When power is no longer anonymous: Shareholders’ agreements and new paradigms of corporate control

In modern corporate governance, a Shareholders’ Agreement (“SHA”) has traditionally been likened to a “secret drawer”—a private repository where investors establish layers of de facto control distinct from the publicly filed Charter (Articles of Association). However, under the pressure of global transparency trends and the tightening of Beneficial Owner (“BO”) regulations pursuant to the Law on Anti-Money Laundering 2022 and its guiding instruments (such as Decree 19/2023/ND-CP, Decree 168/2025/ND-CP, and draft amendments to the Law on Enterprises), the SHA is emerging from the “gray zone” to become a subject of direct regulatory scrutiny.

1. A shift in paradigm: From “Freedom of Contract” to “Transparency Accountability”

In essence, the Vietnamese legal system has consistently prioritized contractual autonomy. The principle of Pacta sunt servanda (agreements must be kept) serves as the core foundation allowing investors to design bespoke governance structures. This flexibility, coupled with technical lacunae in the Law on Enterprises, has transformed the SHA into a “universal tool” for cross-border M&A and complex joint ventures.

Within this private sphere, shareholders often engineer sophisticated power mechanisms that far exceed the information recorded on the face of Business Registration Certificates:

1. Veto rights: Acting as a “brake” on the absolute power of the majority shareholder, allowing minority shareholders to block vital decisions (M&A, share issuances, dissolution) even without holding a majority of voting shares.
2. Personnel nomination mechanisms: SHAs permit the direct appointment of “core” positions such as the Chairperson of the Board of Directors, General Director (CEO), or Chief Financial Officer (CFO), ensuring the executive apparatus reflects the will of strategic investors, regardless of their actual equity ratios.
3. Cash flow control and exit mechanisms: The SHA acts as an arbiter of economic interests through profit guarantees, dividend priorities, or detailed divestment roadmaps (such as Drag-along and Tag-along rights). These are typically sensitive matters of high commercial confidentiality, often omitted from the Charter to avoid the scrutiny of competitors.

However, the era of anonymity is drawing to a close. The modern legislative mindset of 2024–2026 resolutely seeks to abolish the absolute separation between nominal ownership and actual control. The law no longer stops at the passive recording of names on the Enterprise Registration Certificate (“ERC”) but has begun to query: Who is the true controlling party behind the confidentiality commitment?

2. Decoding “Dominant influence” through the lens of the Beneficial Owner

The concept of the Beneficial Owner is the key for regulators to “peel back” the layers of a Shareholders’ Agreement. Actual power no longer necessarily correlates with capital contribution ratios. Under the current legal framework, an individual is identified as a beneficial owner if they fall into one of the following categories:

a. Quantitative criteria (Control via ownership): Individuals who directly or indirectly own 25% or more of the charter capital. This is the superficial layer of control, easily identifiable via the Register of Shareholders.

b. Qualitative criteria (De Facto Control via agreement): This is where the SHA becomes “legal evidence.” An individual may hold 0% nominal capital but still be identified as a BO if, through SHA provisions, they possess:

1. Decision-making power over key personnel: The ability to directly or indirectly appoint or dismiss a majority of the members of the Board of Directors, the Supervisory Board, or the Legal Representative;
2. Strategic intervention rights: The right to approve or block critical decisions regarding corporate restructuring, Charter amendments, or high-value transactions;
3. Concentrated voting power: Through proxy agreements or voting pool arrangements that form a dominant power bloc over the entity’s operations.

Pursuant to Article 7 of Decree 19/2023/ND-CP and Article 17 of Decree 168/2025/ND-CP, a legal basis has been established for competent state authorities and credit institutions to demand that enterprises explain and provide information related to these internal agreements. Accordingly, clauses previously deemed “internal” or “confidential” may now be subject to disclosure and clarification to prove the legitimacy of the capital structure and the true purpose of transactions.

3. The fine line between effective governance and compliance risk

The fact that SHAs are under scrutiny does not imply that control agreements are restricted. On the contrary, they remain a legitimate necessity for investor protection. However, risks arise when there is an inconsistency between actual power and the legal record:

1. Post-clearance audit risks and financial sanctions: If there is a discrepancy between the declared BO and the de facto dominant influence recorded in the SHA, the enterprise may face severe administrative sanctions, suspension of financial transactions, or be “blacklisted” by the banking system for violating transparency regulations.
2. Risk of voidance: In disputes before Arbitration or the Courts, if an SHA is designed to illegally conceal actual power or directly conflicts with business ethics and public policy, such provisions risk being declared null and void. This can lead to the total collapse of the governance structure that investors have meticulously constructed.
3. Vulnerability in shareholder sisputes: When internal conflicts arise, parties may exploit inconsistencies in BO declarations to exert legal pressure on their counterparts, turning a protective agreement into their own “Achilles’ heel.”

4. Strategic recommendations for enterprises and investors

In an era of heightened transparency requirements, maintaining “anonymous” ownership structures or agreements is no longer a sustainable strategy. To optimize commercial benefits while ensuring legal safety and compliance, enterprises and investors should consider the following orientations:

1. Review ownership structures and internal agreements: Enterprises should proactively reassess SHAs, proxy agreements, or indirect investment structures to ensure transparency, legality, and accountability.
2. Standardize legal records and documentation: Internal agreements must be drafted clearly and consistently with the enterprise registration dossier, investment records, and official disclosure documents to mitigate the risk of contradictions or allegations of concealment.
3. Conduct compliance risk assessments prior to investment: Before establishing complex investment structures or utilizing nominee arrangements, enterprises should perform comprehensive legal due diligence to identify risks related to tax, investment, corporate governance, or foreign exchange control.
4. Strengthen internal governance mechanisms: Enterprises need to build internal processes for the archiving, disclosure, and provision of information to respond promptly to requests from regulatory authorities or credit institutions.
5. Engage legal counsel from the initial stage: Consulting with lawyers or experts during the design of the investment structure will help enterprises balance commercial objectives with compliance requirements, while minimizing subsequent legal risks.

The Shareholders’ Agreement is no longer an “absolute safe haven” beyond the reach of regulators. It has become a living entity that reflects the core essence of power within a business. For investors, the challenge lies not in abandoning the SHA, but in understanding and managing the legal consequences it entails. Transparency is not merely a compliance obligation; it is the foundation for building trust with partners, customers, and the market in the future. 

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Submission date: 20 April 2026

Related articles

1. Shareholder Agreement Under M&A Transaction (Part 1)

2. Shareholder Agreement Under M&A Transaction (Part 2)

3. Protecting minority shareholders in shareholder agreements

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to M&A Consulting and contact our team of lawyers in Vietnam via email info@apolatlegal.com.

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