Tiếng ViệtProfit-sharing disputes are among the most common internal corporate conflicts, often arising from non-transparent profit distribution or violations of company charters and resolutions. If not addressed promptly, these disputes can seriously undermine a company’s reputation, shareholder trust, and operational stability.
In this article, Lexconsult & Partners provides an in-depth analysis of legal regulations, root causes, procedural steps, and practical legal solutions for resolving profit-sharing disputes effectively — helping businesses protect shareholder rights and maintain long-term corporate harmony and sustainability.
1. Concept and Characteristics of Corporate Profit-Sharing Disputes
1.1. Definition of Corporate Profit-Sharing Disputes
A corporate profit-sharing dispute refers to conflicts arising among shareholders, capital-contributing members, or the management regarding the determination and distribution of post-tax profits.
Such disputes often revolve around improper dividend allocation ratios, delayed profit distribution, or violations of company charters or resolutions, directly affecting the property rights of investors or capital contributors.
The essence of a profit-sharing dispute lies in its nature as an internal corporate conflict, reflecting an imbalance between the rights and obligations of members. If not resolved promptly, these conflicts may escalate, undermining business operations, corporate reputation, and investor confidence.
1.2. Characteristics of Corporate Profit-Sharing Disputes
Corporate profit-sharing disputes have several identifiable characteristics:
– Arise within the internal structure of a company, between shareholders or capital-contributing members;
– Directly relate to property rights, especially the right to receive dividends and post-tax profits;
– Often associated with violations of the company’s charter or resolutions, such as distributing profits without fulfilling financial obligations;
– Complex in nature, requiring combined expertise in law, finance, and accounting to resolve;
– Have long-term impacts on business performance, shareholder trust, and the company’s capital-raising ability.
1.3. Legal Basis for Resolving Corporate Profit-Sharing Disputes
The regulations governing profit distribution and dispute resolution in companies include:
– Law on Enterprises 2020 (Consolidated Document No. 67/VBHN-VPQH 2025);
– Law on Accounting 2015 (Consolidated Document No. 25/VBHN-VPQH 2025);
– Company charter and resolutions of the General Meeting of Shareholders or Members’ Council.
According to Article 135 of the Law on Enterprises 2020, a company may only distribute profits after fulfilling all tax obligations, setting up mandatory funds, and adopting a valid resolution. In case of violation, shareholders or capital-contributing members may request the Court or Commercial Arbitration to resolve the profit-sharing dispute and protect their lawful rights and interests.
2. Common Causes of Corporate Profit-Sharing Disputes
Corporate profit-sharing disputes generally stem from four primary causes outlined below. Understanding each cause helps businesses proactively prevent risks and ensure transparent and lawful profit distribution.
| No. | Cause | Detailed Description | Impact on the Company |
|---|---|---|---|
| 1 | Lack of financial transparency – the main cause of corporate profit-sharing disputes | The company fails to disclose financial statements or deliberately misrecords expenses to reduce actual profit, leading to shareholder suspicion and internal conflicts. | Undermines shareholder trust and increases the risk of profit-sharing disputes being brought before competent authorities. |
| 2 | Disagreement over profit distribution ratios among shareholders or capital contributors | Disputes arise due to inconsistent determination of profit-sharing ratios, especially after capital changes or share transfers. | Causes internal division, affects shareholders’ property rights, and disrupts management operations. |
| 3 | Violation of company charter or resolutions – a key cause of internal corporate disputes | The management arbitrarily decides on profit distribution contrary to resolutions passed by the General Meeting of Shareholders or the Members’ Council. | Invalidates resolutions, damages corporate governance reputation, and may result in internal litigation. |
| 4 | Failure to distribute dividends on time – a frequent source of profit-sharing disputes | The company delays or fails to distribute approved dividends. | Infringes upon shareholders’ rights to receive dividends and provides grounds for lawsuits before courts or commercial arbitration. |
3. Methods for Resolving Corporate Profit-Sharing Disputes
Depending on the level of conflict and the agreement between the parties, profit-sharing disputes in companies can be resolved through the following methods:
| No. | Method of Resolution | Key Features | Legal Basis |
|---|---|---|---|
| 1 | Negotiation and internal mediation in profit-sharing disputes | Flexible and cost-effective; based on goodwill between the parties without requiring complex legal procedures. | Article 317 of the Commercial Law 2005; Decree 22/2017/NĐ-CP (as amended by Decree 112/2025/NĐ-CP). |
| 2 | Settlement by commercial arbitration – a fast and confidential approach | Suitable for businesses wishing to protect trade secrets; arbitral awards are final and not subject to appeal. | Law on Commercial Arbitration 2010. |
| 3 | Filing a lawsuit with the People’s Court to resolve profit-sharing disputes | Follows civil procedure rules; court judgments are enforceable and subject to appeal. | Articles 35 and 37 of the Civil Procedure Code 2015. |
4. Procedures for Resolving Corporate Profit-Sharing Disputes
Depending on the chosen method (negotiation, arbitration, or court), the dispute resolution process generally involves the following key steps:
| Step | Action | Objective |
|---|---|---|
| 1 | Receive and identify the dispute’s subject matter – Determine the root cause (profit distribution ratio, shareholder rights, resolution violations, etc.) | Helps the company identify the appropriate handling direction and competent authority. |
| 2 | Internal negotiation and mediation – The parties negotiate directly or seek assistance from a neutral mediator to find common ground. | Reduces internal conflict, saves time and costs. |
| 3 | Request commercial arbitration or file a lawsuit in court – Submit a claim or arbitration request in accordance with the company’s charter or contract. | Initiates formal legal proceedings to protect shareholder rights. |
| 4 | Submit documentation and evidence supporting profit entitlement – Including shareholder registry, resolutions, financial statements, and meeting minutes. | Strengthens legal grounds and clarifies each party’s rights and obligations. |
| 5 | Adjudication and decision-making by competent authority – The court or arbitral tribunal reviews the case and issues a judgment or award. | Ensures a fair and lawful resolution of the dispute. |
| 6 | Enforcement of the court judgment or arbitral award – The losing party must comply; if not voluntary, enforcement authorities will compel compliance. | Finalizes the dispute, ensuring the legal effect of the decision. |
A clear dispute resolution process enables businesses to manage risks and control timelines effectively. However, to prevent disputes from arising, establishing a transparent company charter and a fair profit distribution mechanism remains the most critical factor — which will be analyzed in detail in the next section.
