Comparision Of Legal Regulations On Sole-Member Limited Liability Company Between Vietnam And China.pdf

II.Rights, obligations and remunerations of General Director:Regarding rights and obligations of a Director, they are specified in Article 162 ofVietnam Enterprise Law 2020 and Article 1

HANOI UNIVERSITYFACULTY OF MANAGEMENT AND TOURISM

Vũ Mai Chi _ 2004000021Đỗ Kim Anh _ 2004000004

Date: May 4 , 2022

I.Brief introduction of Shareholding company 3

II.Rights, obligations and remunerations of General Director 4

Conflicts between the General Director and Board ofManagement in shareholding companies have been exploredby many articles since the introduction of the Vietnamese stockmarket Over time, the legal regulations have been adjusted toensure the interests of shareholders, the advancement of thestock market, the interests of the government and integrationwith international standards This article aims to re-analyzethe current state of this topic and suggest somerecommendations This research compares the similarities anddifferences regarding Board of Members and GeneralDirector as well as comparison between previous laws andcurrent one Besides, the article provides an illustrativeexample of an actual case and analysis regarding lawsmentioned in the previous part

A Introduction

The web of relationships between executives, investors, and advisors provides abackdrop to conflicts of interest in governance It is challenging for organizationsto take the counsel of board members who bring a helpful perspective - like that ofinvestors - but a perspective that might also represent a conflict best captured as atimeline issue In Vietnam, the stock market was officially established in 2000,opening a new playground for investors and businesses in Vietnam Thecomparison of the responsibility for Board of Members and General Director willhelp the executive team have a better understanding and improve CorporateGovernance is the most important relationship

B Laws regarding General Director and Board of Management analysis

I Brief introduction of Shareholding company

Throughout the years, the concept of “a shareholding company" has fundamentallystood its ground,it is considered an enterprise whose shareholders can either beorganizations or individuals as long as the minimum number of shareholdersremains higher or equal to three Moreover, the shareholders are liable for thecompany's liabilities as well as debts to the full extent of their capital contributionto the company A shareholding company is entitled to issue shares, bonds or anyother kinds of securities in order to raise its capital Last but not least, as soon as ajoint stock company is granted the certificate of business (according to VietnamEnterprise Law 2005) or the Certificate of Enterprise registration (mentioned inArticle 111, Vietnam Enterprise Law 2020), it has the legal status as a juridicalperson

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II.Rights, obligations and remunerations of General Director:

Regarding rights and obligations of a Director, they are specified in Article 162 ofVietnam Enterprise Law 2020 and Article 116 of Vietnam Enterprise Law 2005.Through observation, we are capable of recognizing that the laws regardingresponsibilities and authority of a Director does not change much though 15 yearshave passed To be more specific, the Director shall be designated from the Boardof Directors or hired by the Board of Directors The Director would be in charge ofmanaging the company’s daily business operation, supervised by and liable forBoard of Directors members along with the laws regarding his or her performance.Furthermore, the term of a Director could not surpass 5 years but can be renewedwith an unlimited number of terms Regarding rights and obligations of theGeneral Director, he/she is in charge of tasks such as: proposing organizationalstructure for the company, recruiting or dismissing company’s executives andemployees except for ones under Board of Directors' jurisdiction, deciding on thesalaries and benefits of employees,etc

However, in Vietnam Enterprise Law 2020, there is a clause added to specify therequirements for General Director which is Clause 5 of Article 162 In particular,the clause mentioned that he must not be a relative of any executives, controllers ofthe company or the parent company; the representatives of state investments andthe enterprise’s investment in either the company or the parent company.Moreover, he must have professional qualifications and experience related toBusiness Administration The last difference between the two years is that in 2005,the director or general director of the company can not simultaneously be thegeneral director of another company or enterprise, which is a quite significantdifference regarding the rights of Director

III.Board of Director

When putting Enterprise law of 2005 and 2020 in comparison, we have coveredwhat's remained the same over the years the and what's changed based on variousterms, including: rights and obligations; office and quantity of members; Presidentof the Board of Directors; organization and requirements for membership; meetingof the Board of Directors

In terms of rights and obligations, both 2020 and 2005 legal documents clearlystate in articles 153 and 108 that the Board of Directors and Board of Managementshare the term executive body of the company, having the authority to makedecisions for the company and fulfill its rights and obligations, except for those ofthe General Manager (GM) The following rights and obligations of the Board ofManagement maintain the same Furthermore, the Board of Management ratifiesits decisions and resolutions by voting at a meeting, by questionnaire survey or byanother means specified in the charter

Both years' legal documents provide for the term of office and the number ofmembers to be three to eleven, and that the term of office of a member of theBoard of Directors should not exceed five years

Moreover, there are many commonalities between 2005 Enterprise law and 2020Enterprise law in terms of organization and membership requirements Article 109point 4 of the Enterprise Law 2005 stated that if the order and procedures ofconvention, the agenda and the meeting procedures do not conform to theregulations, the resolutions passed by shareholders and their authorizedrepresentatives representing 100% of the voting shares shall be lawful and take

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immediate effect This has a lot in common with Article 155 point 1clause b fromEnterprise Law 2020.

