On May 15, 2023, the Securities Investment Newspaper published an article about the transfer of shares and the transfer of real estate projects, which honestly reflected the state of the real estate market for many years. At the beginning of the title, the article questioned “Is it illegal to transfer shares of the company that owns the project?”
1. Real estate market situation and solutions of businesses
The real estate market is in a period of lack of supply for many reasons. But in general, the biggest reason is the legal problem in project transfer. “The current common situation is that the party with the goods cannot sell. And the party with the money wants to buy the project is not finished.” This caused a series of projects to freeze, cash flow not circulating, causing many businesses to fall into recession.
Unable to sit idly by the risk of “collapse”, businesses have been looking for solutions for themselves. The solution businesses have applied for many years is to transfer real estate projects, they often transfer the equity of the business that owns the project. This form of transfer does not violate the prohibition of the law, so many people think that businesses do not violate the law.
However, recently when the police agency investigated a number of projects… They concluded that it was a violation because it was a form of “circumvention” to transfer projects.
2. Transfer of shares or transfer of projects?
According to the Enterprise Law 2020, Share transfer has the following characteristics:
– Is the process of buying and selling part or all of the shares of a company.
– By buying shares, the buyer becomes a shareholder of the company. And will benefit from the company’s business.
According to the Law on Real Estate Business 2014, Transfer of real estate projects has the following characteristics:
– Is the process of buying and selling a part or the whole real estate project. A real estate project can be a plot of land, a building, or a large-scale construction.
– The buyer will become the owner of that project. At the same time, it has the right to decide and control the development and marketing of the project.
– In terms of concept and characteristics, transfer of shares and transfer of real estate projects are two completely different categories. Is it possible to become a shareholder of an enterprise… Does it mean owning the project that the business owns?
3. Is the shareholder the owner of the project the company owns?
Legally, shareholders are not the owners of the business’s projects. Shareholders are owners of a part of the capital of that enterprise. And have the right to participate in the management and administration of the business.
When a business owns a real estate project, the project owner is the business, not the capital contributing shareholders. However, corporate decisions related to that project will affect the value of shareholders’ shares. When the company develops the project well and makes a profit, the shareholders will benefit and the value of their shares will also increase.
Thus, the investigation agency’s conclusion on the act of combining 02 forms of transfer into 01 is grounded. Although the form, conditions and legal results of the two transfers are different. Suppose when an investor buys shares to own a project, when there is a dispute… Investors cannot assert that “I am the owner of that real estate project.”
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