Decree 19: Rights and Obligations of Parent Companies towards Subsidiary Companies

Currently, subsidiary companies controlled by the parent company are established, organized, and operate in accordance with the legal regulations corresponding to the legal form of each type of company.

The rights and obligations of the parent company towards the subsidiary company are defined in Decree 19/2014/ND-CP as follows:

- Exercise the rights and obligations of shareholders, capital-contributing members, or joint venture parties through the representative managing the capital contribution of the Company in the subsidiary according to the law and the Company's Charter;- Appoint, change, dismiss, reward, discipline, decide on allowances and benefits for the Representative in the subsidiary;- Require the Representative to report periodically or unexpectedly on the financial status, business results, and other contents of the subsidiary;- Assign tasks and require the Representative to seek opinions on important issues before voting at the subsidiary; report on the exercise of shareholder rights, and control capital-contributing members to serve the development orientation and goals of the parent company and the parent-subsidiary conglomerate;- Collect dividends and bear risks from its capital contribution in the subsidiary;- Monitor and inspect the use of capital contributions in the subsidiary;- Take responsibility for the efficiency of use, preservation, and development of the capital contributions in the subsidiary.

More details can be found in Decree 19/2014/ND-CP effective from April 29, 2014.

Thu Ba

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