PROCEDURAL VIOLATIONS IN MEETING, KEY GROUNDS FOR SHAREHOLDERS TO REQUEST CANCELLATION OF GMS RESOLUTION

In the corporate governance model of a joint-stock company, the General Meeting of Shareholders (GMS) is the highest decision-making body. However, it should be noted that the legal validity of GMS resolution depends strictly on the legality of the issuance process. Dispute resolution practice shows that procedural violations in convening and conducting GMS meetings constitute a crucial legal ground that can lead to valid requests by shareholders to cancel a resolution. To ensure the legitimate rights and interests of relevant parties, the following article will clarify the conditions, statute of limitations, and grounds for exercising the right to request the cancellation of GMS resolution in accordance with current laws.

Who has the right to request cancellation of GMS resolution?

Regarding the subjects entitled to request cancellation of GMS resolution

Not every individual or organization has the right to arbitrarily interfere with the company’s decisions. Pursuant to Clause 2, Article 115 and Article 151 of the Law on Enterprises 2020, a shareholder or a group of shareholders owning 5% or more of the total ordinary shares has the right to request the cancellation of a GMS Resolution.

The law also respects the self-determination right of enterprises by allowing the establishment of a smaller ratio than 5%, provided it is specifically formulated and recorded in the company’s charter. This provision aims to limit and prevent the abuse of the right to initiate lawsuits that hinder business operations, while still ensuring a voice for minority shareholders.

Regarding the statute of limitations for exercising the right to request cancellation of GMS resolution

To ensure stability in the company’s management and transactions, the right to request must be exercised within a time limit of 90 days from the date of receipt of the resolution, the minutes of the GMS meeting, or the minutes of the counting of votes from the GMS. Beyond this statute of limitations, the request will no longer have legal validity.

What are the grounds for considering the cancellation of GMS resolution?

A resolution can only be considered for cancellation when there are sufficient legal grounds as prescribed. According to Clause 1, Article 151 of the Law on Enterprises 2020, a GMS resolution may be canceled if the order and procedures for convening the meeting and passing the decision of the GMS seriously violate the provisions of the Law on Enterprises and the company’s charter. In practice, these violations typically relate to the authority to convene, notification deadlines, or conditions for conducting the meeting.

Besides formal violations (order and procedures), violations of the law in content also serve as an important legal ground to request cancellation of a GMS resolution. Pursuant to Clause 2, Article 151 of the Law on Enterprises 2020, a GMS resolution may be requested to be canceled if its content violates the law or the provisions of the company’s Charter.

How is the jurisdiction to resolve requests for cancellation of GMS resolution regulated?

In cases where there are sufficient grounds, a shareholder or group of shareholders meeting the conditions has the right to request a competent jurisdictional body to review and cancel the GMS resolution that shows signs of violation.

As stipulated in Article 151 of the Law on Enterprises 2020, the shareholder or group of shareholders has the right to request a Court or an Arbitration tribunal to consider and cancel the entire resolution or a part thereof. Whether the dispute is settled at a Court or Arbitration will depend on the provisions in the company’s Charter, the shareholders’ agreement, or the dispute resolution agreement (if any) among the relevant parties.

How is the jurisdiction to resolve requests for cancellation of GMS resolution regulated?

In cases where there are sufficient grounds, a shareholder or group of shareholders meeting the conditions has the right to request a competent jurisdictional body to review and cancel the GMS resolution that shows signs of violation.

As stipulated in Article 151 of the Law on Enterprises 2020, the shareholder or group of shareholders has the right to request a Court or an Arbitration tribunal to consider and cancel the entire resolution or a part thereof. Whether the dispute is settled at a Court or Arbitration will depend on the provisions in the company’s Charter, the shareholders’ agreement, or the dispute resolution agreement (if any) among the relevant parties.

In which cases does a GMS resolution remain valid despite procedural errors?

Legal practice still acknowledges exceptions based on the principle of respecting the absolute consensus of all owners – the shareholders, even if certain procedural errors occurred during the process.

According to the provisions of Clause 2, Article 152 of the Law on Enterprises 2020, a GMS Resolution passed with 100% of the total voting shares is legal and effective even if the order and procedures for convening the meeting and passing such resolution violate the provisions of the Law on Enterprises and the company’s charter.

Requesting the cancellation of a GMS resolution is a complex and potentially prolonged legal procedure, especially when determining the issues as well as the arising legal consequences involved. To ensure this process goes smoothly and safeguards legitimate rights, shareholders should carefully review their records and may consider seeking the accompaniment of legal experts before officially carrying out the procedures with the competent authorities.

>> NEW REGULATIONS ON ELECTRONIC EMPLOYMENT CONTRACTS UNDER DECREE NO. 337/2025/ND-CP https://linconlaw.vn/new-regulations-on-electronic-employment-contracts-under-decree-no-337-2025-nd-cp/

>> ADOPTION OF RESOLUTIONS BY COLLECTING WRITTEN OPINIONS OF THE GMS https://linconlaw.vn/adoption-of-resolutions-by-collecting-written-opinions-of-the-gms/