Regulations on the Board of Controllers of joint stock companies in Vietnam

Regulations on the Board of Controllers of joint stock companies in Vietnam

Pursuant to Article 168 of the Law on Enterprises 2020, the Board of Controllers shall have 3 - 5 Controllers. The term of office of a Controller shall not exceed 05 years without term limit.

- The Chief Controller shall be elected by the Board of Controllers among the Controllers. The Chief Controller shall be elected and dismissed under the majority rule. Rights and obligations of the Chief Controller shall be specified in the company's charter. More than half of the Controllers shall have permanent residences in Vietnam. The Chief Controller shall have a bachelor’s degree in economics, finance, accounting, audit, law, business administration or a major that is relevant to the enterprise’s business operation, unless higher standards are prescribed in the company's charter.

- In case the term of office of all Controllers expires before an election can be carried out, the existing Controllers shall keep performing until Controllers are elected and take over the job.

Regulations on the Board of Controllers of joint stock companies in Vietnam (Internet image)

Rights and obligations of the Board of Controllers in Vietnam

The rights and obligations of the Board of Controllers are stipulated in Article 170 of the Law on Enterprises 2020 as follows:

- Supervise the Board of Directors and the Director/General Director managing the company.

- Inspect the rationality, legitimacy, truthfulness and prudency in business administration; systematic organization, uniformity and appropriateness of accounting works, statistics and preparation of financial statements.

- Validate the adequacy, legitimacy and truthfulness of the income statements, annual and biannual financial statements, reports on performance of the Board of Directors; submit validation reports at the annual General Meeting of Shareholders. Review contracts and transactions with related persons subject to approval by the Board of Directors or the General Meeting of Shareholders and offer recommendations.

- Review, inspect and evaluate the effectiveness of the internal control, internal audit, risk management and early warning systems of the company.

- Inspect accounting books, accounting records, other documents of the company, the company’s administration where necessary, under resolutions of the General Meeting of Shareholders or at the request of the shareholder or group of shareholders specified in Clause 2 Article 115 of the Law on Enterprises 2020.

- When requested by the shareholder or group of shareholders specified in Clause 2 Article 115 of the Law on Enterprises 2020, the Board of Controllers shall carry out an inspection within 07 working days from the day on which the request is received. W

ithin 15 days after the end of the inspection, the Board of Controllers shall submit a report to the Board of Directors or the requesting shareholder or group of shareholders. The inspection must not obstruct normal operation of the Board of Directors or interrupt the company’s business operation.

- Propose changes or improvements to the company’s organizational structure and administration to the Board of Directors or the General Meeting of Shareholders.

- Promptly submit a written notification to the Board of Directors whenever a member of the Board of Directors, the Director/General Director is found to be violating Article 165 of the Law on Enterprises 2020, request the violator to stop the violations and implement remedial measures.

- Participate in and discuss at the General Meeting of Shareholders, meetings of the Board of Directors and other meetings of the company.

- Employ independent counsels and internal audit unit of the company to perform their tasks.

- The Board of Controllers may discuss with the Board of Directors before submitting reports and proposals to the General Meeting of Shareholders.

-. Other rights and obligations prescribed by this Law, the company's charter and resolution of the General Meeting of Shareholders.

Requirements to be satisfied by Controllers in Vietnam

Pursuant to Article 169 of the Law on Enterprises 2020, a Controller of a joint stock companie shall satisfy the following standards and requirements:

- He/she is not in one of the persons specified in Clause 2 Article 17 of the Law on Enterprises 2020;

- His/her major is  economics, finance, accounting, audit, law, business administration or a major that is relevant to the enterprise’s business operation;

- He/she is not a relative of any of the members of the Board of Directors, Director/General Director and other executives;

- He/she is not the company’s executive, is not necessarily a shareholder or employee of the company unless otherwise prescribed by the company's charter;

- Other standards and requirements are satisfied as prescribed by law and the company's charter.

In addition to the standards and requirements specified above, Controllers of a public company or state-owned enterprise prescribed in Point b Clause 1 Article 88 of the Law on Enterprises 2020 must not be relatives of the executives of the company and the parent company; of the representative of enterprise’s investment or state investment in the company and the parent company.

Mai Thanh Loi

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