In Vietnam, can the chairman of Board of Directors signs contract?
Together with the Directors of the joint-stock company, the chairman of the Board of Directors plays an important role to implement the strategy and plan for the development of the company. What responsibilities does the chairman of the Board of Directors take? Does the chairman entitled to sign contracts? In this article, LSX legal firm will help you to answer the question: In Vietnam, can the chairman of Board of Directors signs contract?
Legal grounds
- Law on Enterprise 2020
- Civil Code 2015
Board of Directors of a joint-stock company
The Board of Directors takes part as the managerial body of the company and has the right to make decisions on behalf of the company, perform the rights and obligations of the company, except the rights and obligations of the GMS.
The Board of Directors shall ratify its resolution and decisions by voting at the meeting, questionnaire survey, or another method specified in the company’s charter. Each member of the Board of Directors shall have one vote.
In case a resolution or decision is ratified by the Board of Directors against regulations of law or a resolution of the GMS or the company’s charter and causes damage to the company, the members that vote for the ratification of such resolution or decision shall be jointly responsible for it and pay compensation for the company; the members that vote against such resolution or decision shall not be held responsible. In this case, the company’s shareholders have the right to request the court to suspend or invalidate the resolution or decision.
Rights and obligations of the Board of Directors
According to Article 153 of the Law on Enterprise 2020, the Board of Directors has the following rights and obligations:
a) Decide the company’s medium-term development strategies and annual business plans;
b) Propose the types of authorized shares and quantity of each type;
c) Decide sale of certain types of unsold authorized shares; decide on other methods of raising capital;
d) Decide selling prices for the company’s shares and bonds;
dd) Decide repurchase of shares as prescribed in Clause 1 and Clause 2 Article 133 of this Law;
e) Decide the investment plan and investment projects within its jurisdictions and limitations prescribed by law;
g) Decide solutions for market development, marketing, and technology;
h) Approve sale contracts, purchase contracts, borrowing contracts, lending contracts, other contracts, and transactions that are worth at least 35% of the total assets written in the latest financial statement, unless another ratio or value is specified in the company’s charter; contracts and transactions within the jurisdiction of the GMS as prescribed in Point d Clause 2 Article 138, Clause 1 and Clause 3 Article 167 of this Law.
i) Elect, dismiss the President of the Board of Directors; designate, dismiss, enter into and terminate contracts with the Director/General Director and other key executives specified in the company’s charter; decide salaries, remunerations, bonuses, and other benefits of these executives; designate authorized representatives to participate in the Board of Members or GMS of another company; decide their remunerations and other benefits;
……..
n) Submit annual financial statements to the GMS;
o) Propose the dividends; decide the time and procedures for paying dividends or settling business losses;
p) Propose reorganization or dissolution of the bankruptcy; file bankruptcy of the company;
q) Other rights and obligations prescribed by Law and the company’s charter.
Chairman of Board of Directors in a joint-stock company
The Board of Directors shall elect one of its members President of the Board of Directors or dismiss its President. This person holds the highest position in the company and has a very important role in company operation as well as making plans to develop the company.
The Law on Enterprise 2020 regulates the rights and obligations of the chairman of the Directors Board.
Can the chairman of Board of Directors signs contracts?
Pursuant to Clause 3, Article 156 of the Law on Enterprise:
“3. The President of the Board of Directors has the following rights and obligations:
a) Plan the activities of the Board of Directors;
b) Draw up agenda and prepare documents for meetings of the Board of Directors; convene and chair the meetings;
c) Organize the ratification of resolutions and decisions of the Board of Directors;
d) Supervise the implementation of resolutions and decisions of the Board of Directors;
dd) Chair the GMS;
e) Other rights and obligations prescribed by Law and the company’s charter.”
Besides, Clause 1, Article 12 of the Law on Enterprise:
“The enterprise’s legal representative is the person that, on behalf of the enterprise, exercises and performs the rights and obligations derived from the enterprise’s transactions, acts as the plaintiff, defendant, or person with relevant interests and duties before in court, arbitration, and performs other rights and obligations prescribed by law.”
According to Clause 1, Article 138 of the 2015 Civil Code:
“An individual or a legal entity may authorize another individual or legal entity to enter into and perform a civil transaction”
So, in addition to the rights and obligations of the Chairman of the Board of Directors as prescribed, the Chairman of the Board of Directors has other rights and obligations according to the company’s charter. The Civil Code also stipulates that individuals and legal entities may authorize other individuals and legal entities to establish and perform civil transactions.
In conclusion, the Chairman of the Board of Directors of the Company can only sign contracts with partners when the Chairman of the Board of Directors concurrently holds the legal representative title of the company or the person authorized by the legal representative.
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Contact LSX
Finally, hope this article is useful for you to answer the question about “In Vietnam, can the chairman of Board of Directors signs contract?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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Related questions
The President of Board of Directors shall convene a meeting of the Board of Directors in the following cases:
Firstly, requested by the Board of Controllers or independent members of the Board of Directors;
Secondly, requested by the Director or General Director and at least 05 other executives;
Thirdly, requested by at least 02 members of the Board of Directors;
Other cases specified in the charter.
The President of the Board of Directors shall be elected during the first meeting of the Board of Directors within 07 working days from the election of that Board of Directors. This meeting shall be convened and chaired by the member that received the highest number of votes. In case more than one member received the same highest number of votes, one of them will be elected by the members under majority rule to convene the meeting of the Board of Directors.
– The company’s name, EID number, headquarter address;
– Time and location of the meeting;
– Purposes and agenda of the meeting;
– Full names of participating members and the persons authorized to participate in the meeting and how they participate; full names of non-participating members and their excuses;
– The issues to be discussed and voted on at the meeting;
– Summary of comments of each participating member in chronological order;
– Voting result, the members that cast affirmative votes, negative votes and abstentions;
– Ratified decisions and corresponding ratio of affirmative votes;
– Full names, signatures of the chair and the minute taker, except the case in Clause 2 of Article 168 of the Law on Enterprise.
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