Dismissal, discharge of members of the Board of Members in the state-owned enterprise in Viet Nam

Members of the Board of Members in the state-owned enterprise may be dismissed, discharged  in some circumstances. Viet Nam law on enterprises has regulations on dismissal, and discharge of members of the Board of Members in the state-owned enterprise. Let’s find out this issue through the following scenario: “Dear Lawyer! I would like to ask in what cases shall the President or another member of the Board of Members be dismissed or discharged? Thanks for answering me!

Legal grounds

Law on Enterprises

Types of state-owned enterprises in Viet Nam

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 Board of Members

– The Board of Members shall perform the company’s rights and obligations in the company’s name as prescribed by Law on Enterprises and relevant laws.

– The Board of Members shall consist of up to 07 members including a President. Members of the Board of Members shall be designated, dismissed, rewarded and disciplined by the state ownership representative body.

– The term of office of the President and other members of the Board of Members shall not exceed 05 years. A member of Board of Members may be designated again for not more than 02 terms in the same company unless he/she has worked for the company for more than 15 consecutive years before the first designation.

Conditions to members of the Board of Members

To become a member of the Board of Members, a person shall satisfy the following requirements:

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

– He/she has professional qualifications and experience of busines administration or experience of 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 Director/General Director, the Deputy Director/General Director, the chief accountant or Controllers of the company.

– He/she is not an executive of the member enterprise.

– A member of the Board of Members other than the President may concurrently hold the position of Director/General Director of the company or another company that is not a member enterprise under a decision of the state ownership representative body.

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

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

*Rights and obligations of the Board of Members

– The Board of Members shall, in the name of the company, perform the rights and obligations of the owner, shareholders/members of other companies owned by the company or whose shares/stakes are owned by the company.

– The Board of Members has the following rights and obligations:

+ Decide the matters prescribed in the Law on Management and use of State Investment in Enterprises;

+ Decide establishment, reorganization, dissolution of the company’s branches, representative offices and dependent units;

+ Decide the company’s annual business plan, policies on market development, marketing and technology;

+ Organize internal audits and decide establishment of the company’s internal audit unit;

+ Other rights and obligations prescribed by the company’s charter, Law on Enterprises and relevant laws.

Dismissal, discharge of members of the Board of Members

– The President or another member of the Board of Members shall be dismissed in the following cases:

+ He/she does not fully satisfy the requirements specified in Article 93 of Law on Enterprises;

+ He/she hands in the resignation and is accepted in writing by the state ownership representative body;

+ A reassignment or retirement decision is issued;

+ He/she is not capable of or qualified for the given tasks;

+ He/she is not healthy or reputable enough to hold the position.

– The President or another member of the Board of Members shall be discharged from duty in the following cases:

+ The company fails to achieve the annual targets; fails to conserve and develop investment capital as required by the state ownership representative body without an excuse that is objective or accepted by the state ownership representative body;

+ He/she is convicted by the Court under an effective judgment or decision;

+ He/she fails to perform her duties in an honest manner or abuses his/her power and position or uses the company’s assets for personal gain or to serve any other organization’s or individual’s interests; fails to truthfully report the company’s finance and business performance.

– Within 60 days from the issuance date of the decision to dismiss or discharge the President or member of the Board of Members, the state ownership representative body shall designate another person as President or member.

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