What is responsibility for honesty and prevention of conflict of interest in public companies in Vietnam?

1. What is responsibility for honesty and prevention of conflict of interest in public companies in Vietnam?

Pursuant to Article 47, Section X, Appendix I issued together with Circular 116/2020/TT-BTC, responsibility for honesty and prevention of conflict of interest in a public company is as follows:

1. Members of the Board of Controllers, members of the Board of Controllers, Director/General Director and other managers shall disclose their relevant interests in accordance with the Law on Enterprises and relevant legislative documents.

2. Members of the Board of Directors, members of the Board of Controllers, the Director/General Director, other managers and their related persons may only use the information obtained from their positions to serve the interests of the Company.

3. Members of the Board of Controllers, members of the Board of Controllers, the Director/General Director and other managers shall send written notices to the Board of Directors and the Board of Controllers of the transactions between the Company, subsidiary companies, companies over 50% of charter capital of which is held by the Company with them or with their related persons as prescribed by law. The Company shall disclose information about the transactions that are approved by the GMS or the Board of Directors in accordance with regulations of the Law on Securities on information disclosure.

4. Members of the Board of Controllers must not vote on the transactions that bring interests to themselves or their related persons as prescribed by the Law on Enterprises and [the Company's Charter].

5. Members of the Board of Directors, members of the Board of Controllers, the Director/General Director, other managers and their related persons must not use or reveal internal information for carrying out relevant transactions.

6. Transactions between the Company with one or some members of the Board of Directors, members of the Board of Controllers, the Director/General Director, other executives and their related persons shall not be invalidated in the following cases:

a) For transactions whose value do not exceed [...%] of the total assets written in the latest financial statement, important contents of the contracts or transactions as well as relationships and interests of members of the Board of Directors, members of the Board of Controllers, the Director/General Director, other executives have been reported to the Board of Directors and are approved by the majority of the members of the Board of Directors without relevant interests;

a) For transactions whose separate value or cumulative value over 12 months from the day the first transaction is conducted exceed [...%] of the total assets written in the latest financial statement, important contents of the contracts or transactions as well as relationships and interests of members of the Board of Directors, members of the Board of Controllers, the Director/General Director, other executives have been disclosed to the shareholders and are approved by the GMS by votes of shareholders without relevant interests.

2. What is responsibility for damage and compensation in public companies in Vietnam? 

Pursuant to Article 48, Section X, Appendix I issued together with Circular 116/2020/TT-BTC, responsibility for damage and compensation in public companies is as follows:

1. Any members of the Board of Directors, members of the Board of Controllers, the Director/General Director or other executives that fail to fulfill their duties in a truthful and prudent manner shall be held responsible for their violations.

2. The Company shall pay compensation for the persons who have become or may become a related party in the complaints, lawsuits, charges (including administrative and civil cases other than lawsuits filed by the Company) if they were or are members of the Board of Directors, members of the Board of Controllers, Director/General Director, other executives, employees or authorized representatives of the Company who performed or are performing their duties as authorized by the Company, act in a lawful, honest and prudent manner for the Company’s interests, and there is no evidence that they fail to fulfill their duties.

3. [Costs of compensation include judgment costs, fines, amounts payable in reality (including lawyer payment) during the settlement of these cases. The Company may purchase insurance for these people in order to avoid this liability].

Best Regards!