Standards and Conditions for Serving as a Member of the Board of Directors of a Joint Stock Company under the Law

1. What are the standards and conditions for serving as a member of the Board of Directors of a joint stock company?

Pursuant to Article 155 of the Law on Enterprises 2020 on the organizational structure, standards, and conditions for serving as a member of the Board of Directors as follows:

– A member of the Board of Directors must satisfy the following standards and conditions:

+ Not falling under the subjects prescribed in Clause 2, Article 17 of this Law;

+ Having professional qualifications and experience in business administration or in the company’s business fields, sectors, or trades, and not necessarily being a shareholder of the company, unless the company charter provides otherwise;

+ A member of the company’s Board of Directors may concurrently be a member of the Board of Directors of another company;

+ For state-owned enterprises as prescribed at Point b, Clause 1, Article 88 of this Law and subsidiaries of state-owned enterprises as prescribed in Clause 1, Article 88 of this Law, a member of the Board of Directors must not be a family-related person of the Director, General Director, or other managers of the company; of managers or persons competent to appoint managers of the parent company.

– Unless the law on securities provides otherwise, an independent member of the Board of Directors as prescribed at Point b, Clause 1, Article 137 of this Law must satisfy the following standards and conditions:

+ Not being a person currently working for the company, its parent company, or its subsidiaries; not being a person who has worked for the company, its parent company, or its subsidiaries for at least 03 consecutive years preceding;

+ Not being a person currently receiving salary or remuneration from the company, except allowances to which members of the Board of Directors are entitled as prescribed;

+ Not being a person whose spouse, biological father, adoptive father, biological mother, adoptive mother, biological child, adopted child, biological brother, biological sister, or biological younger sibling is a major shareholder of the company; is a manager of the company or its subsidiaries;

+ Not being a person directly or indirectly owning at least 01% of the total voting shares of the company;

+ Not being a person who has served as a member of the Board of Directors or Board of Controllers of the company for at least 05 consecutive years preceding, unless appointed for 02 consecutive terms.

– An independent member of the Board of Directors must notify the Board of Directors of no longer satisfying the standards and conditions prescribed in Clause 2 of this Article and automatically ceases to be an independent member of the Board of Directors from the date of failing to satisfy such standards and conditions. The Board of Directors must announce the case of an independent member of the Board of Directors no longer satisfying the standards.

Accordingly, the standards and conditions for becoming a member of the Board of Directors are:

+ Not falling under the subjects prescribed in Clause 2, Article 17 of this Law;

+ Having professional qualifications and experience in business administration or in the company’s business fields, sectors, or trades, and not necessarily being a shareholder of the company, unless the company charter provides otherwise;

+ A member of the company’s Board of Directors may concurrently be a member of the Board of Directors of another company;

+ For state-owned enterprises as prescribed at Point b, Clause 1, Article 88 of this Law and subsidiaries of state-owned enterprises as prescribed in Clause 1, Article 88 of this Law, a member of the Board of Directors must not be a family-related person of the Director, General Director, or other managers of the company; of managers or persons competent to appoint managers of the parent company.

2. How much salary, remuneration, and other benefits is a member of the Board of Directors entitled to?

Under Article 163 of the Law on Enterprises 2020 on salary, remuneration, bonuses, and other benefits of members of the Board of Directors as follows:

– The company is entitled to pay remuneration and bonuses to members of the Board of Directors, and pay salaries and bonuses to the Director or General Director and other managers based on business results and efficiency.

– Where the company charter does not provide otherwise, the salary, remuneration, bonuses, and other benefits of members of the Board of Directors, the Director, or the General Director are paid as follows:

+ Members of the Board of Directors are entitled to work remuneration and bonuses. Work remuneration is calculated based on the number of working days necessary to complete the tasks of the member of the Board of Directors and the remuneration rate per day. The Board of Directors estimates the remuneration for each member on the principle of unanimity. The total remuneration and bonuses of the Board of Directors are decided by the General Meeting of Shareholders at the annual meeting;

+ Members of the Board of Directors are reimbursed for food, accommodation, travel, and other reasonable expenses when performing assigned tasks;

+ The Director or General Director is paid salary and bonuses. The salary and bonuses of the Director or General Director are decided by the Board of Directors.

– The remuneration of each member of the Board of Directors, the salary of the Director or General Director and other managers are included in the company’s business expenses under the law on corporate income tax, presented as a separate item in the company’s annual financial statements, and must be reported to the General Meeting of Shareholders at the annual meeting.

Accordingly, the company is entitled to pay remuneration and bonuses to members of the Board of Directors based on business results and efficiency. The remuneration of each member of the Board of Directors is included in the company’s business expenses under the law on corporate income tax, presented as a separate item in the company’s annual financial statements, and must be reported to the General Meeting of Shareholders at the annual meeting.

3. May a person serve as a member of the Board of Directors of the same joint stock company for two consecutive terms?

Pursuant to Article 154 of the Law on Enterprises 2020 on the term and number of members of the Board of Directors as follows:

“Article 154. Term and number of members of the Board of Directors

1. The Board of Directors has from 03 to 11 members. The company charter specifically prescribes the number of members of the Board of Directors.

2. The term of a member of the Board of Directors must not exceed 05 years and may be re-elected with an unlimited number of terms. An individual may be elected as an independent member of the Board of Directors of a company for not more than 02 consecutive terms.

3. Where all members of the Board of Directors end their terms at the same time, such members continue to be members of the Board of Directors until new members are elected to replace them and take over the work, unless the company charter provides otherwise.

4. The company charter specifically prescribes the number, rights, obligations, and the manner of organizing and coordinating activities of independent members of the Board of Directors.”

Accordingly, the term of a member of the Board of Directors must not exceed 05 years and may be re-elected with an unlimited number of terms. An individual may be elected as an independent member of the Board of Directors of a company for not more than 02 consecutive terms.