Procedures for conducting meetings of the Board of Members of mulitiple-member LLC in Viet Nam

Meetings of the Board of Members of multiple-member LLC is an important event to decide main business plans and strategies of the company. Viet Nam Law on Enterprises has regulations on meetings of Board of Members of multiple-member LLC. Let’s find out this issue with Lawyer X through the following case: “Dear Lawyer X! I would like to ask about Viet Nam regulations on convening meetings of the Board of Members of multiple-member LLC. What are conditions for conducting meetings of the Board of Members? What are the procedures for conducting meetings of the Board of Members of a multiple-member LLC in Viet Nam? Thanks for answering me!”

Legal grounds

2020 Viet Nam Law on Enterprises

What is the Board of Members of a multiple-limited liability company?

Limited liablity company comprises 2 types which are single-member limited liability company and Multiple-member limited liability company.

A multiple-member limited liability company is an enterprise which has characteristics as follows:

– A multiple-member limited liability company means an enterprise that has 02 – 50 members that are organizations or individuals. A member’s liability for the enterprise’s debts and other liabilities shall be equal to the amount of capital that member contributed to the enterprise, except for the cases specified in Clause 4 Article 47 of Law on Enterprises. The member’s stake (contributed capital) may only be transferred in accordance with Articles 51, 52 and 53 of Law on Enterprises.

– A multiple-member limited liability company has the status of a juridical person from the day on which the Enterprise Registration Certificateis issued.

– Multiple-member limited liability companies must not issue shares except for equitization.

– Multiple-member limited liability companies may issue bonds in accordance with Law on Enterprises and relevant laws; private placement of bonds shall comply with Article 128 and Article 129 of Law on Enterprises.

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.

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.

Convening meetings of the Board of Members

Meetings of the Board of Members shall be convened by the President of the Board of Members or at the request of the member or group of members prescribed in Clause 2 and Clause 3 Article 49 of Law on Enterprises. In case the President of the Board of Members does not convene a meeting as requested by the aforementioned member of group of members within 15 days from the day on which the request is received, the member of group of members may convene the meeting themselves. Reasonable costs of convening and conducting meetings of the Board of Members shall be reimbursed by the company.

The President of the Board of Members or the person that convenes the meeting shall draw up the meeting agenda and prepare meting document; convene and chair the meeting. Members are entitled to propose additional contents to the meeting agenda in writing. Such a written proposal shall contain the following information:

– Full name, signature, mailing address, nationality and legal document number if the member is an individual; EID number or legal document number and headquarters address if the member is an organization; full name and signature of the proposing member or the proposing member’s authorized representative;

– The member’s holding, number and date of issuance of the certificate of capital contribution;

– The proposed contents;

– Reasons for proposal.

The President of the Board of Members or the person that convenes the meeting shall accept a proposal that contains adequate information and is sent to the company’s headquarters at least 01 working day before the meeting date. In case a proposal is put forward right before the beginning of the meeting, it may be accepted if it is accepted the majority of the participants.

Invitations to a meeting of the Board of Members can be sent physically, by phone, fax, electronically or by other methods prescribed by the company’s charter to each member of the Board of Members. The invitation shall specify the time, location and agenda of the meeting.

The meeting agenda and documents shall be sent to members before the meeting date. Documents about revisions of the company’s charter, ratification of the company’s development strategy, annual financial statements, reorganization or dissolution shall be sent to the members at least 07 working days before the meeting date. The deadlines for sending other documents shall be specified in the company’s charter.

Unless otherwise prescribed by the company’s charter, a request to convene a meeting of the Board of Members mentioned in Clause 1 of Article 57 of Law on Enterprises shall be made in writing and contain the following information:

– Full name, signature, mailing address, nationality and legal document numbers of members that are individuals; names, EID numbers or legal document numbers and headquarters addresses of members that are organizations; each member’s holding, number and issuance date of each member’s capital contribution certificate;

– Reasons for convening the meeting and issues that need resolving;

– The draft agenda;

– Full names and signatures of the requesting members or their authorized representatives.

In case the request does not contain adequate information as prescribed in Clause 6 of this Article, the President of the Board of Members shall send a written rejection to the requesting member(s) within 07 working days from the day on which the request is received. If the request is valid, the President of the Board of Members shall convene the meeting within 15 days from the day on which the request is received.

In case the President of the Board of Members fails to convene the meeting as prescribed in Clause 7 of Article 57 of Law on Enterprises, he/she shall be personally responsible for the damage incurred by the company and relevant members.

Conditions and procedures for conducting meetings of the Board of Members

– 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 Law on Enterprises 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 this Clause 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.

Resolutions and decisions of the Board of Members

– The Board of Members shall ratify its resolution and decisions by voting at the meeting, questionnaire survey or another method specified in the company’s charter.