As for the rights and responsibilities of the President of the Board of Directors,many similarities exist between Clause 2 Article 11 (2005) and Point 3 Article 156(2020):

a) Organize the activities of the Board of Directorsb) Prepare agendas and documents for meetings of the Board of Directors; conveneand chair meetings

c) Ratify the decisions and resolutions of the Board of Directorsd) Ensure that the Board's resolutions and decisions are implemented; dd) Lead the GMS

e) Other rights and obligations stipulated by law and the charter of the company.In regard to the meeting of the Board of Directors, all Board of Directors meetingsmust have minutes taken according to Article 158 (2020) and Article 113 (2005).Minutes must be written in Vietnamese and may be translated into other languages.The minutes' accuracy and veracity are the responsibility of the chair, the minutetaker, and those who sign them.Furthermore, the minutes and meeting papers mustbe kept at the company's headquarters, and Vietnamese and foreign languagecopies of the minutes have equal legal validity

However, there are some differences between 2005 and 2020 Law Enterprise Interms of rights and obligations, the Board of Directors must approve all contractsof purchase, sale, lending, borrowing, and other transactions that represent at least

Article 153 of Enterprise Law 2020), while the Board of Management shouldapprove types of contracts that represent not less than 50% of them (Point g,Clause 2, Article 108 of Enterprise Law 2005) Second, the Board of Directors isempowered only to elect and dismiss the President of the Board of Directors (Pointi, Clause 2, Article 153 of Enterprise Law 2020) whereas the Board ofManagement is authorized to appoint and dismiss the General Director and otherkey managerial positions of the company (Point h, Clause 2, Article 108 ofEnterprise Law 2005)

Regarding the term of office and quantity of members, as mentioned in Clause 1 ofArticle 109 of the 2005 Enterprise Law, at least half of the Board of Managementmembers are required to reside in Vietnam, however, the 2020 Law does notmention that requirement but clarifies that an independent member of the Board ofDirectors of a company may only serve up to two consecutive terms (Clause 2Article 154)

In addition, there is a significant difference between 2005 and 2020 Enterprise lawregarding organization and requirements for membership Whereas in Point bClause 1 Article 110 of 2005 Enterprise law, it was stated that managementmembers should own 5% or more of the company's ordinary shares, in 2020Enterprise law, no equity shareholders are required to serve on the Board ofDirectors (Point b Clause 1 Article 155)

In terms of the President of the Board of Directors, the Board of Directors shallelect one of its members to become president of the Board of Directors and havethe right to dismiss them from membership (Clause 1 Article 156 of Enterprise law2020) whereas it was stated in Clause 1 Article 111 of 2005 Law Enterprise that

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the Chairman of the Board of Management was elected by the Shareholders’Meeting or the Board of Management and it was regulated by the company’scharter.

In regard to the meeting of the Board of Directors, the President of Enterprise 2020shall convene the meeting of the Board of Directors within seven working daysfollowing receipt of the request referred to in Clause 3 of Article 157 LawEnterprise 2020 (Clause 5 Article 157) Moreover, the company's charter specifiesthat invitations must be sent no later than three working days before the meeting bythe person who convenes the meeting (Clause 6 Article 157 of Law Enterprise2020) However, the chairman shall convene a meeting of the Board ofManagement within 15 days of receiving the request (Clause 5 Article 112 LawEnterprise 2005) and the invitation must be sent at least 5 days before the meeting(Clause 6 Article 112 Law Enterprise 2005)

C Actual caseI The case between Hoa Sen Group chairman and former general

director

Mr P.V.T had held the position of deputy general director for businessoperations of Hoa Sen Group (HSG) since April 2017 On October 22, 2010,he signed a commitment: "During the period of contract performance andwithin 36 months from the time of job leave at the company, it is not allowed toprovide information, disclose business secrets out, are obligated not tocooperate, produce, do business, serve as a use agent or disclose informationabout any other organizations or individuals to serve the private work of the