Is a member of the Board of Directors an executive? What are the requirements to be fulfilled by members of the Board of Directors in Vietnam?
Is a member of the Board of Directors an executive?
Pursuant to the provisions of Clause 24, Article 4 of the 2020 Law on Enterprises in Vietnam as follows:
Definitions
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24. “executive of an enterprise” means the owner of a sole proprietorship, a general partner of a partnership, chairperson or member of the Member/Partner Assembly, President of a company, President or member of the Board of Directors, Director/General Director, or holder of another managerial position prescribed in the company’s charter.
In addition, Clause 1, Article 153 of the 2020 Law on Enterprises in Vietnam recognizes that the Board of Directors is the managerial body of the company and has the right to make decisions on behalf of the company, perform rights and obligations of the company, except the rights and obligations of the General Meeting of Shareholders.
Thus, a member of the Board of Directors is an executive of of a joint stock company.
At the same time, Clauses 1 and 2, Article 154 of the 2020 Law on Enterprises in Vietnam stipulate that the Board of Directors shall have 03 – 11 members. The specific quantity of members shall be prescribed by the company's charter.
The term of office of a member of the Board of Directors shall not exceed 05 years without term limit. An individual may only be elected independent member of the Board of Directors of a company for up to 02 continuous terms.
Is a member of the Board of Directors an executive? What are the requirements to be fulfilled by members of the Board of Directors in Vietnam?
What are the requirements to be fulfilled by members of the Board of Directors in Vietnam?
Pursuant to the provisions of Article 155 of the 2020 Law on Enterprises in Vietnam on the requirements to be fulfilled by members of the Board of Directors:
Organizational structure and requirements to be fulfilled by members of the Board of Directors
1. To be a member of the Board of Directors, a person shall satisfy the following requirements:
a) He/she is not one of the persons specified in Clause 2 Article 17 of this Law;
b) He/she has professional qualifications and experience of busines administration in the company’s busines lines; a member is not necessarily a shareholder of the company, unless otherwise prescribed by the company's charter;
c) A person may hold the position of member of the Board of Directors of more than one company;
d) A member of the Board of Directors of a state-owned enterprise prescribed in Point b Clause 1 Article 88 of this Law and subsidiary companies of a state-owned enterprise prescribed in Clause 1 Article 88 of this Law must not be a relative of the Director/General Director or any other executive of the company, of the executive or the person having the power to designate the executive of the parent company.
2. Unless otherwise prescribed by securities laws, an independent member of the Board of Directors prescribed in Point b Clause 1 Article 137 of this Law shall satisfy the following requirements:
a) He/she is not working for the company or its parent company or subsidiary company; did not worked for the company or its parent company or subsidiary company within the last 03 years or longer;
b) He/she is not receiving a salary from the company, except the allowances to which members of the Board of Directors are entitled as per regulations;
c) His/her spouse, biological parents, adoptive parents, biological children, adopted children and siblings are not major shareholders of the company, executives of the company or its subsidiary companies;
d) He/she is not directly or indirectly holding 1% of the company’s voting shares or more;
dd) He/she did not hold the position of member of the Board of Directors or the Board of Controllers of the company within the last 05 years or longer unless he/she was designated in 02 consecutive terms.
3. An independent member of the Board of Directors shall notify the Board of Directors if he/she no longer satisfies the requirements specified in Clause 2 of this Article and is obviously no longer an independent member from the day on which a condition is not satisfied. The Board of Directors shall the disqualification if this member at the nearest General Meeting of Shareholders or convene the General Meeting of Shareholders to elect a new independent member within 06 months from the day on which the notification is received from the member.
Thus, organizations and individuals that do not have the right to establish and manage enterprises in Vietnam will not be able to be members of the Board of Directors.
How is the President of the Board of Directors decided?
Pursuant to the provisions of Clause 1, Article 156 of the 2020 Law on Enterprises in Vietnam on the President of the Board of Directors as follows:
1. The Board of Directors shall elect one of its members President of the Board of Directors; dismiss its President.
2. The President of the Board of Directors of a public company or a joint stock company prescribed in Point b Clause 1 Article 88 of this Law must not concurrently hold the position of Director/General Director.
3. The President of the Board of Directors has the following rights and obligations:
a) Plan the activities of the Board of Directors;
b) Draw up agenda and prepare documents for meetings of the Board of Directors; convene and chair the meetings;
c) Organize the ratification of resolutions and decisions of the Board of Directors;
d) Supervise the implementation of resolutions and decisions of the Board of Directors;
dd) Chair the General Meeting of Shareholders;
e) Other rights and obligations prescribed by Law and the company's charter.
Thus, the Board of Directors shall elect one of its members President of the Board of Directors.
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