Rights and obligations of the Board of Members of a multiple-member limited liability company in Vietnam

Rights and obligations of the Board of Members of a multiple-member limited liability company in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is the Board of Members?

The Board of Members is the supreme governing body of the company, consists of all members that are individuals and authorized representatives of members that are organizations. The company's charter shall specify the frequency of meetings of the Board of Members but at least one meeting shall be held per year.

(Clause 1, Article 55 of the Law on Enterprise 2020)

2. Rights and obligations of the Board of Members of a multiple-member limited liability company in Vietnam

According to Clause 2, Article 55 of the Law on Enterprise 2020, the Board of Members has the following rights and obligations:

- Decide the company’s annual business plan and development strategy;

- Decide increase or decrease in charter capital, time and method for raising more capital; issuance of bonds;

- Decide investments in the company’s development projects; solutions for market development, marketing and technology transfer;

- Approve contracts for borrowing, lending, sale of assets and other contracts prescribed by the company's charter  whose value are at least 50% of the total assets written in the latest financial statement (or a smaller ratio or value specified in the company's charter);

- Elect, dismiss the President of the Board of Members; designate, dismiss, sign and terminate contracts with the Director/General Director, chief accountant, controllers and other executives specified in the company's charter;

- Decide the salaries, remunerations, bonuses and other benefits of the President of the Board of Members, Director/General Director, chief accountant, controllers and other executives specified in the company's charter;

- Ratify annual financial statements, plans for use and distribution of profits or settlement of losses;

- Decide the company’s organizational structure;

- Decide establishment of subsidiary companies, branches and representative offices;

- Revise the company's charter;

- Decide reorganization of the company;

- Decide dissolution or file bankruptcy of the company;

- Other rights and obligations prescribed by Law and the company's charter.

3. Conditions and procedures for conducting meetings of the Board of Members of a multiple-member limited liability company in Vietnam

Article 58 of the Law on Enterprise 2020 stipulates the conditions and procedures for conducting meetings of the Board of Members of a multiple-member limited liability company in Vietnam as follows:

- The meeting shall be conducted when it is participated by a number of members that hold at least 65% of charter capital; a specific ratio shall be specified in the company's charter.

- In case the conditions for conducting a meeting specified in Clause 1 of Article 58 of the Law on Enterprise 2020 are not fulfilled and the company's charter does not provide for this situation otherwise:

+ The invitation to the second meeting shall be sent within 15 days from the first meeting date. The second meeting shall be when it is participated by a number of shareholders that hold at least 50% of charter capital;

+ In case the conditions for conducting the second meeting prescribed in Point a of Clause 2 of Article 58 of the Law on Enterprise 2020 are not fulfilled, the invitation to the third meeting shall be sent within 10 days from the second meeting date. The third meeting shall be conducted regardless of the number of charter capital held by the participants.

- Members and their authorized representatives shall participate in and vote at meetings of the Board of Members. The procedures for conducting meetings of the Board of Members and voting methods shall be specified in the company's charter.

- In case the duration of a meeting is longer than expected, it may be extended but must not exceed 30 days from its opening date.

Nguyen Ngoc Que Anh

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