Business structure in Vietnam

Minh Nguyen 7/20/2012
yiuyuiu 1
1
Topic 2 Business Structures
Ha, Thi Thanh Binh (LLD)
Outlines
2
• General understanding of business structures
in Vietnam.
• Forms of business in Vietnam.
• Dissolution of an enterprise.
• Re-structuring of a company in Vietnam.
Ha, Thi Thanh Binh (LLD)
General understanding of Business
structures in Vietnam
3
• Definition of an enterprise.
• Characteristics of an enterprise.
• Formation of an enterprise.
Ha, Thi Thanh Binh (LLD)
Definition of an enterprise
4
• Enterprise means an economic organization that has its own
name, assets, permanent transaction office, and has been
lawfully registered for the purpose of conducting business.
(Art 4.1 of the LOE).
• Business means the continuous implementation of one,
several or all of stages of an investment process, from the
production to sale of products or provision of services on the
market for profit purposes.
Ha, Thi Thanh Binh (LLD)

Characteristics of an enterprise
5
• has its own name.
• has its own asset separated from other’s.
• has a permanent registered office.
• has to be established in accordance with the law.
• carry out business for the purpose of making profits.
Ha, Thi Thanh Binh (LLD)
Formation of an enterprises
• The right to set up a business
• The procedures to set up a business
• Business name
Ha, Thi Thanh Binh (LLD)
6
Minh Nguyen 7/20/2012
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The right to set up a business
7
• Founders and managers of an enterprise
• Capital contributors to an enterprise
Ha, Thi Thanh Binh (LLD)
Founders and managers of an
enterprise
8
• Founder means anyone who owns a private enterprise or who
formulates, approves and signs the original charter of the company.
• Manager means the owner or director of a private enterprise, general
partner of a partnership, chairman of the members’ council, president of
a company, member of the management board, director or general
director or other important managerial positions provided for in the

company’s charter.
• Who?
– Every individual and organization (having legal entity status) except those who
are listed in Art 13.2 of the LOE.
Ha, Thi Thanh Binh (LLD)
Capital contributors to an
enterprise
9
• Those who contribute capital to the registered
(charter) capital of an enterprise.
• Who?
– Every individual and organization (having legal
entity status) except those who are listed in Art
13.4 of the LOE.
Ha, Thi Thanh Binh (LLD)
Forms of capital contribution
10
• Vietnamese currency,
• Freely convertible foreign currency,
• Gold,
• Value of land use rights,
• Value of intellectual property, technology, technical
know how,
• Other assets as provided for in the charter of the
company.
Ha, Thi Thanh Binh (LLD)
The procedures to set up a
business
11
• Prepare and submit the business registration

application dossier as required under the LOE to a
competent business registration authority.
• Business registration certificate to be issued within
10 days from the date of receiving sufficient
documents.
• Announcement of the establishment within 30 days
from the date of receiving the business registration
certificate as required in Art. 28 of the LOE.
Ha, Thi Thanh Binh (LLD)
Conditions for the grant of a business
registration certificate
12
• Business lines to be registered are not prohibited;
• The name of the proposed enterprise complies with the
provisions of Art 31, 32, 33, 34 of the LOE;
• The proposed enterprise has its business registered office in
accordance with Art. 35 of the LOE;
• Business registration dossier is sufficient as required by law
• Business registration fee is fully paid.
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Prohibited lines of business
13
- Trading in weapons, ammunition, military equipment, military items and
specialist military technical equipment of the armed forces;
- Trading in explosives, poisonous chemicals and radioactive substances;
- Trading in drugs of addiction;
- Prostitution, organizing prostitution services and trading in women and
children;

- Providing gambling services or operating gambling venues;
- Trading in chemical substances of high toxicity.
- Trading in any items which belong to the historical, cultural or museum
heritage;
- ….others provided in Art. 7 of Decree 102/2010/NĐ-CP.
Ha, Thi Thanh Binh (LLD)
Conditional lines of business
14
- In the form of a business license issued by the
relevant authority body.
- In the form of fulfillment of regulations (such as
requirement on foods hygiene and safe, by means of
regulations on fire prevention and fire-fighting
….(business conditions that do not require a license).
- In the form of legal capital requirements.
- In the form of practicing certificates.
Ha, Thi Thanh Binh (LLD)
Business name
15
• Functions
• Requirements
– Components (Art. 31)
– Vietnamese and foreign name (Art. 33)
– Prohibitions (Art. 32)
– Identical and confused names (Art. 34)
Ha, Thi Thanh Binh (LLD)
Selected forms of business
structure in Vietnam
16
• Private enterprise

• Partnership
• Company
– One member limited liability company
– Two or more member limited liability company
– Joint stock company
Ha, Thi Thanh Binh (LLD)
Private Enterprise
17
• Definition
• Characteristics
• Management
• Special rights of the owner
Ha, Thi Thanh Binh (LLD)
Definition
18
A
private enterprise is an enterprise owned by
one individual who shall be liable for all
activities of the enterprise to the extent of all
his or her assets. (Art.141 of the LOE).
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Characteristics
19
- is an independent business, it has freedom of carrying on its business
and it can conduct business autonomously.
- is formed by an individual who is owner and manages the business.
- Does not have legal entity status.
- The owner shall be unlimited liable for all activities of the enterprise.