5. Solutions to Prevent Corporate Profit-Sharing Disputes
To prevent profit-sharing disputes, enterprises must establish a transparent governance mechanism and strictly comply with legal procedures. Proactively setting out clear internal regulations from the outset helps maintain shareholder trust and avoid potential litigation risks.
5.1. Establish a Transparent Company Charter
The company charter serves as the key legal foundation governing profit-sharing ratios, timing, and approval authority for resolutions. Clearly defined provisions help minimize misunderstandings and internal disputes arising from misinterpretation of shareholder rights.
5.2. Ensure Periodic Financial Disclosure
Transparent publication of financial statements—preferably audited or reviewed by an independent legal or accounting advisor—allows shareholders to understand the company’s performance and minimizes suspicion during profit allocation. This is an effective method to prevent profit-sharing disputes early on.
5.3. Conduct Shareholders’ General Meetings in Accordance with Regulations
Resolutions on dividend or profit distribution must be properly adopted in accordance with the Law on Enterprises 2020, and meeting minutes should be duly recorded and preserved. Compliance with procedural requirements provides a strong legal basis for resolving future profit-sharing disputes.
5.4. Engage in Periodic Corporate Legal Consultation
Companies should maintain regular collaboration with corporate lawyers to review the charter, resolutions, and profit distribution processes. Ongoing legal consultation enables early detection of procedural or compliance errors, ensuring lawful operations and minimizing the risk of future disputes.
6. Legal Consultation from LexConsult & Partners on Resolving Corporate Profit-Sharing Disputes
When a company faces a profit-sharing dispute, having the support of a corporate lawyer is a decisive factor in ensuring a swift, lawful, and fair resolution that protects shareholders’ rights. Below are the consulting services provided by LexConsult & Partners:
| Service Category | Scope of Legal Assistance |
|---|---|
| 1. Review of Documentation and Legal Grounds | Lawyers examine the company charter, profit distribution resolutions, financial reports, and shareholder rights to determine the legal basis before initiating proceedings. |
| 2. Support in Negotiation and Internal Mediation | Guiding the parties through negotiation and mediation to achieve voluntary agreements, reducing conflicts and litigation costs. |
| 3. Representation before Arbitration or Court | LexConsult corporate lawyers represent the client in filing applications, preparing evidence, attending hearings, and defending the company’s lawful interests. |
| 4. Post-Dispute Prevention Advisory | After case resolution, lawyers assist in reviewing the company charter, improving profit-sharing procedures, and updating internal financial regulations to prevent future disputes. |
Contact LexConsult for Legal Support:
📞 Hotline: 0938 607 287
📧 Email: info@lexconsult.com.vn
LexConsult & Partners – your trusted corporate legal companion through every stage of the process, from negotiation – mediation – litigation, delivering lawful, fair, and effective solutions for all corporate profit-sharing disputes.
7. FAQ – Frequently Asked Questions about Corporate Profit-Sharing Disputes
When can a company legally distribute profits?
→ Only after completing all tax obligations, setting up statutory funds, and having a valid resolution of the General Meeting of Shareholders or Members’ Council.
Can shareholders request profit distribution if the company fails to do so?
→ Yes. If a resolution on profit distribution has been adopted but not implemented, shareholders may request the Court or Commercial Arbitration to resolve the dispute.
What happens if dividends are distributed at an incorrect ratio?
→ Affected shareholders may request correction or file a lawsuit. Managers who violate regulations may bear civil liability under the Law on Enterprises 2020.
Should I choose arbitration or court for a profit-sharing dispute?
→ Arbitration is suitable for businesses seeking confidentiality and faster procedures, while court litigation is appropriate if no arbitration clause exists or enforcement is required.
What is the statute of limitations for filing a profit-sharing dispute?
→ Two (02) years from the date the shareholder’s rights are infringed, pursuant to Article 319 of the Commercial Law 2010.
How can businesses prevent profit-sharing disputes?
→ By ensuring transparent financial disclosure, clearly defining profit-sharing ratios in the company charter, and regularly consulting legal advisors to maintain compliance and transparency.
Corporate profit-sharing disputes are not merely financial conflicts — they are a test of corporate governance and transparency. Addressing them lawfully, transparently, and strategically helps sustain shareholder trust and long-term organizational stability.
If your company is facing a profit-sharing dispute or requires specialized corporate legal advice, contact LexConsult & Partners — a team of experienced corporate lawyers dedicated to resolving profit-sharing disputes effectively and lawfully.
📞 Hotline: 0938 507 289
📧 Email: info@lexconsult.com.vn
LexConsult & Partners – Effective Legal Solutions for Comprehensive Business Protection.
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