What rights and obligations does the Director of a limited liability company with 2 or more members have in Vietnam?

What rights and obligations does the Director of a limited liability company with 2 or more members have in Vietnam? (Internet image)

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

1. Who is the Director of a limited liability company with 2 or more member?

The Director/General Director is the person who manages the company’s everyday busines operation and is responsible to the Board of Members for his/her performance.

(Clause 1, Article 63 of the Law on Enterprise 2020)

2. What rights and obligations does the Director of a limited liability company with 2 or more members have in Vietnam?

According to Clause 2, Article 63 of the Law on Enterprise 2020, the Director of a limited liability company with 2 or more members has the following rights and obligations:

- Organize the implementation of resolutions and decisions of the Board of Members;

- Decide everyday operating issues of the company;

- Organize implementation of the company’s busines plans and investment plans;

- Issue the company’s rules and regulations unless otherwise prescribed by the company's charter;

- Designate, dismiss the company’s executives, except those within jurisdiction of the Board of Members;

- Enter into contracts on behalf of the company, except those within jurisdiction of the President of the Board of Members;

- Propose the company’s organizational structure;

- Submit annual financial statements to the Board of Members;

- Propose plans for use and distribution of profits or settlement of business losses;

- Recruit employees;

- Other rights and obligations specified in the company's charter, resolution and decisions of the Board of Members, and his/her employment contract.

3. Requirements for holding the position of Director of a limited liability company with 2 or more members in Vietnam

A person may hold the position of Director of a limited liability company with 2 or more members if he/she:

- Is not in one of the persons specified in Clause 2 Article 17 of the Law on Enterprise 2020.

- Has professional qualifications and experience of busines administration and satisfies other conditions specified in the company's charter.

- If the company is a state-owned enterprise prescribed in Point b Clause 1 Article 88 of the Law on Enterprise 2020 or a subsidiary company of a state-owned enterprise prescribed in Clause 1 Article 88 of the Law on Enterprise 2020, is not a relative of the executives and controllers of the company and the parent company, of the representative of enterprise’s investment or state investment in the company and the parent company.

The representative of the enterprise's capital, the representative of the state capital in the company and the parent company.

(Article 64 of the Law on Enterprise 2020)

4. Salaries, remunerations, bonuses and other benefits of the director of a limited liability company with 2 or more members in Vietnam 

Pursuant to Article 66 of the Law on Enterprise 2020, the company shall pay salaries, remunerations, bonuses and provide other benefits for  the Director according to the company’s business performance.

Salaries, remunerations, bonuses and other benefits for the Director shall be recorded as operating costs 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.

5. Responsibilities of the director of a limited liability company with 2 or more members in Vietnam 

The President of the Board of Members, the Director/General Director, other executives, legal representatives and Controllers have the following responsibilities:

- Exercise and perform their rights and obligations in an honest and prudent manner to protect the enterprise’s lawful interests;

- Be loyal to the enterprise’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;

- Promptly and fully notify the company of the enterprises that they own or have shares/stakes or that their related persons own, jointly own or have separate controlling shares/stakes.

- Other responsibilities prescribed by law.

In addition, the Director/General Director shall not have a pay rise or bonus when the company is not able to pay its due debts.

(Clause 1, 2, Article 71 of the Law on Enterprise 2020)

Nguyen Ngoc Que Anh

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