Is the law required to develop internal governance regulations of public companies? Does a group of shareholders owning 10% of the total common shares have the right to nominate people to the Board of Directors?

Is the law required to develop internal governance regulations for public companies?

At Point b, Clause 3, Article 41 of the 2019 Securities Law, it is stipulated as follows:

Corporate governance content applies to public companies

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3. The composition, structure, responsibilities and obligations of the Board of Directors ensure compliance with the following regulations:

a) The structure of the Board of Directors of a public company ensures a balance between executive and non-executive members of the Board of Directors, and the number of independent members of the Board of Directors to ensure the independence of the Board of Directors;

b) The Board of Directors must be responsible to shareholders for the company’s activities; ensure the company’s operations comply with the law, the company’s Charter and the company’s internal regulations; Develop internal regulations on corporate governance and submit them to the General Meeting of Shareholders for approval; appoint a person in charge of corporate governance and have other responsibilities and obligations according to the provisions of law and the company’s charter;

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Accordingly, the Board of Directors of public companies must develop internal regulations on corporate governance and submit them to the General Meeting of Shareholders for approval.

If you want to develop internal governance regulations, you can refer to Article 270 of Decree 155/2020/ND-CP stipulating the company charter and internal regulations on corporate governance as follows:

“Article 270. Company charter and internal regulations on corporate governance

1. The company charter is approved by the General Meeting of Shareholders and must not contravene the Enterprise Law, Securities Law, the provisions of this Decree and relevant legal documents.

2. Internal regulations on corporate governance are developed by the Board of Directors and submitted to the General Meeting of Shareholders for approval. Internal regulations on corporate governance must not contravene the provisions of law and the company’s Charter.

3. The Minister of Finance shall guide the Model Charter and Model Internal Regulations on Corporate Governance for public companies to refer to in formulating the Charter of the Company and Internal Regulations on Corporate Governance.”

Accordingly, the Internal Regulations on corporate governance are developed by the Board of Directors and submitted to the General Meeting of Shareholders for approval. Internal regulations on corporate governance must not contravene the provisions of law and the company’s Charter.

How is candidacy and nomination of members of the Board of Directors in public companies carried out?

According to Article 274 of Decree 155/2020/ND-CP regulating the candidacy and nomination of members of the Board of Directors in public companies as follows:

– In case a candidate for the Board of Directors has been identified, the public company must disclose information related to the candidates at least 10 days before the opening date of the General Meeting of Shareholders on the company’s website so that shareholders can learn about these candidates before voting. The candidate for the Board of Directors must have a written commitment to the truthfulness and accuracy of the published personal information and must commit to performing their duties honestly. carefully and in the best interests of the company if elected as a member of the Board of Directors. Information related to announced candidates for the Board of Directors includes:

+ Full name, date, month, year of birth;

+ Professional qualifications;

+ Work process;

+Other management positions (including positions of Board of Directors of other companies);

+ Benefits related to the company and its related parties;

+ Other information (if any) as prescribed in the Company Charter.

Public companies must be responsible for disclosing information about the companies where the candidate is holding the position of member of the Board of Directors, other management positions, and interests related to the Board candidate’s company (if any).

– Shareholders or groups of shareholders owning 10% or more of the total common shares or a smaller percentage as prescribed in the company’s Charter have the right to nominate candidates for the Board of Directors in accordance with the provisions of the Enterprise Law and the company’s Charter.

– In case the number of candidates for the Board of Directors through nomination and candidacy is still insufficient as prescribed in Clause 5, Article 115 of the Law on Enterprises, the incumbent Board of Directors introduces additional candidates or organizes nominations according to the provisions of the company’s Charter and the company’s internal regulations on corporate governance. The introduction of additional candidates by the Board of Directors must be clearly announced before the General Meeting of Shareholders votes to elect members of the Board of Directors in accordance with the law.

Does a group of shareholders owning 10% of the total common shares have the right to nominate people to the Board of Directors?

Pursuant to Clause 2, Article 274 of the Decree 155/2020/ND-CP stipulates as follows:

“Article 274. Candidacy and nomination of members of the Board of Directors

[…]

2. Shareholders or groups of shareholders owning 10% or more of the total number of common shares or a smaller percentage as prescribed in the Company Charter have the right to nominate candidates for the Board of Directors according to the provisions of the Enterprise Law and Charter of the company.

Accordingly, shareholders or groups of shareholders owning 10% or more of the total common shares or a smaller percentage as prescribed in the company’s Charter have the right to nominate candidates for the Board of Directors. That is, the group of shareholders owning 10% of the total common shares has the right to nominate people to the Board of Directors.