Must a Director in a Wholly State-Owned Enterprise Report Work Difficulties?

Must an employee hired as director in a wholly state-owned enterprise report difficulties encountered during the performance of the labor contract?

1. What is a wholly state-owned enterprise?

Under Clauses 1 and 2, Article 88 of the Law on Enterprises 2020 (amended and supplemented by Law 76/2025/QH15, effective from 01/7/2025) on state enterprises:

“Article 88. State enterprises

1. State enterprises are organized and managed in the form of limited liability companies and joint-stock companies, including:

a) Enterprises in which the State holds 100% of charter capital;

b) Enterprises in which the State holds over 50% of charter capital or the total number of voting shares, except for the enterprises specified at Point a, Clause 1 of this Article.

2. Enterprises in which the State holds 100% of charter capital under Point a, Clause 1 of this Article include:

a) Single-member limited liability companies in which the State holds 100% of charter capital that are parent companies of state economic groups, parent companies of state corporations, and parent companies in parent-subsidiary groups;

b) Single-member limited liability companies that are independent companies in which the State holds 100% of charter capital.”

Thus, an enterprise in which the State holds 100% of charter capital (commonly called a wholly state-owned enterprise) is a state enterprise, including single-member limited liability companies in which the State holds 100% of charter capital that are parent companies of state economic groups, parent companies of state corporations, parent companies in parent-subsidiary groups, and single-member limited liability companies that are independent companies in which the State holds 100% of charter capital.

2. What standards and conditions must a director of a wholly state-owned enterprise meet?

Under Article 101 of the Law on Enterprises 2020 on standards and conditions for directors of wholly state-owned enterprises:

• Not falling under the subjects specified in Clause 2, Article 17 of this Law.
• Having professional qualifications and experience in business administration or in the company’s business sectors, industries and trades.
• Not being a family member of the head or deputy head of the owner-representative agency; members of the Members’ Council, Chairman of the company; Deputy General Directors, Deputy Directors and the Chief Accountant of the company; or company supervisors.
• Never having been dismissed as Chairman of the Members’ Council, member of the Members’ Council, Chairman of the company, Director or General Director, Deputy Director or Deputy General Director at the company or at another state enterprise.
• Not concurrently serving as Director or General Director of another enterprise.
• Other standards and conditions prescribed in the company charter.

3. Must a director in a wholly state-owned enterprise report difficulties during work performance?

Under Article 5 of Decree 145/2020/ND-CP on the contents of labor contracts for employees hired as directors in wholly state-owned enterprises:

The labor contract for an employee hired as director in an enterprise in which the State holds 100% of charter capital, or in which the State holds over 50% of charter capital or the total number of voting shares under Clause 4, Article 21 of the Labor Code, includes the following main contents:

• Name and address of the enterprise’s head office under the enterprise registration certificate; full name, date of birth, citizen ID card or ID card or passport number, phone number, and contact address of the Chairman of the Members’ Council, Chairman of the company, or Chairman of the Board of Directors.
• Full name; date of birth; gender; nationality; education level; residential address in Vietnam, residential address abroad (for foreign employees); citizen ID card or ID card or passport number; phone number, contact address; work permit number issued by the competent state agency or document confirming non-eligibility for a work permit; other documents as required by the employer (for foreign employees), if any, of the employee hired as director.
• Tasks permitted, tasks prohibited, and obligations tied to the results of work performance of the employee hired as director.
• Workplace of the employee hired as director.
• The term of the labor contract as agreed by the two parties, not exceeding 36 months. For foreign employees hired as directors, the labor contract term shall not exceed the term of the work permit issued by the competent state agency.
• Contents, time limits, responsibilities for protecting business secrets and technological secrets of the enterprise applicable to the employee hired as director, and handling of violations.
• Rights and obligations of the employer, including:
  • Providing information to the employee hired as director to perform tasks;
  • Inspecting, supervising, and evaluating the work performance effectiveness of the person hired as director;
  • Other rights and obligations under the law;
  • Issuing working regulations for the director;
  • Performing obligations toward the employee hired as director regarding: salary and bonus payments; social insurance, health insurance and unemployment insurance contributions; provision of working, travel, food and accommodation means; training and development;
  • Other rights and obligations as agreed by the two parties.
• Rights and obligations of the employee hired as director, including:
  • Performing tasks under the labor contract;
  • Reporting and proposing solutions for difficulties and obstacles arising in the course of performing tasks under the labor contract;
  • Reporting on the management and use of capital, assets, labor and other resources;
  • Entitlement to regimes regarding: salary and bonuses; working hours and rest hours; provision of working, travel, food and accommodation means; social insurance, health insurance and unemployment insurance; training and development; other regimes as agreed by the two parties;
  • Other rights and obligations as agreed by the two parties.
• Conditions, order and procedures for amending or supplementing the labor contract and for unilateral termination of the labor contract.
• Rights and obligations of the employer and the employee hired as director upon termination of the labor contract.
• Labor discipline, material liability, settlement of labor disputes and complaints.
• Other contents as agreed by the two parties.

Thus, reporting and proposing solutions for difficulties and obstacles arising in the course of performing tasks under the labor contract is one of the contents on the rights and obligations of the employee hired as director. Accordingly, a director in a wholly state-owned enterprise must report difficulties encountered during work performance.

Notes on applying current legal provisions

This article belongs to the Enterprise Knowledge & M&A 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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