Chairman of Members’ Council Fails to Convene a Meeting: Remedies

When the Chairman of the Members’ Council fails to convene a meeting, what must the members do (the purpose of the meeting being to remove the Chairman of the Members’ Council)?

1. Does the Members’ Council of a two-member limited liability company have the right to remove the Chairman of the Members’ Council?

Under Point đ, Clause 2, Article 55 of the Law on Enterprises 2020:

Members’ Council

1. The Members’ Council is the highest decision-making body of the company, comprising all individual members and authorized representatives of organizational members. The company charter prescribes the Members’ Council’s meeting schedule, but it must meet at least once a year.

2. The Members’ Council has the following rights and obligations:

a) Deciding the company’s development strategy and annual business plans;

…

đ) Electing, dismissing and removing the Chairman of the Members’ Council; deciding to appoint, dismiss and remove, and to sign and terminate contracts with the Director or General Director, Chief Accountant, Supervisors and other managers prescribed in the company charter;

Thus, under the above provisions, the Members’ Council of a two-member limited liability company has the right and obligation to remove the Chairman of the Members’ Council.

2. What should be done when the Chairman of the Members’ Council of a two-member limited liability company fails to convene a meeting?

Pursuant to Clause 2, Article 49 of the Law on Enterprises 2020, as amended by Clause 1, Article 7 of the Law amending the Law on Public Investment, the Law on Investment under the Public-Private Partnership Model, the Law on Investment, the Law on Housing, the Law on Bidding, the Law on Electricity, the Law on Enterprises, the Law on Special Consumption Tax and the Law on Civil Judgment Enforcement 2022:

Rights of company members

…

2. In addition to the rights prescribed in Clause 1 of this Article, a member or group of members owning 10% or more of the charter capital, or a smaller ratio prescribed by the company charter, or falling under Clause 3 of this Article, has the following rights:

a) Requesting the convening of a Members’ Council meeting to resolve matters within its authority;

Thus, if a member or group of members of your company owns 10% or more of the charter capital (or less than 10% if the company charter so provides), they have the right to request the convening of a Members’ Council meeting to resolve matters within its authority.

Under Article 55 of the Law on Enterprises 2020, removing the Chairman of the Members’ Council is a matter within the authority of the Members’ Council.

Article 57 of the Law on Enterprises 2020 provides:

Convening Members’ Council meetings

1. A Members’ Council meeting is convened at the request of the Chairman of the Members’ Council or at the request of a member or group of members prescribed in Clauses 2 and 3, Article 49 of this Law. Where the Chairman of the Members’ Council fails to convene a Members’ Council meeting at the request of a member or group of members within 15 days from the date of receipt of the request, such member or group of members convenes the Members’ Council meeting. Reasonable costs for convening and conducting the Members’ Council meeting will be reimbursed by the company.

…

7. Where the request to convene a Members’ Council meeting lacks the contents prescribed in Clause 6 of this Article, the Chairman of the Members’ Council must notify in writing the relevant member or group of members of the refusal to convene the meeting within 07 working days from the date of receipt of the request. In other cases, the Chairman of the Members’ Council must convene the Members’ Council meeting within 15 days from the date of receipt of the request.

8. Where the Chairman of the Members’ Council fails to convene a Members’ Council meeting as prescribed in Clause 7 of this Article, they bear personal liability for damage caused to the company and relevant company members.

Thus, if the Chairman of the Members’ Council fails to convene the meeting within 15 days from the date of receipt of the request, the requesting member has the right to convene the Members’ Council meeting.

In that case, the Chairman of the Members’ Council bears legal liability for damage caused to the company and relevant members, and reasonable costs for convening and conducting the Members’ Council meeting will be reimbursed by the company.

3. What is the term of office of the Chairman of the Members’ Council of a two-member limited liability company?

Under Clause 3, Article 56 of the Law on Enterprises 2020:

Chairman of the Members’ Council

…

3. The term of office of the Chairman of the Members’ Council is prescribed by the company charter but must not exceed 05 years and may be renewed for an unlimited number of terms.

4. Where the Chairman of the Members’ Council is absent or unable to perform their rights and obligations, they must authorize in writing a member to perform the rights and obligations of the Chairman of the Members’ Council in accordance with the principles prescribed in the company charter. Where no member is authorized, or the Chairman of the Members’ Council dies, goes missing, is detained, is serving a prison sentence, is serving administrative handling measures at a compulsory detoxification or compulsory education establishment, flees their residence, has limited or lost civil act capacity, has difficulties in cognition or behavior control, or is prohibited by a court from holding positions, practicing a profession or performing certain jobs, one of the members of the Members’ Council convenes the remaining members to elect one of them as interim Chairman of the Members’ Council on the principle of majority approval of the remaining members until a new decision of the Members’ Council is made.

Thus, under the above provisions, the term of office of the Chairman of the Members’ Council of a two-member limited liability company is prescribed by the company charter but must not exceed 05 years and may be renewed for an unlimited number of terms.

Notes on applying current legal provisions

This article belongs to the Enterprise & M&A Knowledge group and is presented for reference, helping readers understand the legal issue at an overview level before preparing dossiers or conducting transactions.

Legal provisions may change depending on timing, locality, dossier type and specific circumstances. Where it is necessary to determine the exact legal basis applicable to your dossier, you should contact an ANT Legal lawyer at 0966.475.966 for review and advice before proceeding.

Common risks to note

• Applying legal texts that have been amended, supplemented or replaced.
• Preparing incomplete dossiers, documents or evidence.
• Misunderstanding the applicable conditions, procedures, time limits or competent authority.
• Signing, filing or conducting transactions without fully assessing legal risks.

How can ANT Legal help?

ANT Legal assists in reviewing specific situations, checking dossiers, identifying the applicable legal basis, advising on handling plans, and representing you in working with individuals, organizations or competent authorities when necessary.

For quick advice, you may contact a lawyer at 0966.475.966.

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