– Unless otherwise prescribed by the company’s charter, a decision on one of the following issues shall be voted on at the meeting:

+ Revisions to the company’s charter;

+ Orientation for development of the company;

+ Election, dismissal of the President of the Board of Members; designation, dismissal of the Director/General Director;

+ Ratification of the annual financial statement;

+ Reorganization or dissolution of the company.

– Unless otherwise prescribed by the company’s charter, a resolution or decision of the Board of Members will be ratified at the meeting if:

+ It is voted for by a number of participants that hold at least 65% of the total stakes of all participants, except the case in Point b of this Clause;

+ It is a resolution or decision to sell assets whose value is 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), a resolution or decision on revisions to the company’s charter, reorganization or dissolution of the company, and is voted for by a number of participants that hold at least 75% of the total stakes of all participants.

– It will be considered that a member participates in and votes at the meeting of the Board of Members in the following cases:

+ The member directly participates in and votes at the meeting;

+ The member authorizes another person to participate in and vote at the meeting;

+ The member participates and votes online or through other electronic methods;

+ The member sends the votes to the meeting by post, fax or email.

– In case of questionnaire survey, a resolution or decision will be ratified when it is voted for by a number of members that hold at least 65% of charter capital (a specific ratio shall be specified in the company’s charter).

Minutes of meetings of the Board of Members

Minutes of every meeting the Board of Members shall be taken. Audio recording or electronic forms are optional.

The minutes shall be ratified right before the meeting ends and contain the following information:

– Time, location, purposes and agenda of the meeting;

– Full names, holdings, numbers and dates of issues of capital contribution certificates of participating members and their authorized representatives; full name, stakes, numbers and dates of issues of capital contribution certificates of non-participating members and their authorized representatives;

– The issues that are discussed and voted on; summaries of the members’ comments on each issue;

– Quantities of valid votes, invalid votes, affirmative votes, negative votes and abstentions on each issue;

– Ratified decisions and corresponding ratio of affirmative votes;

– Full names, signatures and comments of participants who disagree with the ratification of the minutes (if any);

– Full names, signatures of the minute taker and the chair of the meeting, except the case in Clause 3 of Article 59 of Law on Enterprises

In case the chair and the minute taker refuse to sign the minutes, they will be effective if they are signed by the other members of the Board of Members and contain all information prescribed in Points a, b, c, d, dd and e Clause 2 of Article 59 of Law on Enterprises. The minutes shall clearly state the reasons why the chair and the minute taker refuse to sign them. The persons who sign the minutes are jointly responsible for the accuracy and truthfulness of the minutes.

Procedures for ratification of resolutions and decisions of the Board of Members by questionnaire survey

Unless otherwise prescribed by the company’s charter, a questionnaire survey on ratification of resolutions or decisions of the Board of Members shall be carried out as follows:

– The President of the Board of Members shall decide to carry out a questionnaire survey on ratification of resolutions and decisions within its jurisdiction;

– The President of the Board of Members organize the drafting and sending of reports on the issues, the resolution or decision and questionnaires to members of the Board of Members;

A questionnaire shall contain:

– The company’s name, EID number, headquarter address;

– Full name, signature, mailing address, nationality and legal document numbers of individuals; the members’ holdings;

– The issue that needs voting, options including affirmative, negative and abstentions;

– The deadline for submission of the answered questionnaire;

– Full name and signature of the President of the Board of Members;

An answered questionnaire that contains adequate information, bears the member’s signature and sent to the company by the deadline is considered valid. The President of the Board of Members organize the vote counting, preparation of a report and notification of the vote counting result to the members within 07 working days from the deadline for submission of answered questionnaires. The report on vote counting result has the same value as the minutes the meeting of the Board of Members and shall contain the following information:

– The survey issue and purposes;

– Full names, holdings, numbers and dates of issue of capital contribution certificates of members that submitted their answered questionnaires; and their authorized representatives; Full names, holdings, numbers and dates of issue of capital contribution certificates of members whose questionnaires are not submitted or invalid;

– The issues that are voted on; summaries of the members’ comments on each issue (if any);

– The numbers of valid, invalid, unsubmitted questionnaires; numbers of valid questionnaires that contain affirmative votes negative votes and abstentions on each issue;

– The ratified resolutions and/or decisions and corresponding ratio of affirmative votes;

– Full names and signatures of the vote counters and the President of the Board of Members, who are jointly responsible for the legitimacy, accuracy and truthfulness of the vote counting report.

Effect of resolutions and decisions of the Board of Members

– Unless otherwise prescribed by the company’s charter, a resolution or decision of the Board of Members shall take effect from the day on which it is ratified on one the effective date specified therein.

– A resolution or decision that is ratified with 100% of total charter capital shall be lawful and effective even if the procedures for ratification of such resolution or decision are not followed.

– In case a member or group of members requests the court or an arbitral tribunal to invalidate a ratified resolution or decision, it will remain effective as prescribed in Clause 1 of Article 62 of Law on Enterprises until the court or an arbitral tribunal issues a decision to invalidate it, except for the cases in which temporary emergency measures have to be implemented under decision of a competent authority.

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