Board of Supervisors and Supervisors in Multi-Member LLCs: Standards and Responsibilities

Short answer: A multi-member limited liability company may establish a Board of Supervisors with 01–05 Supervisors; Supervisors must meet the standards in Articles 168 and 169 of the Law on Enterprises 2020.

What are the regulations on the Board of Supervisors and Supervisors in a multi-member limited liability company?

Article 65 of the Law on Enterprises 2020 regulates the Board of Supervisors and Supervisors in a multi-member LLC as follows:

“Article 65. Board of Supervisors, Supervisors

1. The Board of Supervisors has from 01 to 05 Supervisors. A Supervisor’s term of office shall not exceed 05 years and they may be reappointed for an unlimited number of terms. Where the Board of Supervisors has only 01 Supervisor, that Supervisor is concurrently the Head of the Board of Supervisors and must meet the standards of the Head of the Board of Supervisors.

2. The Head of the Board of Supervisors and Supervisors must meet the corresponding standards and conditions prescribed in Clause 2, Article 168 and Article 169 of this Law.

3. The rights, obligations, responsibilities, dismissal, removal and working regime of the Board of Supervisors and Supervisors are applied correspondingly under Articles 106, 170, 171, 172, 173 and 174 of this Law.

4. The Government details this Article.”

Accordingly, the Board of Supervisors has from 01 to 05 Supervisors. A Supervisor’s term of office shall not exceed 05 years and they may be reappointed for an unlimited number of terms. Where the Board of Supervisors has only 01 Supervisor, that Supervisor is concurrently the Head of the Board of Supervisors and must meet the standards of the Head of the Board of Supervisors.

What are the standards and conditions of the Board of Supervisors and Supervisors of a multi-member LLC?

The standards and conditions of the Board of Supervisors and Supervisors of a multi-member LLC are prescribed in Article 168 and Article 169 of the Law on Enterprises 2020, specifically:

For the Board of Supervisors:

(1) The Board of Supervisors has from 03 to 05 Supervisors. A Supervisor’s term of office shall not exceed 05 years and they may be re-elected for an unlimited number of terms.

(2) The Head of the Board of Supervisors is elected by the Board of Supervisors from among the Supervisors; election, dismissal and removal follow the majority principle. The rights and obligations of the Head of the Board of Supervisors are prescribed by the company charter. The Board of Supervisors must have more than half of its Supervisors residing in Vietnam. The Head of the Board of Supervisors must hold a university degree or higher in economics, finance, accounting, auditing, law, business administration, or a discipline related to the enterprise’s business operations, except where the company charter prescribes higher standards.

(3) Where Supervisors’ terms end at the same time and the new-term Supervisors have not yet been elected, the Supervisors whose terms have expired continue to exercise their rights and obligations until the new-term Supervisors are elected and take office.

For Supervisors:

(1) Supervisors must meet the following standards and conditions:

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

– Trained in one of the disciplines of economics, finance, accounting, auditing, law, business administration, or a discipline suitable to the enterprise’s business operations;

– Not being a family-related person of a member of the Board of Directors, the Director or General Director, or other managers;

– Not being a manager of the company; not necessarily being a shareholder or employee of the company, except where the company charter provides otherwise;

– Other standards and conditions under relevant laws and the company charter.

(2) In addition to the standards and conditions prescribed in Clause 1 of this Article, Supervisors of public companies and State enterprises under Point b, Clause 1, Article 88 of this Law must not be family-related persons of the enterprise managers of the company and the parent company; persons representing the enterprise’s capital contributions or the State’s capital contributions at the parent company and at the company.

What are the responsibilities of the Board of Supervisors and Supervisors in a multi-member LLC?

The responsibilities of the Board of Supervisors and Supervisors in a multi-member LLC are prescribed in Article 71 of the Law on Enterprises 2020, specifically:

Supervisors of the company have the following responsibilities:

– Exercise their rights and obligations honestly, carefully and in the best manner to ensure the maximum lawful interests of the company;

– Be loyal to the interests of the company; not abuse their position or title and not use the company’s information, know-how, business opportunities or other assets for personal gain or to serve the interests of other organizations or individuals;

– Promptly, fully and accurately notify the company of the enterprises they own or in which they hold shares or capital contributions, and the enterprises that their related persons own, jointly own or separately own controlling shares or capital contributions;

– Other responsibilities under the law and the company charter.

The above notification must be in writing and include the following contents:

– Name, enterprise code, head office address of the enterprises they own or in which they own capital contributions or shares; the ratio and time of such ownership of capital contributions or shares;

– Name, enterprise code, head office address of the enterprises that their related persons own, jointly own or separately own controlling shares or capital contributions.