Legal status of the Director/General Director of a multiple-member LLC in Viet Nam

The Director/General Direct is a very important position in operating business of a multiple-member LLC. Viet Nam Law on Enterprise has regulations on legal status of the Director/General Director of a multiple-member LLC. Let’s find out this issue with Lawyer X through the following case: “Dear Lawyer X! I would like to learn about the rights and obligations of the Director/General Director of a multiple-member LLC in Viet Nam. Are there any requirements for holding the position of Director/General Director under Viet Nam Law? Besides, I also want to know how are controllers and the Board of Controllers regulated in Viet Nam? Thanks for answering me!”

Legal grounds

2020 Viet Nam Law on Enterprises

What is a multiple-member 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 Director/General Director

– The Director/General Director is the person who manages the company’s everyday business operation and is responsible to the Board of Members for his/her performance.

– The Director/General Director has the following rights and obligations:

+ Organize the implementation of resolutions and decisions of the Board of Members;

+ Decide everyday operating issues of the company;

+ Organize implementation of the company’s business plans and investment plans;

+ Issue the company’s rules and regulations unless otherwise prescribed by the company’s charter;

+ Designate, dismiss the company’s executives, except those within jurisdiction of the Board of Members;

+ Enter into contracts on behalf of the company, except those within jurisdiction of the President of the Board of Members;

+ Propose the company’s organizational structure;

+ Submit annual financial statements to the Board of Members;

+ Propose plans for use and distribution of profits or settlement of business losses;

+ Recruit employees;

+ Other rights and obligations specified in the company’s charter, resolution and decisions of the Board of Members, and his/her employment contract.

Requirements for holding the position of Director/General Director

A person may hold the position of Director/General Director if he/she:

– Is not in one of the persons specified in Clause 2 Article 17 of Law on Enterprises.

– Has professional qualifications and experience of business administration and satisfies other conditions specified in the company’s charter.

– If the company is a state-owned enterprise prescribed in Point b Clause 1 Article 88 of Law on Enterprises or a subsidiary company of a state-owned enterprise prescribed in Clause 1 Article 88 of Law on Enterprises, is not a relative of the executives and controllers of the company and the parent company, of the representative of enterprise’s investment or state investment in the company and the parent company.

Controllers and the Board of Controllers

– The Board of Controllers shall have 1 – 5 Controllers. The term of office of a controller shall not exceed 05 years and without term limit. In case the Board of Controllers only has 01 controller, he/she shall be the Chief Controller and shall satisfy corresponding conditions.

– The Chief Controller and Controllers shall satisfy the requirements specified in Clause 2 Article 168 and Article 169 of Law on Enterprises.

– Rights, obligations, responsibilities, dismissal and works of Controllers and the Board of Controllers are specified in Articles 106, 170, 171, 172, 173 and 174 of Law on Enterprises.

Salaries, remunerations, bonuses and other benefits of the Director/General Director

The company shall pay salaries, remunerations, bonuses and provide other benefits for the Director/General Director according to the company’s business performance.

Salaries, remunerations, bonuses and other benefits for the Director/General Director shall be recorded as operating costs in accordance with regulations of law on corporate income tax and relevant laws and placed in a separate section in the company’s annual financial statements.

Responsibilities of the Director/General Director

The Director/General Director has the following responsibilities:

– Exercise and perform their rights and obligations in an honest and prudent manner to protect the enterprise’s lawful interests;

– Be loyal to the enterprise’s interests; 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;

– Promptly and fully notify the company of the enterprises that they own or have shares/stakes or that their related persons own, jointly own or have separate controlling shares/stakes.

– Other responsibilities prescribed by law.

The Director/General Director shall not have a pay rise or bonus when the company is not able to pay its due debts.

The notification mentioned in Point c Clause 1 of Article 71 of Law on Enterprises shall be made in writing and contain the following information:

– Names, EID numbers, headquarters addresses of the enterprises they own or have shares/stakes in; the holdings and time of owning or holding the shares/stakes;

– Names, EID numbers, headquarters addresses of the enterprises their related persons own, jointly own or have separate controlling shares/stakes.

The notification mentioned in Clause 3 of Article 71 of Law on Enterprises shall be sent within 05 working days from the day on which the event or change occurs. The company shall compile a list of the entities mentioned in Clause 3 of Article 71 of Law on Enterprises, their contracts and transactions with the company. This list shall be kept at the company’s headquarters. Members, executives, Controllers and their authorized representatives are entitled to see, copy part or all of the information specified in Clause 3 of Article 71 of Law on Enterprises during office hours following the procedures specified in the company’s charter.

Services of Lawyer X

Prestigious professional services: Firstly, the team of consultants and consultants for many years in the field of civil status, and customer support.

On-time: Certainly, with the motto “Get your lawyer right at your fingertips”, we ensure the service always performs on time. The rights and interests of customers always come first.

Cost: Besides, Lawyer X’s service costs are highly competitive; depending on the nature of the particular case. So, we want our guests to have the best possible service experience. Therefore, costs which guaranteed to be the most suitable and economical for customers.

Confidentiality of client information: Finally, all personal information of clients Lawyer X will be 100% confidential.

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Frequently asked questions

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