Board of Directors in Joint-Stock Companies: Structure, Term, Membership

Regulations on the Board of Directors in a Joint-Stock Company?

Pursuant to Article 153 of the Law on Enterprises 2020 (as amended and supplemented by Law No. 76/2025/QH15, effective from 01/7/2025), regulations on the Board of Directors in a Joint-Stock Company are as follows:

1. The Board of Directors is the managing body of the company, having full authority in the name of the company to decide and exercise the company’s rights and obligations, except rights and obligations under the authority of the General Meeting of Shareholders.

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

– Deciding strategies, medium-term development plans, and annual business plans of the company;

– Proposing types of shares and the total number of shares of each type authorized for offering;

– Deciding to sell unsold shares within the number of shares authorized for offering of each type; deciding to raise additional capital in other forms;

– Deciding the selling price of the company’s shares and bonds;

– Deciding to repurchase shares as prescribed in Clauses 1 and 2, Article 133 of this Law;

– Deciding investment plans and investment projects within its authority and limits as prescribed by law;

– Deciding solutions for market, marketing, and technology development;

– Approving contracts for purchase, sale, borrowing, lending, and other contracts and transactions valued at 35% or more of the total asset value recorded in the company’s latest financial statements, except where the company charter prescribes a different ratio or value and contracts and transactions under the decision-making authority of the General Meeting of Shareholders as prescribed at Point d, Clause 2, Article 138, Clauses 1 and 3, Article 167 of this Law;

– Electing, dismissing, and removing the Chairperson of the Board of Directors; appointing, dismissing, signing contracts with, and terminating contracts with the Director or General Director and other key managers as prescribed by the company charter; deciding salaries, remuneration, bonuses, and other benefits of such managers; appointing authorized representatives to participate in the Members’ Council or General Meeting of Shareholders of other companies, and deciding the remuneration and other benefits of such persons;

– Supervising and directing the Director or General Director and other managers in conducting the company’s day-to-day business;

– Deciding the organizational structure and internal management regulations of the company, deciding to establish subsidiaries, branches, and representative offices, and to contribute capital to and purchase shares of other enterprises;

– Approving the agenda and content of documents for General Meeting of Shareholders meetings, convening General Meeting of Shareholders meetings, or collecting opinions for the General Meeting of Shareholders to adopt resolutions;

– Submitting annual financial statements to the General Meeting of Shareholders;

– Proposing the level of dividends to be paid; deciding the time limit and procedures for paying dividends or handling losses arising in the course of business;

– Proposing the reorganization or dissolution of the company; requesting the bankruptcy of the company;

– Other rights and obligations as prescribed by this Law and the company charter.

3. The Board of Directors adopts resolutions and decisions by voting at meetings, collecting written opinions, or other forms prescribed by the company charter. Each member of the Board of Directors has one vote.

4. Where a resolution or decision adopted by the Board of Directors is contrary to the law, the General Meeting of Shareholders’ resolutions, or the company charter, causing damage to the company, the members voting in favor of such resolution or decision are jointly and individually responsible for such resolution or decision and must compensate the company for damage; members opposing the adoption of such resolution or decision are exempt from responsibility. In this case, shareholders of the company have the right to request the Court to suspend the implementation of or annul such resolution or decision.

How Are the Term and Number of Members of the Board of Directors in a Joint-Stock Company Regulated?

The term and number of members of the Board of Directors in a Joint-Stock Company are prescribed in Article 154 of the Law on Enterprises 2020, specifically:

“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 does not exceed 05 years and may be re-elected with no limit on the number of terms. An individual may be elected as an independent member of the Board of Directors of a company for no 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, except where the company charter otherwise provides.

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

Accordingly, the Board of Directors has from 03 to 11 members. The term of a member of the Board of Directors does not exceed 05 years and may be re-elected with no limit on the number of terms. An individual may be elected as an independent member of the Board of Directors of a company for no more than 02 consecutive terms.

Organizational Structure, Standards, and Conditions for Members of the Board of Directors in a Joint-Stock Company?

The organizational structure, standards, and conditions for members of the Board of Directors in a Joint-Stock Company are prescribed in Article 155 of the Law on Enterprises 2020, specifically as follows:

1. Members of the Board of Directors must have 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 fields, lines, or trades of the company’s business and not necessarily being a shareholder of the company, except where the company charter otherwise provides;

– A member of the Board of Directors of a company may concurrently be a member of the Board of Directors of another company;

– For state enterprises as prescribed at Point b, Clause 1, Article 88 of this Law and subsidiaries of state enterprises as prescribed in Clause 1, Article 88 of this Law, members of the Board of Directors must not be family members of the Director, General Director, or other managers of the company; or of managers or persons authorized to appoint managers of the parent company.

2. Unless the securities law otherwise provides, independent members of the Board of Directors as prescribed at Point b, Clause 1, Article 137 of this Law must have the following standards and conditions:

– Not being a person working for the company, the parent company, or a subsidiary of the company; not being a person who worked for the company, the parent company, or a subsidiary of the company for at least the 03 immediately preceding years;

– Not being a person receiving salaries 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 older brother, biological older sister, or biological younger sibling is a major shareholder of the company; is a manager of the company or a subsidiary of the company;

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

– Not being a person who was a member of the Board of Directors or the Supervisory Board of the company for at least the 05 immediately preceding years, except where appointed for 02 consecutive terms.

3. An independent member of the Board of Directors must notify the Board of Directors when 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 no longer satisfying such standards and conditions. The Board of Directors must notify the case of an independent member of the Board of Directors no longer satisfying the standards and conditions at the nearest General Meeting of Shareholders or convene a General Meeting of Shareholders to elect additional or replacement independent members of the Board of Directors within 06 months from the date of receipt of the notification of the relevant independent member of the Board of Directors.

A legally compliant Board of Directors structure is the foundation of joint-stock company governance — from the number and term to the standards for independent members, all have mandatory requirements. If your company needs advice on consolidating its Board of Directors, building internal regulations, or a compliant charter, please contact ANT Legal and its corporate lawyers.