VIETNAM Law and Practice Contributed by: Ngoc Luong Trinh, Tung Nguyen, Hanh Vo, Esko Cate, Nguyen Dang, Khanh Le, Hoang Nguyen and Truc Ta, VILAF
charter capital or voting shares or otherwise controls key corporate decisions of the company. Periodical Investment-Related Reporting A foreign-invested company and/or a company implementing investment projects shall be subject to investment reporting obligations. These typically include periodic reports on project implementation, such as investment capital disbursements, business results, human resources, taxes, environmental mat - ters and other project-specific indicators, submitted to the investment registration authority and the sta - tistics authority. 3.4 Management Structures The management structure depends on the type of company and the governance model adopted in its charter. Limited Liability Company In a single-member LLC,the governance structure is relatively simple and depends on the status of the owner. Where the owner is an individual, the com - pany is generally managed by a company president and a director or general director (collectively, GD). Where the owner is an organisation, the company may adopt either a company president model or a Mem - bers’ Council (MC) model. The MC, if established, comprises three to seven members appointed by the owner. In either case, the company will also have a GD responsible for day-to-day management and, where required, an Inspection Committee. A multiple-member LLC is managed through the MC comprising all capital-contributing members (or their authorised representative if the member is an organi - sation), a GD is responsible for day-to-day manage - ment and a Supervisory Board (SB), where required. The MC is the highest decision-making body of the company. Joint Stock Company A JSC may adopt either of the following governance structures: • The first model includes a General Meeting of Shareholders (GMS), a Board of Directors (BOD), an SB and a GD.
• The second model includes a GMS, BOD and GD. For a JSC that follows the second model, at least 20% of the BOD must be independent and the company must establish an Audit Committee under the BOD. The GMS is the highest decision-making body, com - prising all shareholders with the right to vote. The BOD has three to 11 members appointed by the GMS. This is the company’s management body and has full authority, on behalf of the company, to decide and exercise the company’s rights and obligations. The SB members are appointed in a similar manner to those of the BOD and the number of SB members must be at least three and not more than five. The SB oversees the BOD and the GD with respect to the company’s management. The GD is appointed or hired by the BOD and is responsible for the day-to-day management of the company. 3.5 Directors’, Officers’ and Shareholders’ Liability General Duties The members of MC, BOD, SB, GD, legal representa - tives and other managers of Vietnamese companies are subject to statutory duties under the Enterprises Law. These duties generally include: • to act in accordance with law, the company charter and corporate approvals; • to exercise rights and perform duties honestly, dili - gently and to the best of their ability for the protec - tion of the legitimate interests of the company; • to be loyal to the company; not to abuse the com - pany’s position, corporate information, business opportunities or assets for personal benefit or for the benefit of others; to notify timely, completely and accurately any substantial shareholding owned by them or their related persons, in other compa - nies; and • to disclose their related interests and abstain from voting on transactions between the company and their related person.
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