The legal status of the Board of Controllers in State-owned Enterprises in Viet Nam

The Board of Controllers is an integral part of the organizational structure of State-owned Enterprises in Viet Nam. Law on Enterprises has regulations on the legal status of the Board of Controllers in State-owned Enterprises. Let’s find out this issue with Lawyer X through the following scenario: “Dear Lawyer! I would like to ask how shall the Board of Controllers in State-owned Enterprise be chosen in Viet Nam? What are rights and obligations of the Board of Controllers in State-owned Enterprises in Viet Nam? Thanks for your consulting!”

Legal grounds

Viet Nam Law on Enterprises

Controllers and the Board of Controllers

– The state ownership representative body shall decide the establishment of a Board of Controllers, which has 01 – 05 Controllers including a Chief Controller. The term of office of a Controller shall not exceed 05 years. A Controller must not be designated more than 02 consecutive terms. In case the Board of Controllers has only 01 Controller, he/she shall be the Chief Controller and has to satisfy corresponding requirements.

– An individual may concurrently hold the position of Chief Controller or Controller of up to 04 state-owned enterprises.

– A Controller or Chief Controller shall satisfy the following requirements:

+ He/she has a bachelor’s degree or higher in economics, finance, accounting, audit, law, business administration or a major that is relevant to the enterprise’s business operation and at least 03 years’ experience (05 years for Chief Controller);

+ He/she is not executive of the company or any other enterprise; not a Controller of enterprises other than state-owned enterprises; not a company’s employee.

+ 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 Director/General Director, any of the Deputy Directors/General Directors, the chief accountant or any other Controllers of the company;

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

Obligations of the Board of Controllers

– The Board of Controllers has the following obligations:

+ Supervise the implementation of the company’s business plans and development strategy;

+ Supervise and evaluate the company’s business performance and finance;

+ Supervise and evaluate the performance of the Board of Members and its members, the company’s President and Director/General Director;

+ Supervise and evaluate the compliance to the company’s internal audit, risk management, reporting regulations and other rules and regulations;

+ Supervise the legitimacy, systematic organization and honesty of accounting tasks, accounting records, financial statements, their annexes and relevant documents;

+ Supervise the company’s contracts and transactions with relevant parties;

+ Supervise execution of major projects; sales and purchases; other large-scale contracts and transactions; unusual contracts and transactions of the company;

+ Prepare and send evaluation reports and proposals of the matters specified in Points a, b, c, d, dd, e and g of this Clause to the state ownership representative body and the Board of Members;

+ Perform other obligations demanded by the state ownership representative body, prescribed by the company’s charter.

– The state ownership representative body shall decide and pay the Controllers’ salaries, bonuses and other benefits.

Rights the Board of Controllers

The Board of Controllers has the rights to:

– Participate in meetings of the Board of Members, official and unofficial discussions between the state ownership representative body with the Board of Members; question the Board of Members, its members, the company’s President and the Director/General Director about the plans, projects, development programs and other decisions in management and administration of the company.

– Examine accounting books, reports, contracts, transactions and other documents of the company; inspect the management and administration by the Board of Members and its members, the company’s President and Director/General Director where necessary or at the request of the state ownership representative body.

– Request the Board of Members and its members, the company’s President and Director/General Director, Deputy Directors/Deputy General Directors, chief accountant and other executives to submit reports or provide information about the company’s management, investment and business operation.

– Request the company’s executives to submit reports on the subsidiary companies’ finance and business performance if they are necessary for performance of their duties prescribed by law and the company’s charter.

– Request the state ownership representative body to establish an audit unit which will advise and assist the Board of Controllers in performance of its rights and obligations.

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

Working regulations of the Board of Controllers

– The Chief Controller shall prepare monthly, quarterly and annual working plans of the Board of Controllers; assign specific tasks to each Controller.

– Controllers shall perform their assign tasks independently; propose other tasks where necessary.

– The Board of Controllers shall hold a meeting at least once a month to evaluate and approve the monthly operation reports before they are submitted to the state ownership representative body; discuss and approve operation plans of the next month.

– A decision of the Board of Controllers will be ratified when it is voted for by the majority of the participating members. Dissenting opinions shall be fully and accurately recorded and reported to the state ownership representative body.

Responsibilities of Controllers

– Comply with regulations of law, the company’s charter, decisions of the state ownership representative body and the code of ethics in performance of their rights and obligations.

– Exercise and perform their rights and obligations in an honest and prudent manner to protect the lawful interests of the State, the company the parties.

– Be loyal to the interests of the company and the State; 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;

– The Controller that violates the regulations of this Article and causes damage to the company shall be personally or jointly pay compensation, be held liable to disciplinary actions, administrative penalties or criminal prosecution depending on the nature and severity of the violation and have to return the incomes and benefits earned from the violation.

– Send a notification to the state ownership representative body of violations committed by another Controller and request the violator to stop the violation and implement remedial measures.

– Request the violator to stop the violation and implement remedial measures, and notify to the state ownership representative body, other Controllers and relevant individuals in the following cases:

+ A member of the Board of Members, the company’s President, the Director/General Director or another executive violates or is going to violate regulations on their rights and obligations

+ Violations against the law, the company’s charter or the company’s rules and violations are discovered.

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