Did you know that on the Shark Tank stage, when a Shark offers a price higher than the par value of a share, the difference can become a “secret weapon” that boosts a startup’s financial strength? It’s a fascinating financial-legal equation: an investor pays many times the par value per share, creating a massive share premium. This “excess capital” is not just a number on the balance sheet, it’s ammunition for the startup to reinvest, strengthen control, and increase the founders’ share value.
In this article, BLawyers Vietnam presents 02 key notes for start-ups on how to utilize this share premium.
1. Share premium for increasing start-up capital
Start-ups are newly established businesses aiming to grow as rapidly as possible that typically have a strong demand for investment capital. To raise funds flexibly, most start-ups opt for the joint stock company model, which is a form best suited for mobilizing capital from multiple investors.
Under the Law on Enterprises 2020 (amended in 2025), for joint stock companies that are not public companies, the common fundraising method is a private placement of shares. It should be noted that before offering shares to new investors, start-ups must comply with the pre-emptive rights of existing shareholders and those receiving the transfer of such rights.
In practice, the process of offering shares in start-ups, especially in Shark Tank-style deals, often goes through several stages before “closing the deal”, which means completing the share sale:
- Submitting the company’s presentation dossier (pitch deck) to seek fundraising opportunities;
- Signing a Non-Disclosure Agreement (NDA);
- Providing a data room and facilitating due diligence, including legal due diligence;
- Negotiating and signing a Memorandum of Understanding / Key Terms of the Transaction (Term Sheet);
- Signing the Shareholders’ Agreement; and
- The investor disburses the investment capital.
Immediately upon completion of the share offering and receipt of funds, the start-up must register the change of charter capital, update the shareholder list, and adjust shareholding ratios with the Business Registration Office, in accordance with the Law on Enterprises 2020 (amended in 2025) and Decree No. 168/2025/ND-CP, within 10 days from the date the offering is completed.
In many deals, the share issue price to investors is significantly higher than the par value stated in the company’s charter. This difference constitutes the share premium, recorded in Account 4112 under accounting regulations. For example, if you receive USD 1 million for 10% of the company’s shares, the company’s valuation is USD 10 million, while its charter capital is only VND 1 billion – the difference constitutes the share premium. The share premium may have a credit or debit balance and, under current regulations, is not subject to corporate income tax or value-added tax, as it is an additional capital contribution from shareholders rather than income from business activities.
2. Utilizing the share premium for start-up business activities
Under Circular No. 19/2003/TT-BTC, start-ups may transfer the share premium to supplement and increase charter capital in the following cases:
- Difference from selling treasury shares: The start-up may use the entire difference to increase charter capital.
- If not all treasury shares have been sold, the start-up may only use the difference between the share premium and the total cost of unsold treasury shares to supplement charter capital.
- If the total cost of unsold treasury shares is equal to or greater than the share premium, the start-up is not permitted to adjust its charter capital from this source.
- Difference from issuing shares for investment projects: The start-up may only use the difference to supplement charter capital three years after the project has been completed and put into operation.
- For the difference from issuing shares to restructure debt or supplement working capital: The start-up may only use this source to supplement charter capital one year after the completion of the share issuance.
- Distribution to shareholders: The share premium sources specified in items (i) and (ii) above may be distributed to shareholders in the form of shares, in proportion to their ownership.
Practical note: Although Circular No. 19/2003/TT-BTC remains in effect, many Departments of Planning and Investment (now Departments of Finance) do not approve applications to increase charter capital by converting the share premium for companies that are not public companies. The reason is that the Law on Enterprises 2020 (amended in 2025) does not provide for increasing charter capital from the share premium, and Circular No. 19 only served as guidance under the Law on Enterprises 1999.
Legal support from BLawyers Vietnam
BLawyers Vietnam can assist you with the following matters:
- Reviewing the company’s charter and pre-emptive rights to purchase shares;
- Drafting and reviewing key documents, including the NDA, Term Sheet, and Shareholders’ Agreement;
- Advising on lawful options for utilizing the share premium (investment, offsetting, or other uses without violating capital increase regulations); and
- Providing legal advice on fundraising through Shark Tank models – from legal structuring to optimal use of the share premium and practical risk analysis.
The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.
Date: 13 November 2025
Writer: Chau Dang
