Standards and conditions for Controllers of joint-stock companies in Vietnam

Standards and conditions for Controllers of joint-stock companies in Vietnam (Internet image)

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

1. Requirements to be satisfied by Controllers in Vietnam

Specifically, Article 169 of the Law on Enterprises 2020 stipulates the requirements to be satisfied by Controllers as follows:

- A Controller 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 in Clause 1 of Article 169 of the Law on Enterprises 2020, 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.

2. Salaries, bonuses and other benefits of Controllers of joint-stock companies in Vietnam

Pursuant to Article 172 of the Law on Enterprises 2020, unless otherwise prescribed by the company's charter, the salaries, bonuses and other benefits of Controllers shall be paid as follows:

- Controllers’ salaries, bonuses, other benefits and operating budget shall be decided by the GMS;

- Reasonable costs of food, stay, travel, independent counseling services of Controllers shall be reimbursed. The total salaries and costs must not exceed the annual operating budget of the Board of Controllers which has been approved by the GMS, unless otherwise prescribed by the GMS;

- Salaries and operating costs of the Board of Controllers shall be recorded as the company’s expenses in accordance with regulations of law on corporate income tax and relevant laws and placed in a separate section in the company’s annual financial statements.

3. Responsibilities of Controllers of a joint-stock company

According to Article 173 of the Law on Enterprises 2020, the responsibilities of Controllers include:

- Comply with regulations of law, the company's charter, resolutions of the GMS and code of ethics in performance of their rights and obligations.

- Perform their rights and obligations in an honest and prudent manner to serve the best and lawful interests of the company.

- Be loyal to the company’s interests; do not abuse their power and position or use the enterprise’s information, secrets, business opportunities and assets for personal gain or serve any other organization’s or individual’s interests.

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

- The Controller that violates Clauses 1, 2, 3 or 4 of Article 173 of the Law on Enterprises 2020 and causes damage to the company or another person shall be personally or jointly responsible for the damage and return the benefits earned from the violation to the company

- Send a written notification to the Board of Controllers of violations committed by another Controller and request the violator to stop the violation and implement remedial measures.

4. Cases of dismissal of Controllers of joint-stock companies in Vietnam

Cases of dismissal of Controllers of joint-stock companies in Vietnam are specified in Article 174 of the Law on Enterprises 2020 as follows:

- The GMS shall dismiss a Controller from office in the following cases:

+ He/she does not fully satisfy the standards and requirements specified in Section 1;

+ He/she hands in a resignation and is accepted;

+ Other cases specified in the charter.

- The GMS shall dismiss a Controller in the following cases:

+ He/she fails to perform his/her duties;

+ He/she fails to perform his/her rights and obligations for 06 consecutive months, except in force majeure events;

+ He/she commits multiple, serious violations of Controller’s duties prescribed by the Law on Enterprises 2020 and the charter;

+ Other cases specified in resolutions of the GMS.

Ho Quoc Tuan

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