In modern corporate governance, salary is no longer the only tool for retaining talent. Especially in technology businesses, start-ups or businesses in a period of rapid growth, giving employees the opportunity to become shareholders often brings much greater efficiency than short-term cash bonuses.
Therefore, the Employee Stock Ownership Plan (ESOP) has long become a familiar component of the human resource management strategy of many businesses around the world. When employees are also shareholders, their benefits are no longer tied to their monthly salary or year-end bonuses, but are directly tied to the long-term value of the business.
One of the reasons why many businesses are confused is that they are equating treasury stocks with bonus stock policies.
In Vietnam, however, the story is posing a remarkable paradox. The demand for share bonuses for employees is increasing, but one of the legal tools used by many businesses is the treasury share mechanism, which no longer exists for non-public joint-stock companies. So in that context, do businesses have any way to implement the bonus stock policy for employees?
From a practical problem
Recently, the Ministry of Finance has responded in writing to an enterprise about buying back its own shares as bonus shares for employees[1]. The approach of businesses is not new. In the past, many non-public joint-stock companies have relied on Circular No. 19/2003/TT-BTC to buy back shares from existing shareholders, form treasury shares and then redistribute them to employees under internal incentive programs.
However, the Ministry of Finance said that Circular No. 19/2003/TT-BTC has been annulled by Circular No. 96/2025/TT-BTC as of December 15, 2025. At the same time, the current Law on Enterprises no longer stipulates that non-public joint-stock companies are allowed to maintain treasury shares as a source of shares for redistribution. In other words, the legal path that many businesses used to use has officially closed.
From a legal technical perspective, this is the story of an expired document. But from the perspective of corporate governance, this is a much bigger story: does the absence of the treasury share mechanism mean that the enterprise loses the ability to reward shares to employees?
Businesses are confusing goals and tools
One of the reasons why many businesses are confused is that they are equating treasury stocks with bonus stock policies.
In fact, treasury stocks are just a tool. The goal that businesses aim for is not to own treasury shares but to create a mechanism for employees to benefit from the growth of the business. In other words, what businesses need is not treasury shares, but a mechanism to transfer ownership of the enterprise to employees.
When looking at the problem in this direction, the abolition of Circular No. 19/2003/TT-BTC does not lose the objectives of enterprises. It only forces the business to change the implementation tool. This is a point that needs to be well recognized. If they continue to seek to "revive" the treasury stock mechanism, businesses may fall into unnecessary legal arguments. On the contrary, if we return to the essence of the problem, the Enterprise Law 2020 is still opening up many other options to achieve the same goal.
Why is the Enterprise Law 2020 no longer suitable for the treasury stock mechanism?
This change comes from the legislative philosophy of the Law on Enterprises 2020. According to Article 133 of the Law on Enterprises, the company still has the right to repurchase the issued shares. However, unlike the previous regulations, Clause 2 of Article 134 requires the company to reduce its charter capital in proportion to the total par value of the repurchased shares. This regulation shows that lawmakers no longer consider the acquired shares as an asset for businesses to continue to hold. After the acquisition, those shares will essentially be excluded from the company's capital structure.
This approach aims to more honestly reflect the real capital status of the business, while limiting the risks associated with manipulating the ownership structure or using treasury shares in a non-transparent manner. Therefore, if the enterprise buys back shares and then issues them to employees, in essence, the enterprise is making two consecutive opposite transactions: reducing capital and then increasing capital again.
The lawmaker seems to want to simplify the process by allowing businesses to go straight to the new share issuance step instead of having to go through an intermediate stage of treasury shares.
A more suitable path: issuing shares to workers
From an economic perspective, the employee bonus stock program is a form of capital increase associated with HR strategy. Workers receive shares. Enterprises have additional capital or consolidate equity. The interests between employees and shareholders are connected. This is the logic of ESOP that is being widely applied in the world.
The Law on Enterprises 2020 does not prohibit non-public joint-stock companies from issuing shares to employees. In contrast, the right to issue shares is one of the basic rights of a joint-stock company. Therefore, instead of looking for treasury shares, enterprises can design a program to issue shares directly to employees on the basis of the resolution of the General Meeting of Shareholders.
This is a solution with a clearer, more transparent legal foundation and more in line with the spirit of the current Enterprise Law.
From share bonus to building a co-ownership mechanism
It is worth noting that many Vietnamese businesses now still see ESOP as a year-end bonus program. Meanwhile, in developed markets, ESOPs are often designed as a business co-ownership mechanism. This difference is not only technical but also reflects different management thinking.
If the shares are awarded immediately and without any conditions, the employee may consider this as a mere bonus. Conversely, if share ownership is tied to the length of work, work results, or development goals of the business, the program will create a stronger long-term motivation.
Employees are no longer interested in their current income, but begin to care about profits, business strategies, market share, business value, and future development prospects. At that time, they really become companions with the business. From a management perspective, this is the biggest value of share bonuses.
A well-designed ESOP program not only needs to be legitimate in terms of the business, but it must also be carefully calculated in terms of personal income tax, corporate income tax, and related financial obligations.
Barriers businesses need to overcome
Although there is a legal basis for implementation, the issuance of shares to employees is not a simple problem.
The first hurdle is the issue of dilution of ownership.
Each additional issue of shares reduces the ownership ratio of existing shareholders. If not satisfactorily explained, the ESOP program may encounter opposition from the shareholders themselves that the business needs to protect its interests.
The second hurdle is the priority right to buy shares of existing shareholders.
This is a mechanism designed to protect shareholders from the risk of dilution of the ownership ratio. Therefore, enterprises need to have an appropriate handling plan and be approved by the General Meeting of Shareholders in accordance with regulations.
The third hurdle is the issue of pricing.
For a non-public company, determining the true value of shares is always a complicated story. If the issue price is too low, existing shareholders may think that their interests are affected. If the issuance price is too high, the program will no longer be attractive to workers.
The final hurdle is the tax obligation.
A well-designed ESOP program not only needs to be legitimate in terms of the business, but it must also be carefully calculated in terms of personal income tax, corporate income tax, and related financial obligations.
A clearer legal framework is needed
The problems of the above-mentioned enterprises also show a reality worth pondering.
The current enterprise law has given joint-stock companies a lot of autonomy in raising capital and organizing business activities. However, regulations related to ESOPs at non-public companies are still relatively fragmented and lack specific guidance. Meanwhile, the demand for equity as a human resource management tool is increasing, especially in technology enterprises, innovative enterprises, and startups.
Therefore, in the long term, Vietnam may need a more transparent legal mechanism for the employee share ownership program, not to create more administrative procedures but for businesses to have a clear framework when implementing.
A transparent legal corridor will help reduce disputes between shareholders and employees, and at the same time create conditions for businesses to access modern governance standards that are widely applied in the world.
Conclusion
The fact that the treasury share mechanism no longer applies to non-public joint-stock companies should not be seen as a narrowing of the rights of enterprises. On the contrary, this can be seen as a shift from a management mindset based on treasury shares to a management mindset based on share issuance and ownership sharing. In other words, businesses do not lose the ability to reward shares to employees. What has changed is only the legal path to that goal.
And in terms of corporate governance, the most important thing is not whether the enterprise has treasury shares or not, but whether the enterprise has created a mechanism for excellent employees to truly become co-owners of the growth of the business. That is the core spirit of every bonus stock program in the modern economy.
