Vietnam: Contracts and transactions between the two member limited liability company and which entities are subject to approval by the Board of Members?
- Contracts and transactions between the two member limited liability company and which entities are subject to approval by the Board of Members?
- Who will be on the Board of Members of a two member limited liability company in Vietnam?
- What are the rights and obligations of the Board of Members of a two member limited liability company in Vietnam?
Contracts and transactions between the two member limited liability company and which entities are subject to approval by the Board of Members?
Pursuant to Article 67 of the 2020 Law on Enterprises in Vietnam stipulating as follows:
Contracts and transactions subject to approval by the Board of Members
1. Contracts and transactions between the company and the following entities are subject to approval by the Board of Members:
a) Members and their authorized representatives, the Director/General Director, the company’s legal representative;
b) Related persons of the persons mentioned in Point a of this Clause;
c) Executives of the parent company and the person having the power to designate them;
d) Related persons of the persons mentioned in Point c of this Clause.
2. The person who concludes a contract or carries on a transaction on behalf of the company shall send a notification to members of the Board of Members and the Controllers of the related entities and interests of such contract or transaction together with the draft contract or description of the transaction. Unless otherwise prescribed by company's charter, the Board of Members shall decide whether to approve or disapprove the contract or transaction within 15 days from the day on which the notification is received and follow the instructions in Clause 3 Article 59 of this Law. Members of the Board of Members who are related to the parties to the contract or transaction must not vote.
3. A contract or transaction shall be invalidated under a court decision and handled as prescribed by law when it is concluded or carried out against regulations of Clause 1 and Clause 2 of this Article. The person who concludes the contract or carries out the transaction, related members and their related persons shall pay compensation for any damage caused and return the benefits generated by such contract or transaction to the company.
Thus, contracts and transactions between the two member limited liability company and the following entities are subject to approval by the Board of Members:
- Members and their authorized representatives, the Director/General Director, the company’s legal representative;
- Related persons of the members and their authorized representatives, the Director/General Director, the company’s legal representative;
- Executives of the parent company and the person having the power to designate them;
- Related persons of the executives of the parent company and the person having the power to designate them.
Vietnam: Contracts and transactions between the two member limited liability company and which entities are subject to approval by the Board of Members?
Who will be on the Board of Members of a two member limited liability company in Vietnam?
Pursuant to Clause 1, Article 55 of the 2020 Law on Enterprises in Vietnam stipulating as follows:
The Board of Members
1. The Board of Members is the supreme governing body of the company, consists of all members that are individuals and authorized representatives of members that are organizations. The company's charter shall specify the frequency of meetings of the Board of Members but at least one meeting shall be held per year.
Thus, all members that are individuals and authorized representatives of members that are organizations will be able to participate in the Board of Members of a two member limited liability company.
What are the rights and obligations of the Board of Members of a two member limited liability company in Vietnam?
In Clause 2, Article 55 of the 2020 Law on Enterprises in Vietnam stipulating the rights and obligations of the Board of Members as follows:
- Decide the company’s annual business plan and development strategy;
- Decide increase or decrease in charter capital, time and method for raising more capital; issuance of bonds;
- Decide investments in the company’s development projects; solutions for market development, marketing and technology transfer;
- Approve contracts for borrowing, lending, sale of assets and other contracts prescribed by the company's charter whose value are at least 50% of the total assets written in the latest financial statement (or a smaller ratio or value specified in the company's charter);
- Elect, dismiss the President of the Board of Members; designate, dismiss, sign and terminate contracts with the Director/General Director, chief accountant, controllers and other executives specified in the company's charter;
- Decide the salaries, remunerations, bonuses and other benefits of the President of the Board of Members, Director/General Director, chief accountant, controllers and other executives specified in the company's charter;
- Ratify annual financial statements, plans for use and distribution of profits or settlement of losses;
- Decide the company’s organizational structure;
- Decide establishment of subsidiary companies, branches and representative offices;
- Revise the company's charter;
- Decide reorganization of the company;
- Decide dissolution or file bankruptcy of the company;
- Other rights and obligations prescribed by Law and the company's charter.
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