According to Vietnamese law, shall the President of a company hold the position of General Director?

Due to the influence of Covid-19, the current trend in the human resource structure of enterprises is prioritizing leanness. Therefore, it is normal for a person to hold multiple positions in the company, especially in leadership positions. Shall the President of the company concurrently hold the position of General Director in accordance with the current law?

LawNet would like to give answer to this question:

The law on enterprises recognizes many types of enterprises with separate organizational structures and legal regimes.

Specifically, according to the Enterprise Law 2020 of Vietnam, there are 4 types of enterprises, including: sole proprietorship, partnership, joint stock company and limited liability company (including single-member limited liability company or multiple-member limited liability company)

Due to the variety of business models and organizational structures, it is necessary to consider each type of enterprise separately to know if the president of the company can be the director (general director).

What type of enterprises that the Chairman can concurrently act as the Director/General Director of the company?

1. Limited liability company:

- Multiple-member limited liability company:

Pursuant to Clause 1 Article 56 the Enterprise Law 2020 of Vietnam:

“The Board of Members shall elect a member as the President, who may concurrently hold the position of Director/General Director of the company.”

According to this provision, President of the Board of Members in multiple-member limited liability shall also hold the position of Director/General Director of the company.

- Single-member limited liability company:

Pursuant to Clause 1 Article 82 the Enterprise Law 2020 of Vietnam:

“The President of the Board of Members, another member of the Board of Members or the company’s President may concurrently hold the position of Director/General Director unless otherwise prescribed by law or the company's charter.”

Thus, the President of the Board of Members or the company’s President may currently hold the position of Director/General Director unless otherwise prescribed by law or the company's charter. 

2. Joint stock company: 

Pursuant to Clause 2 Article 156 the Enterprise Law 2020 of Vietnam:

“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.”

Therefore, Vietnamese law only prohibits the case when the President of the Board of Directors of a public company or a joint stock company which is partially state-owned enterprises (over 50% of charter capital or voting shares) that must not concurrently hold the position of Director/General Director. In other cases, a person is still allowed to hold these two positions.

3. Partnership: 

According to Clause 1 Article 182 the Enterprise Law 2020 of Vietnam:

“The Board of Partners consists of all partners and shall elect a partner as the President of the Board of Partners, who may concurrently hold the position of Director/General Director of the partnership unless otherwise prescribed by the charter.”

According to this provision, the President of the Board of Partners may concurrently hold the position of Director/General Director of the partnership unless otherwise prescribed by the charter.

4. Sole proprietorship: 

This is a special type of enterprise where only 1 individual is the owner. Pursuant to Clause 1 Article 188 the Enterprise Law 2020 of Vietnam:

“A sole proprietorship is an enterprise owned by a single individual whose liability for its entire operation is equal to his/her total assets.”

Therefore, for the form of a sole proprietorship, the title of President of the company is not recorded, so there is no problem of concurrently holding multiple positions.

Duc Dung

 

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