A purchaser of listed shares in a public joint stock company (Public JSC) from an individual selling such shares through his/her securities trading account does not need to verify the selling individual’s authority to sell the listed shares under the Law on Family and Marriage 2014 assuming that:

the listed shares are not the main sources of income of the selling individual and his/her spouse (if he/she is married); and
the purchaser is an innocent purchaser who does not know that the selling individual is married or that the selling individual does not have the authority to sell the listed shares under the Law on Family and Marriage 2014.

This is because Article 32.1 of the Law on Family and Marriage 2014 provides that an individual operating a bank account or a securities trading account will be deemed to have the authorities to deal with the monies or securities in such account when dealing with an innocent third party.

A purchaser of unlisted shares in a Public JSC from a selling individual should request the selling individual to provide evidence that he/she has the authority to sell the unlisted shares in the public joint stock company under the Law on Marriage and Family 2014. This is because:

The Securities Law 2006 requires the shares of a Public JSC to be registered with the Vietnam Securities Depository Centre (VSD). The VSD registration process is for recognising the title of the shareholder. Therefore, shares in Public JSC are likely to be seen as movable asset requiring title registration; and
The Law on Marriage and Family 2014 requires the disposal of movable asset requiring title registration to be consented by both spouses.

Evidence of authorities to sell shares under the Law on Marriage and Family 2014 may include evidence that:

the selling individual is not married;
the spouse of the selling individual has consent to the sale transaction; or
the sale shares are owned by the selling individual separately from the common properties of the selling individual and his/her spouse.

It is not clear if a purchaser of unlisted shares in a non-Public JSC from a selling individual should request the selling individual to provide evidence that he/she has the authority to sell the unlisted shares in a non-Public JSC under the Law on Marriage and Family 2014. This is because:

it is not clear if shares in a non-Public JSC is regarded as movable asset requiring title registration (động sản phải đăng ký quyền sở hữu). One the one hand, under the Enterprise Law 2014, details of shareholders in a joint stock company must be recorded in the shareholder register of such company. This could be viewed as a title registration requirement. On the other hand, it is arguable that shares in a non-Public JSC is not subject to title registration since title registration requirement is commonly understood to mean a registration issued by a Government authority instead of a private company; and
if shares in a non-Public JSC is not regarded as movable asset requiring title registration then under the Civil Code 2015, a transaction between the selling individual and an innocent third party will be valid even the selling individual does not have the authority to sell the shares unless the sale shares are stolen or otherwise taken away from the spouse of the selling individual against his/her will. The qualification to the protection for innocent third party is quite broad and general.

This post is contributed in parts by Le Thanh Nhat, a legal intern at Venture North Law.

Vietnam Business Law