04 Types of Contracts and Transactions That Must Be Approved by the Members' Council Starting from 2021

04 types of contracts and transactions must be approved by the Board of Members from 2021 - Illustrative image.

To be specific: in Clause 1, Article 67 of the Enterprise Law 2020, it is stipulated that contracts and transactions between the company and the following entities must be approved by the Board of Members:

- Member, authorized representative of the member, Director or General Director, legal representative of the company;- Related person of the authorized representative of the member, Director or General Director, legal representative of the company;- Manager of the parent company, person with authority to appoint the manager of the parent company;- Related person of the manager of the parent company, person with authority to appoint the manager of the parent company.

Furthermore, Clause 2, Article 67 of the Enterprise Law 2020 also stipulates that the person acting on behalf of the company to sign the contract or transaction must notify the members of the Board of Members and the Supervisors of the related parties and benefits concerning that contract or transaction; accompanied by the draft contract or the main contents of the intended transaction.

In case the company's charter does not provide otherwise, the Board of Members must decide to approve or not to approve the contract or transaction within 15 days from the date of receipt of the notice, and the contract or transaction is passed in the following case:

- Approved by the members attending the meeting holding at least 75% of the total contributed capital of all members attending the meeting in favor of the contract or transaction with a value of 50% or more of the total asset value recorded in the company's most recent financial statement or another smaller rate or value stipulated in the company's charter; amendments, supplements to the company's charter; reorganization, dissolution of the company;- Except for the above case, it must be approved by the members attending the meeting holding at least 65% of the total contributed capital of all members attending the meeting.

Note: Members of the Board of Members related to the parties in the contract or transaction are not counted in the voting.

Detailed regulations can be found in the Enterprise Law 2020, effective January 01, 2021.

Le Vy

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