Who has the right to change the legal representative in a joint stock company?

1. What is a joint stock company?

According to Article 111 of the Law on Enterprises 2020, the regulations on joint stock companies are as follows:

“Article 111. Joint stock company

1. Joint stock company is an enterprise, in which:

a) charter capital is divided into equal parts called shares;

b) Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number;

c) Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

d) Shareholders have the right to freely transfer their shares to others, except for the cases specified in Clause 3, Article 120 and Clause 1, Article 127 of this Law.

2. A joint stock company has legal status from the date of issuance of the Business Registration Certificate.

3. A joint stock company has the right to issue shares, bonds and other securities of the company.”

Accordingly, a joint stock company is an enterprise in which:

+ charter capital is divided into equal parts called shares;

+ Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number;

+ Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise;

+ Shareholders have the right to freely transfer their shares to others.

2. In a joint stock company, who is the legal representative?

Pursuant to the provisions of Article 137 of the Law on Enterprises 2020, the regulations on the organizational and management structure of joint stock companies are 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 Charter or the operating regulations of the Audit Committee issued by the Board of Directors.

2. In case the company has only one legal representative, the Chairman of the Board of Directors or Director or General Director is the legal representative of the company. In case there is no regulation in the Charter, the Chairman of the Board of Directors is the legal representative of the company. In case the company has more than one legal representative, the Chairman of the Board of Directors and the Director or General Director are of course the legal representatives of the company.”

So, depending on the organizational structure and charter of the company, the legal representative of the company will also be different for each specific case:

– In case the company has only one representative, the Chairman of the Board of Directors or the Director or General Director is the legal representative of the company. In case the Charter does not stipulate who is the legal representative, the Chairman of the Board of Directors will automatically assume the above position.

– In case there are many representatives, the Chairman of the Board of Directors and the Director or General Director are of course the legal representatives of the company.

3. Who has the right to change the legal representative in a joint stock company?

According to Article 153 of the Law on Enterprises 2020, the Board of Directors is regulated as follows:

– The Board of Directors is the company’s management agency, with full authority on behalf of the company to make decisions and exercise the rights and obligations of the company, except for the rights and obligations under the authority of the General Meeting of Shareholders.

– The Board of Directors has the following rights and obligations:

+ Decide on the company’s strategy, medium-term development plan and annual business plan;

+ Propose the types of shares and the total number of shares authorized to be offered for each type;

+ Decide to sell unsold shares within the scope of the number of shares authorized to be offered for each type; decide to mobilize additional capital in other forms;

+ Decide on the selling price of the company’s shares and bonds;

+ Decide to repurchase shares according to the provisions of Clauses 1 and 2, Article 133 of this Law;

+ Decide on investment plans and investment projects within the authority and limits prescribed by law law;

+ Decide on solutions for market development, marketing and technology;

+ Approve contracts to buy, sell, borrow, lend and other contracts and transactions with a value of 35% or more of the total asset value recorded in the company’s most recent financial report, unless the company’s charter stipulates a different ratio or value and the contract and transaction are under the decision-making authority of the company. The General Meeting of Shareholders according to the provisions of Point d, Clause 2, Article 138, Clause 1 and Clause 3, Article 167 of this Law;

+ Elect, dismiss, dismiss the Chairman of the Board of Directors; appoint, dismiss, sign contracts, terminate contracts with the Director or General Director and other important managers as prescribed by the company’s Charter; decide on salaries, remunerations, bonuses and other benefits of those managers; appoint authorized representatives to participate in the Board of Members or General Meeting of Shareholders in other companies, decide on the remuneration and other benefits of those people;

+ Supervise and direct the Director or General Director and other managers in operating the company’s daily business;

+ Decide on the company’s organizational structure, internal management regulations, and decide on the establishment of the company subsidiaries, branches, representative offices and capital contributions and stock purchases of other enterprises;

+ Approve the agenda and content of documents for the General Meeting of Shareholders, convene a General Meeting of Shareholders or collect opinions for the General Meeting of Shareholders to pass a resolution;

+ Submit annual financial reports to the General Meeting of Shareholders;

+ Recommendations dividend rate to be paid; decide on the time limit and procedures for paying dividends or handling losses arising during the business process;

+ Proposing the reorganization and dissolution of the company; request bankruptcy of the company;

+ Other rights and obligations according to the provisions of this Law and the company’s Charter.

– The Board of Directors passes resolutions and decisions by voting at meetings, soliciting written opinions or other forms prescribed by the company’s Charter. Each member of the Board of Directors has one vote.

– In case a resolution or decision passed by the Board of Directors is contrary to the provisions of law, the resolutions of the General Meeting of Shareholders, or the Company’s Charter, causing damage to the company, the members who approve the resolution or decision must jointly bear personal responsibility for that resolution or decision and must compensate the company for damage; Members who oppose the adoption of the above resolutions and decisions are exempted from liability. In this case, the company’s shareholders have the right to request the Court to suspend the implementation or cancel the above resolutions and decisions.

Accordingly, the Board of Directors has the right to elect, dismiss, and dismiss the Chairman of the Board of Directors; appoint, dismiss, sign contracts, terminate contracts with the Director or General Director and other important managers as prescribed by the company’s Charter; decide on salaries, remunerations, bonuses and other benefits of those managers; appoint authorized representatives to participate in the Board of Members or General Meeting of Shareholders in other companies, and decide on the remuneration and other benefits of those people.