VIETNAM Law and Practice Contributed by: Thang Nguyen, Minh Nguyen and Nguyet Le, ACSV Legal
If the reporting or payment is not done before the deadline, a fine can be imposed. Auditing Foreign-owned entities, credit institutions, insur - ance enterprises, public companies, institutional securities traders and other large-scale enter - prises must be audited at least once a year, and the audit must be completed within 90 days from the end of the calendar year. All auditing activi - ties will follow the Vietnam Accounting Stand - ards, which differ from the International Finan - cial Reporting Standards (IFRS). These Vietnam standards are issued by the Ministry of Finance based on the international standards on audit- ing. Vietnam is expected to adopt the IFRS shortly, which will likely impact the current way of doing business in Vietnam. 3.4 Management Structures The two most common legal entities in Vietnam are the LLC and the JSC. They are distinguished by a defined management structure under the Vietnamese Law on Enterprises, which pre - scribes the following bodies of corporate gov - ernance. LLC With respect to a single-member LLC, the man - agement structure must include a president or a members’ council and a director or general director if owned by an organisation, or a presi - dent and a director or general director if owned by an individual. As for those owned by a state- owned entity (SOE), the structure must also include an inspection committee. With respect to a multiple-member LLC, the management structure must include a members’ council, a chairperson of the members’ council
and a director or general director. As for SOEs or their subsidiaries, the structure must also include an inspection committee. JSC With respect to a JSC, except for public ones, which may need to be managed under anoth - er structure if stipulated in the Law on Secu - rities, the management structure must include a General Meeting of Shareholders, a Board of Management (BOM), and a director or general director. If a JSC has at least 11 shareholders or the corporate shareholder(s) hold at least 50% of total shares, the structure must also include an inspection committee. Otherwise, at least 20% of the BOM’s members must be independent and there must be an audit committee under the BOM. The director or general director is the person who manages the day-to-day business operations of the company. Vietnamese laws do not set out a terminological difference between a director and general director. In practice, an enterprise can opt to appoint this person as either director or general director based on its business models and management requirements. He/she usually is also the (only) person endowed with legal rep - resentation rights for the company, which makes him/her the entity’s most important executive organ in practice. Within the permissible realm of Vietnamese laws, investors can structure their investment vehicle according to their needs and preferences. Their choices will be recorded in the company charter, which will also specify the timing and procedure of (obligatory, annual) board meetings and other organisational standards.
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