What standards must a Controller of a Joint Stock Company meet to be appointed?

What are the Supervisory Board and Controllers of a Joint Stock Company?

According to the provisions of Clause 1, Article 137 of the Law on Enterprises 2020 as follows:

“Article 137. Organizational structure and management of joint stock companies

1. Unless otherwise prescribed by securities laws, a joint stock company has the right to choose a management organization and operate according to one of the following two models:

a) General Meeting of Shareholders, Board of Directors, Supervisory Board and Director or General Director. In cases where a joint stock company has less than 11 shareholders and institutional shareholders own less than 50% of the company’s total shares, a Supervisory Board is not required;

b) General Meeting of Shareholders, Board of Directors and Director or General Director. In this case, at least 20% of the members of the Board of Directors must be independent members and there must be an Audit Committee under the Board of Directors. The organizational structure, functions, and tasks of the Audit Committee are specified in the Company’s Charter or the operating regulations of the Audit Committee issued by the Board of Directors.

In Clause 1, Article 65 of the Law on Enterprises 2020, it is also stipulated:

“Article 65. Supervisory Board, Controllers

1. The Supervisory Board has from 01 to 05 Controllers. The term of office of a Controller shall not exceed 05 years and may be reappointed for an unlimited number of terms. In case the Supervisory Board has only 01 Controller, that Controller is also the Head of the Supervisory Board and must meet the standards of the Head of the Supervisory Board.

Pursuant to legal regulations, the Supervisory Board of a Joint Stock Company depends on the model chosen by the Company. In cases where a joint stock company has less than 11 shareholders and institutional shareholders own less than 50% of the company’s total shares, a Supervisory Board is not required. The Supervisory Board has from 01 to 05 Supervisors. The term of office of a Controller shall not exceed 05 years and may be reappointed for an unlimited number of terms. In case the Control Board has only 01 Controller, that Controller is also the Head of the Control Board and must meet the standards of the Head of the Control Board.

What are the standards for appointing Controllers of a Joint Stock Company?

According to the provisions of Article 169 of the Law on Enterprises 2020, the standards for appointing Controllers of Joint Stock Companies are as follows:

“Article 169. Standards and conditions of Controllers

1. Controllers must have the following standards and conditions:

a) Not subject to the provisions of Clause 2, Article 17 of this Law;

b) Be trained in one of the majors in economics, finance, accounting, auditing, law, business administration or a major suitable to the business activities of the enterprise;

c) Not a family member of a member of the Board of Directors, Director or General Director and other managers;

d) Not a company manager; not necessarily a shareholder or employee of the company, unless otherwise stipulated in the company charter;

d) Other standards and conditions according to other provisions of relevant laws and the company’s Charter.

2. In addition to the standards and conditions specified in Clause 1 of this Article, Controllers of public companies and state-owned enterprises as prescribed in Point b, Clause 1, Article 88 of this Law must not be a person related to the family of the business manager of the company and parent company; representative of the enterprise’s capital, representative of the state capital at the parent company and at the company.”

Thus, in addition to the conditions of professional qualifications, a person who wants to be appointed as a Controller of a Joint Stock Company must also not be prohibited from establishing, operating and managing a business in Vietnam, and at the same time meet other conditions as prescribed above and according to the Charter of that Joint Stock Company.

What are the responsibilities of a Controller of a Joint Stock Company?

According to the provisions of Article 173 of the Law on Enterprises 2020, the Controller of a Joint Stock Company has the following responsibilities:

“Article 173. Responsibilities of Controllers

1. Comply with the law, the Company Charter, resolutions of the General Meeting of Shareholders and professional ethics in exercising assigned rights and obligations.

2. Exercise assigned rights and obligations honestly, carefully, and in the best way to ensure the company’s maximum legitimate interests.

3. Loyal to the interests of the company and shareholders; Do not abuse your position or position and use information, know-how, business opportunities, or other company assets for personal gain or to serve the interests of other organizations or individuals.

4. Other obligations according to the provisions of this Law and the Company’s Charter.

5. In case of violation of the provisions of Clauses 1, 2, 3 and 4 of this Article that causes damage to the company or other people, the Controller must be personally or jointly responsible for compensating for that damage. Income and other benefits that the Controller receives due to violations must be returned to the company.

6. In case a Controller is discovered to have committed a violation in exercising assigned rights and obligations, he/she must notify the Supervisory Board in writing; request the violator to stop the violation and remedy the consequences.