Regulations on the rights and obligations of the Board of Members according to Vietnamese law

Can the Chairman of the Board of Members sign a document appointing himself as Director? How are the rights and obligations of the Board of Members regulated?

1. What is the Membership Council?

According to Article 91 of the Law on Enterprises 2020, the regulations on the Board of Members are as follows:

“Article 91. Council of members

1. The Board of members, on behalf of the company, exercises the rights and obligations of the company according to the provisions of this Law and other relevant laws.

2. The Board of members includes the Chairman and other members, numbering no more than 07 people. Members of the Board of members are appointed, dismissed, demoted, rewarded and disciplined by the owner’s representative agency.

3. The term of office of the Chairman and other members of the Board of Members shall not exceed 05 years. Members of the Board of members may be reappointed. An individual may be appointed as a member of the Board of Members for no more than 02 terms at a company, unless he or she has worked for more than 15 years continuously at that company before being appointed for the first time.”

Accordingly, the Board of Members, on behalf of the company, exercises the rights and obligations of the company in accordance with the provisions of this Law and other relevant laws. The Board of members includes the Chairman and other members, numbering no more than 07 people. Members of the Board of members are appointed, dismissed, demoted, rewarded and disciplined by the owner’s representative agency.

2. How are the rights and obligations of the Board of Members regulated?

According to Article 92 of the Law on Enterprises 2020, the rights and obligations of the Board of Members are stipulated as follows:

“Article 92. Rights and obligations of the Board of Members

1. The Board of Members, on behalf of the company, exercises the rights and obligations of owners, shareholders, and members towards the company in which the company is the owner or owns shares and capital contributions.

2. The Board of members has the following rights and obligations:

a) Decide on the contents as prescribed in the Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

b) Decide on the establishment, reorganization and dissolution of branches, representative offices and dependent accounting units;

c) Decide on the company’s annual production and business plans, market development, marketing and technology policies;

d) Organize internal audit activities and decide to establish the company’s internal audit unit;

d) Other rights and obligations according to the provisions of the company charter, this Law and other relevant laws.”

Accordingly, the Board of Members has the following rights and obligations:

– Decide on the contents as prescribed in the Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

– Decide on the establishment, reorganization and dissolution of branches, representative offices and dependent accounting units;

– Decide on annual production and business plans, market development policies, marketing and technology of the company;

– Organize internal audit activities and decide to establish the company’s internal audit unit;

– Other rights and obligations according to the provisions of the company charter, this Law and other relevant laws. 

3. Can the Chairman of the Board of members sign a document appointing himself as Director?

According to Clause 2, Article 56 of the Law on Enterprises 2020, the rights and obligations of the Chairman of the Board of Members are as follows: 

“Article 56. Chairman of the Board of Members

[…]

2. The Chairman of the Board of Members has the following rights and obligations:

a) Prepare programs and activity plans of the Board of Members;

b) Prepare the agenda, content, documents for meetings of the Board of Members or to collect opinions of members;

c) Convene, preside and chair a meeting of the Board of Members or organize to collect opinions of members;

d) Supervise or organize the supervision of the implementation of resolutions and decisions of the Board of Members;

dd) On behalf of the Board of Members, sign resolutions and decisions of the Board of Members;

e) Other rights and obligations according to the provisions of this Law and the Company’s Charter.

[…]”

Accordingly, the Chairman of the Board of Members has the right to sign resolutions and decisions of the Board of Members on behalf of the Board of Members member. 

At the same time, in Clause 2, Article 59 of the Law on Enterprises 2020 as follows:

“Article 59. Resolutions and decisions of the Board of Members

[…]

2. In case the company Charter does not have other provisions, resolutions and decisions on the following issues must be passed by voting at the meeting of the Board of Members:

a) Amending and supplementing the content of the Company Charter;

b) Deciding on the direction of company development;

c) Electing, dismissing, dismissing the Chairman of the Board of Members; appoint, dismiss, dismiss the Director or General Director;

d) Approve the annual financial report;

dd) Reorganize and dissolve the company.

[…]”

Based on the above regulations, in this case, the Chairman of the Board of Members can sign a Resolution on the appointment of the Director company director.