Organizational structure of a joint stock company under Viet Nam Law on Enterprises
Joint stock companies are typical forms of enterprises in business markets. Viet Nam Law on Enterprises has regulations on the organizational structure of a joint stock company. Let’s find out this issue with Lawyer X through the following case: “Dear Lawyer! I would like to ask how a joint stock company is organized? What are main bodies, department in a joint stock company? What are the rights and responsibilities of these bodies? Thanks for answering me!”
Legal grounds
Law on Enterprises
Organizational structure of a joint stock company
– Unless otherwise prescribed by securities laws, a joint stock company may choose one of the following models:
+ A joint stock company with the GMS, Board of Directors, Board of Controllers and Director/General Director. If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory;
+ A joint stock company with the GMS, Board of Directors and Director/General Director. In this case, at least 20% of the members of the Board of Directors shall be independent members and there has to be an audit committee affiliated to the Board of Directors. The organizational structure, functions and duties of the audit committee shall be specified in the company’s charter or the audit committee’s operating regulations promulgated by the Board of Directors.
– If the company has only one legal representative, the President of the Board of Directors or the Director/General Director shall be the legal representative. The President of the Board of Directors shall be the company’s legal representative unless otherwise prescribed by the company’s charter. If the company has more than one legal representative, the President of the Board of Directors and the Director/General Director shall be the company’s legal representatives.
Rights and obligations of the General Meeting of Shareholders
– The GMS shall consist of all voting shareholders and is the supreme body of a joint stock company.
– The GMS has the following rights and obligations:
+ Ratify the orientation for development of the company;
+ Decide the types of authorized shares and quantity of each type; decide the annual dividends of each type of shares;
+ Elect, dismiss members of the Board of Directors and Controllers;
+ Decide investment in or sale of assets 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;
+ Decide revisions to the company’s charter;
+ Ratify annual financial statements;
+ Decide repurchase of more than 10% of total sold shares of each type;
+ Take actions against violations committed by members of the Board of Directors and Controllers that cause damage the company and its shareholders;
+ Decide reorganization or dissolution of the company;
+ Decide the budget or total salaries, bonuses and other benefits of the Board of Directors and the Board of Controllers;
+ Approve the rules and regulations of the company, the Board of Directors and the Board of Controllers;
+ Approve the list of independent audit companies; choose independent audit companies carry out audit of the company; dismiss independent audits where necessary;
+ Other rights and obligations prescribed by Law and the company’s charter.
The Board of Directors
– The Board of Directors is the managerial body of the company and has the right to make decisions on behalf of the company, perform rights and obligations of the company, except the rights and obligations of the GMS.
– The Board of Directors has the following rights and obligations:
+ Decide the company’s medium-term development strategies and annual business plans;
+ Propose the types of authorized shares and quantity of each type;
+ Decide sale of certain types of unsold authorized shares; decide other methods of raising capital;
+ Decide selling prices for the company’s shares and bonds;
+ Decide repurchase of shares as prescribed in Clause 1 and Clause 2 Article 133 of Law on Enterprises;
+ Decide the investment plan and investment projects within its jurisdictions and limitations prescribed by law;
+ Decide solutions for market development, marketing and technology;
+ 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 Law on Enterprises.
+ 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;
+ Supervise the Director/General Director and other executives managing the company’s everyday business;
+ Decide the company’s organizational structure, rules and regulations; establishment of subsidiary companies, branches and representative offices; contribution of capital to and purchase of shares of other enterprises;
+ Approve the agenda and documents of the GMS; convene the GMS or carry out surveys for the GMS to ratify its resolutions;
n) Submit annual financial statements to the GMS;
+ Propose the dividends; decide the time and procedures for paying dividends or settling business losses;
+ Propose reorganization or dissolution of the bankruptcy; file bankruptcy of the company;
+ Other rights and obligations prescribed by Law and the company’s charter.
– 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 are entitled to request the court to suspend or invalidate the resolution or decision.
The Director/General Director
– The Board of Directors shall designate one of its members or hire a person as the Director/General Director.
– The Director/General Director shall manage the company’s everyday busines operation, is supervised by and responsible to the Board of Directors Members and the law for his/her performance.
The term of office of the Director/General Director shall not exceed 05 years without term limit.
– The Director/General Director has the following rights and obligations:
+ Decide everyday operating issues of the company that are outside the jurisdiction of the Board of Directors;
+ Organize the implementation of resolutions and decisions of the Board of Directors;
+ Organize implementation of the company’s busines plans and investment plans;
+ Propose the company’s organizational structure, rules and regulations;
+ Designate, dismiss the company’s executives, except those under jurisdiction of the Board of Directors;
+ Decide salaries and other benefits of the company’s employees, including the executives designated by the Director/General Director;
+ Recruit employees;
+ Propose plans distribution of dividends or settlement of business losses;
+ Other rights and obligations specified by law, the company’s charter, resolutions and decisions of the Board of Directors.
– The Director/General Director shall manage the company’s everyday business in accordance with law, the company’s charter, his/her employment contract with the company, resolutions and decisions of the Board of Directors. Otherwise, the Director/General Director shall be legally responsible for and pay damages to the company.
– The Director/General Director of a public company or 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 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 is not a relative of any of the executives, controllers of the company and the parent company; the representatives of state investments and the enterprise’ investment in the company and the parent company;
+ He/she has professional qualifications and experience of busines administration.
Board of Controllers
– The Board of Controllers shall have 3 – 5 Controllers. The term of office of a Controller shall not exceed 05 years without term limit.
– The Chief Controller shall be elected by the Board of Controllers among the Controllers. The Chief Controller shall be elected and dismissed under the majority rule. Rights and obligations of the Chief Controller shall be specified in the company’s charter. More than half of the Controllers shall have permanent residences in Vietnam. The Chief Controller shall have a bachelor’s degree in economics, finance, accounting, audit, law, business administration or a major that is relevant to the enterprise’s business operation, unless higher standards are prescribed in the company’s charter.
– In case the term of office of all Controllers expires before an election can be carried out, the existing Controllers shall keep performing until Controllers are elected and take over the job.
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Frequently asked questions
Unless otherwise prescribed by securities laws, a joint stock company may choose one of the following models:
+ A joint stock company with the GMS, Board of Directors, Board of Controllers and Director/General Director. If the joint stock company has fewer than 11 shareholders and the shareholders that are organizations hold less than 50% of the company’s total shares, a Board of Controllers is not mandatory;
+ A joint stock company with the GMS, Board of Directors and Director/General Director. In this case, at least 20% of the members of the Board of Directors shall be independent members and there has to be an audit committee affiliated to the Board of Directors. The organizational structure, functions and duties of the audit committee shall be specified in the company’s charter or the audit committee’s operating regulations promulgated by the Board of Directors.
The GMS shall consist of all voting shareholders and is the supreme body of a joint stock company
The Board of Directors is the managerial body of the company and has the right to make decisions on behalf of the company, perform rights and obligations of the company, except the rights and obligations of the GMS.
Conclusion: So the above is Organizational structure of a joint stock company under Viet Nam Law on Enterprises. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
