What Is a Founding Shareholder and Minimum Shareholding?

Short answer: A founding shareholder is a shareholder owning at least one ordinary share who signs the list of founding shareholders when a joint-stock company is established. The law sets no minimum ownership ratio (no mandatory 10%, 20% or 51%) — any claim that “founding shareholders must hold at least X%” is wrong. The distinctive feature of founding shareholders is the restriction on share transfers during the first 03 years from the date the company is issued its Enterprise Registration Certificate.

Legal basis

• Article 120 of the Law on Enterprises 2020 — ordinary shares of founding shareholders.

Conditions for being a founding shareholder

• Owning at least 01 ordinary share;
• Signing the list of founding shareholders;
• No minimum ownership ratio and no minimum holding period are required (beyond the 03-year transfer restriction).

Transfer restrictions during the first 03 years

• Within 03 years from the issuance of the Enterprise Registration Certificate, founding shareholders may only freely transfer to other founding shareholders;
• Transfers to persons who are not founding shareholders require approval by the General Meeting of Shareholders;
• This restriction does not apply to shares the founding shareholder acquired after establishment registration and to shares already transferred to another founding shareholder;
• After 03 years: free transfer like ordinary shareholders.

Distinguishing from ordinary shareholders

• Founding shareholders must sign the list at establishment; shareholders purchasing shares afterwards are not founding shareholders;
• Other rights and obligations (voting, dividends, pre-emptive rights, etc.) are the same as ordinary shareholders;
• The list of founding shareholders is part of the dossier for registering a joint-stock company.

If you need to determine the appropriate approach for your specific situation, you should discuss it with a lawyer beforehand to have your file reviewed and a suitable solution advised.

For quick advice, you may contact a lawyer via 0966.475.966.

Related articles

• Procedures for establishing a joint-stock company
• Share transfers in joint-stock companies
• What rights does the General Meeting of Shareholders have?