents. Accordingly, one of its fundamental principles, and also the consistent view of the competent state authorities, is that shareholders must be officially recorded in the company’s registry to exercise legal rights, such as voting and dividend entitlements only when, they have been officially recognized in the company’s internal records, including the company’s charter, the certificate of capital contribution, or the shareholder register. In particular, this information must also be registered with the business registration authority in accordance with legal provisions.

As such, several recent cases and draft precedents in Vietnam have clearly demonstrated the view on this issue. The content of the draft precedent and the court’s ruling indicate that investors not officially recorded in the company’s business registration process will not have the legal standing to claim shareholder rights, even if they have actually contributed capital and received dividends. However, in a guideline from the Supreme People’s Court, a different view was expressed, stating that registration is not necessarily a mandatory condition. A typical example is the case where the court recognized a factory as a company asset even though the ownership transfer procedure had not yet been completed.

Therefore, this article focuses on analyzing the legal framework for the recognition of contributed capital, while comparing it with several recent court rulings to clarify how the relevant legal principles are being applied in practice. Through the study of draft precedent and court judgments, the article aims to elucidate the boundary between statutory regulations and practical realities in recognizing the legal status of members/shareholders in a company

1. The Non-Recognition of Capital Contribution

1.1 The Nguyen Truong Tan v. Dien Tam Long Case 1

In 2010, Mr. Tấn agreed to convert a 1 billion VND payment owed for prior services into 100,000 company shares. Although no share certificate or registration was issued, he received dividends for several years. However, when he filed a lawsuit to (i) be recognized as a shareholder and (ii) claim unpaid dividends from 2019 onwards, the court denied his request.

The court argued that without official registration in the shareholders’ register, Mr. Tan could not be considered a legitimate shareholder. Furthermore, the share transfer had never been registered, rendering it legally invalid. As a result, the court ruled that Mr. Tan was entitled only to a refund of the original capital contributed, but not to shareholder rights or future dividends.

1.2 Draft Precedent No. 12/2024 (Case of Mr. Tran Manh H and Company D)2

Mr. H contributed 2.75 billion VND to the company and received a portion of profits over more than a decade. However, his contribution was never registered as part of the company’s charter capital. The court ruled that he was not an official shareholder but rather an external financial partner, engaged in a form of business cooperation. Since his name did not appear in any formal company documents, the court found no legal basis to recognize his claim to shareholder status or corporate rights. Therefore, the Court dismissed the petition to recognize Mr. H as a member of Company D

1.3 Conclusion

These two rulings illustrate a coherent and formalist application of Vietnamese corporate law, in which legal shareholder status is strictly conditioned by statutory registration requirements. Despite the plaintiffs’ substantial financial contributions and long-term involvement with the companies, the Court nevertheless refused to acknowledge their status due to the failure to complete enterprise registration procedures.

Together, these decisions affirm that economic engagement, even when sustained and documented, does not substitute for legal formality. The courts’ reasoning reflects a clear preference for legal certainty and procedural integrity, placing formal registration at the heart of shareholder recognition under Vietnamese corporate law.

2. Recognition of Capital Contribution

2.1 Official Letter No. 212/TANDTC-PC on online resolution of judicial issue

According to Section IV, point 2 of Official Letter No. 212/TANDTC-PC, the Supreme People’s Court provided guidance on resolving a case where Mr. A and Ms. B were members of a multi-member limited liability company established in 2016. Mr. A committed to contributing capital in the form of a factory. Although the Company received and used the factory from the time of establishment, the ownership of the factory and its attached land use rights had not been transferred to the Company. In 2018, Mr. A transferred his capital contribution to Ms. C without approval or notice to Ms. B, the other member.

In its guidance, the Court determined that although the legal procedures for transferring ownership of the contributed asset had not been completed, in practice, the Company had received and continuously used the asset for business operations since its establishment. Furthermore, the capital contribution had been recorded in the Company’s annual financial statements and recognized as part of its charter capital. Accordingly, in assessing the member status and the legality of the capital contribution, the Court considered the overall business operations, internal documents such as capital contribution certificates and financial statements, and the actual use of the asset, rather than relying solely on the formal transfer of ownership as prescribed by law.

Therefore, the asset contributed by Mr. A to the company shall still be considered as the company’s asset even though the ownership transfer procedures have not been completed.

2.2 Conclusion

The above guidance demonstrates that in specific cases, the Court may prioritize practical business activities and financial documentation to recognize capital contributions, even when legal procedures for transferring ownership have not been completed. The Company’s receipt and use of the factory, along with the recording of its value in the charter capital and annual financial statements, were regarded as indicators of the Mr. A’s intent to contribute capital and the Company’s acknowledgment thereof. This approach reflects the Court’s flexible view in balancing regulation with business realities, thereby protecting the legitimate rights of company.

3. Summative Perspective

From the analysis of the judicial precedents and court guidance above, it is evident that Vietnamese law currently adopts two distinct approaches in recognizing shareholder status upon capital contribution: (i) a rigid legal-formal approach emphasizing statutory registration and procedural compliance; and (ii) a practical approach focusing on the contributor’s intent, the Company’s actual receipt and use of the contributed assets, and internal documentation such as financial statements.

According to ADK’s opinion, in order to facilitate investment and reduce disputes, state authorities should adopt the approach outlined in Section 2 above. Specifically, registration with the competent authority should be treated as an administrative notification obligation, not as a prerequisite for proving the completion of a capital contribution. The establishment of shareholder/member status should be assessed comprehensively based on actual business practices, accounting documents, and the Company’s acknowledgment, thereby ensuring the legitimate rights of investors in a reasonable manner aligned with the commercial nature of the transaction.

1 Mr. Tan v. Dien Tam Long Case: https://plo.vn/vu-co-dong-kien-cuu-chu-tich-cong-ty-thuy-dien-toa-khong-cong-nhan-viec-gop-von-post838571.html 
2 Draft Precedent No. 12/2024: https://anle.toaan.gov.vn/webcenter/portal/anle/chitietanleduthao?dDocName=TAND332631 

Mr. Le Manh Hung (Harry), Legal Consultant