Can directors of joint stock companies be designated from members of the Board of Directors in Vietnam?
Can directors of joint stock companies be designated from members of the Board of Directors in Vietnam? Are salaries of directors of joint-stock companies recorded as the company’s expenses in Vietnam?
Hello, my company has just converted into a joint stock company, now there are members of the Board of Directors, and we still lack the title of Director , so can we designate members from the Board of Directors as Directors? Please advise.
1. Can directors of joint stock companies be designated from members of the Board of Directors in Vietnam?
Pursuant to Article 162 of the Enterprise Law 2020 stipulates that the Director/General Director of a joint-stock company are as follows:
1. The Board of Directors shall designate one of its members or hire a person as the Director/General Director.
2. The Director/General Director shall manage the company’s everyday busines operation, is supervised by and responsible to the Board of Directors Members and the law for his/her performance.
The term of office of the Director/General Director shall not exceed 05 years without term limit.
3. The Director/General Director has the following rights and obligations:
a) Decide everyday operating issues of the company that are outside the jurisdiction of the Board of Directors;
b) Organize the implementation of resolutions and decisions of the Board of Directors;
c) Organize implementation of the company’s busines plans and investment plans;
d) Propose the company’s organizational structure, rules and regulations;
dd) Designate, dismiss the company’s executives, except those under jurisdiction of the Board of Directors;
e) Decide salaries and other benefits of the company’s employees, including the executives designated by the Director/General Director;
g) Recruit employees;
h) Propose plans distribution of dividends or settlement of business losses;
i) Other rights and obligations specified by law, the company's charter, resolutions and decisions of the Board of Directors.
4. The Director/General Director shall manage the company’s everyday business in accordance with law, the company’s charter, his/her employment contract with the company, resolutions and decisions of the Board of Directors. Otherwise, the Director/General Director shall be legally responsible for and pay damages to the company.
5. The Director/General Director of a public company or state-owned enterprise prescribed in Point b Clause 1 Article 88 of this Law or a subsidiary company of a state-owned enterprise prescribed in Clause 1 Article 88 of this Law 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 is not a relative of any of the executives, controllers of the company and the parent company; the representatives of state investments and the enterprise’ investment in the company and the parent company;
c) He/she has professional qualifications and experience of busines administration.
Thus, according to the above law, the director of a joint-stock company can be appointed from a member of the Board of Directors. Therefore, your company can choose from the Board of Directors of your company one member to be the Director of the company in Vietnam.
2. Are salaries of directors of joint-stock companies recorded as the company’s expenses in Vietnam?
According to Article 163 of the Enterprise Law 2020, salaries, remunerations, bonuses and other benefits of members of the Board of Directors and the Director/General Director are as follows:
1. The company is entitled to pay salaries and bonuses to members of the Board of Directors, the Director/General Director and other executives according to the company’s business performance.
2. Unless otherwise prescribed by the company's charter, the salaries, bonuses and other benefits of the members of the Board of Directors and the Director/General Director shall be paid as follows:
a) Members of the Board of Directors shall receive salaries and bonuses. The salary is based on the number of days necessary to fulfill the member’s duties and the daily pay. The Board of Directors shall estimate the salary of each member by consensus. The total salaries and bonuses of the Board of Directors shall be decided by the annual GMS;
b) Members of the Board of Directors shall have the costs of food, stay, travel and other reasonable costs reimbursed if their duties are fulfilled;
c) The Director/General Director’s salary and bonuses shall be decided by the Board of Directors.
3. Salaries of members of the Board of Directors, the Director/General Director and other executives shall be recorded as the company’s expenses in accordance with regulations of law on corporate income tax in a separate section of the company’s consolidated financial statement and shall be reported at the annual GMS.
According to this article, salaries of the company's director is recorded as the company’s expenses in accordance with regulations of law on corporate income tax in a separate section of the company’s consolidated financial statement and shall be reported at the annual GMS in Vietnam.
Best Regards!
