The legal status of the Director/General Director in State-owned Enterprises in Viet Nam

The Director/General Director is an essential position in State-owned Enterprises in Viet Nam. Viet Nam Law on Enterprises has regulations on the legal status of the Director/General Director in State-owned Enterprises. Let’s find out this issue with Lawyer X through the following scenario: “Dear Lawyer! I want to know how shall the Director/General Director in State-owned Enterprises be designated? What are the rights and obligations of the Director/General Director in State-owned Enterprises in Viet Nam? Thanks for your advise!”

Legal grounds

Law on Enterprises

What are state-owned enterprises?

State-owned enterprises shall be limited liability companies or joint stock companies, including:

– Wholly state-owned enterprises (100% of charter capital of which is held by the State). Wholly state-owned enterprises include:

+ Single-member limited liability companies 100% of charter capital of which is held by the State that are parent companies of state-owned corporations or parent companies in groups of parent company – subsidiary companies;

+ Independent single-member limited liability companies 100% of charter capital of which is held by the State.

– Partially state-owned enterprises (over 50% of charter capital or voting shares is held by the State, except the enterprises specified in Point a Clause 1 of Article 88 of Law on Enterprises). Partially state-owned enterprises include:

+ Multiple-member limited liability companies and joint stock companies over 50% of charter capital or voting shares of which is held by the State that are parent companies of state-owned corporations or parent companies in groups of parent company – subsidiary companies;

+ Independent multiple-member limited liability companies and joint stock companies over 50% of charter capital or voting shares of which is held by the State.

Organizational structure

The state ownership representative body shall decide whether to apply one of the two models below to organize the state-owned enterprise as a single-member limited liability company:

– A company with a President, Director/General Director and Board of Controllers;

– A company with a Board of Members, Director/General Director and Board of Controllers.

The Director/General Director and Deputy Directors/General Directors

The Director/General Director shall be designated or hired by the Board of Members or the company’s President under a personnel plan approved by the state ownership representative body.

The Director/General Director shall manage the company’s everyday business and has the following rights and obligations:

– Organize the implementation of the company’s busines plans and investment plans and evaluation thereof;

– Organize the implementation of resolutions and decisions of the Board of Members, company’s President and state ownership representative body and evaluation thereof;

– Decide everyday matters of the company;

– Issue the company’s rules and regulations after they are approved by the Board of Members or company’s President;

– Designate, hire, dismiss, terminate employment contracts with the company’s executives, except those within jurisdiction of the Board of Members or the company’s President;

– Enter into contracts and carry out transactions in the company’s name, except those within jurisdiction of the President of the Board of Members or the company’s President;

– Prepare and submit quarterly and annual reports on achievement of business targets and financial statements to the Board of Members or the company’s President;

– Propose the distribution and use of post-tax profits and other financial obligations of the company;

– Recruit employees;

– Propose the plan for the company’s reorganization;

– Other rights and obligations prescribed by law and the company’s charter.

The company may have one or several Deputy Directors/General Directors. The designation and quantity of Deputy Directors/General Directors shall be specified in the company’s charter. Rights and obligations of Deputy Directors/General Directors shall be specified in the company’s charter and their employment contracts.

Requirements to be satisfied by the Director/General Director

The Director/General Director need to satisfy the following requirements:

– He/she is not one of the persons specified in Clause 2 Article 17 of Law on Enterprises. Specificially:

+ State authorities, People’s armed forces using state-owned assets to establish enterprises to serve their own interests;

+ Officials and public employees defined by the Law on Officials and the Law on Public Employees;

+ Commissioned officers, non-commissioned officers, career military personnel, military workers and public employees in agencies and units of Vietnam People’s Army; commissioned officers, non-commissioned officers and police workers in police authorities and units, except for those designated and authorized representatives to manage state-owned stakes in enterprises or to manage state-owned enterprises;

+ Executive officers and managers of state-owned enterprises prescribed in Point a Clause 1 Article 88 of Law on Enterprises, except those who are designated as authorized representatives to manage state-owned stakes in other enterprises;

+ Minors; people with limited legal capacity; incapacitated people; people having difficulties controlling their behaviors; organizations that are not juridical persons;

– People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, has limited legal capacity or is incapacitated, is not able to control his/her own behaviors, is banned by the court from holding certain positions or doing certain works; other cases prescribed by the Law on Bankruptcy and the Anti-corruption Law.

If requested by the business registration authority, the applicant shall submit the judicial records;

+ Juridical persons that are banned from business operation or banned from certain fields as prescribed by the Criminal Code.

– He/she has professional qualifications and experience of busines administration or in the company’s business lines.

– He/she is not a relative of the head or deputies of the state ownership representative body; any of the members of the Board of members, the company’s President; any of the Deputy Directors/General Directors, the chief accountant or Controllers of the company.

– He/she has never been dismissed from the position of President of the Board of Members, member of the Board of Members, the company’s President, Director/General Director, Deputy Director/General Director of the company or another state-owned enterprise.

– He/she is not holding the position of Director/General Director of another enterprise.

– He/she satisfies other requirements specified in the company’s charter.

Dismissal, discharge of the Director/General Director, other executives and the chief accountant

The Director/General Director shall be dismissed from office in the following cases:

– He/she no longer fully satisfies the requirements specified in Article 101 of Law on Enterprises;

– He/she hands in the resignation.

The Director/General Director shall be discharged from duty in the following cases:

– The enterprise’s capital is not conserved as prescribed by law;

– The enterprise fails to achieve its annual targets;

– The enterprise violates the law;

– The Director/General Director is not qualified for or capable of developing the enterprise’s new busines plan and development strategy;

– The Director/General Director fails to perform his/her rights and obligations prescribed in Article 97 and Article 100 of Law on Enterprises;

– Other cases prescribed by the company’s charter.

Within 60 days from the issuance date of the decision on dismissal or discharge, the Board of Members or the company shall recruit or designate a person to hold the position.

The company’s charter shall provide for cases of dismissal and discharge of Deputy Directors/General Directors, other executives and the chief accountant.

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Frequently asked questions

Conclusion: So the above is The legal status of the Director/General Director in State-owned Enterprises in Viet Nam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com