Ha, Thi Thanh Binh (LLD)
Management of enterprise
20
• The owner shall have
– total discretion in making all business decisions;
– total discretion in deciding on the use of profits after payment of taxes
and performance of other financial obligations as stipulated by law.
• The owner may manage and administer the business operation or
employ other person to do so.
• Where another person is employed as the director managing the
enterprise, the owner must
– declare this with the business registration body and
– remain responsible for all business activities of the enterprise.
Ha, Thi Thanh Binh (LLD)
Special rights of owner of a private enterprise
21
- Lease of enterprise
 A written report and a notarized copy of the lease contract must be submitted to
the business registration body and the tax authorities.
- Sale of private enterprise
• No later than 15 days prior to the date of transferring the enterprise to the
purchaser, the owner must provide written notice to the business registration
body.
• The purchaser and seller of an enterprise must comply with the provisions of the
law.
- Suspension of operation
• A written notice must be submitted to the business registration body and the tax
authority of the duration of such suspension no later than 15 days prior to
suspension of the business operation of the enterprise.
Ha, Thi Thanh Binh (LLD)

PARTNERSHIP
22
• Definition
• Characteristics
• Management
• Partners
Ha, Thi Thanh Binh (LLD)
Definition
23
According to Art 130 of the LOE, a partnership is a business in which:
• There must be at least two unlimited liability
partners doing business together under a common
name. In addition to whom there may be limited
liability partners (the literal translation is “capital
contributing partners”)
• Unlimited liability partners must be individuals who
have professional qualifications and credibility and
shall be liable for the obligations of the partnership
to the extent of all their assets.
• Limited liability partners shall only be liable for the
debts of the partnership to the extent of the
amount of the capital they have contributed to the
partnership.
Ha, Thi Thanh Binh (LLD)
Characteristics
24
– There are two types of partnership. One is the partnership with
all unlimited liability partners, the other is the partnership with
both unlimited and limited liability partners.
– It is compulsory that a partnership must have unlimited liability

partners. A partnership may have limited liability partners.
– Only unlimited liability partners shall be directly involved in the
management of the partnership’s business operation, limited
liability partners shall not be involved in the management of the
partnership or conduct business activities in the name of the
partnership.
– Partnership has a legal status separated from its partners.
– Partnership is not entitled to issue securities to the public.
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Management
25
• Shall be agreed by unlimited liability
partners in the charter of the partnership.
• Unlimited liability partners shall have equal
right upon making decisions on issues of
management of the partnership unless
otherwise provided for in the Charter.
Ha, Thi Thanh Binh (LLD)
Management Structure
26
• Partners’ Council
• Director
Ha, Thi Thanh Binh (LLD)
The Partners’ Council
27
+
comprise all unlimited liability partners.
+ is the highest decision-making body of the

partnership.
+ make decisions on all activities of the partnership.
+ when voting, each unlimited liability partner shall
have one vote unless otherwise provided for in the
Charter.
Ha, Thi Thanh Binh (LLD)
The Partners’ Council (cont.)
28
+ Resolutions on the following issues must be approved by at
least three-fourth of all unlimited liability partners unless
otherwise provided for by the charter:
– Business plan of the partnership;
– Admission of unlimited liability partners;
– Dismissal of unlimited liability partners;
– Amendments of and additions to the charter of the partnership;
– Dissolution of the partnership,
– Decision on the sell or purchase of assets valued at or more than the
charter capital of the partnership…
+ Other matters shall be decided by at least two-third of all
unlimited liability partners.
Ha, Thi Thanh Binh (LLD)
The Partners’ Council (cont.)
29
+ All resolutions of the Partners’ Council must
be recorded in a meeting minutes book.
Ha, Thi Thanh Binh (LLD)
A director of a partnership shall have the
following duties:
30
+ To delegate, regulate and coordinate the tasks

of the unlimited liability partners;
+ To manage the business affairs of the
partnership;
+ To perform other duties as authorized by
unlimited liability partners.
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Admission of partners
31
• A person shall be admitted as an unlimited liability
partners or as a limited liability partner of the
partnership upon agreement of the Partners’
Council.
• An unlimited liability partner admitted to the
partnership shall only be liable for the obligations of
the partnership arising after such partner has been
registered with the business registration body.
Ha, Thi Thanh Binh (LLD)
Termination of status as partner
32
• The status as an unlimited partner shall be terminated in the following
circumstances:
+ Death or death declaration by a court;
+ Disappearance declaration by a court or reduction or loss of capacity for civil acts;
+ Voluntary withdrawal from the partnership;
+ Dismissal from the partnership.
+ Other cases provided for in the partnership’s charter
• The status of a limited liability partner shall be terminated when:
+ Death or death declaration by a court;

+ Assignment of his or her share of equity to other;
+ Leave his or her share of equity at will to others.
Ha, Thi Thanh Binh (LLD)
Rights and obligations of partners
33
• Unlimited liability partners
• Limited liability partners
Ha, Thi Thanh Binh (LLD)
Unlimited liability partners
34
- share managerial positions and inspect all activities of the
partnership.
- appoint one of themselves to the position of director.
- on their own initiative, perform their duties in order to
achieve the objectives of the partnership;
- represent the partnership in negotiating and signing
contracts;
- represent the partnership before the law and before State
bodies within the scope of their respective duties.
Ha, Thi Thanh Binh (LLD)
Unlimited liability partner (cont.)
35
• shall not concurrently act as unlimited liability partner of
other partnerships or as the owner of private enterprise
unless otherwise agreed by other unlimited liability partners;
• shall not, on their own behalf or on behalf of a third party,
conduct business activities in the same line of business as the
partnership;
• shall not, on behalf of the partnership, sign contracts or
establish and conduct other transactions for their own benefit

or for the benefit of other persons.
• shall have other obligations as stipulated in the charter of the
partnership.
Ha, Thi Thanh Binh (LLD)
Unlimited liability partners (Cont.)Unlimited liability partners (Cont.)
36
• Contribute in full their amount of capital to partnership as
undertaken;
• Accept liability for the obligations of the partnership to the
extent of their own assets;
• Bear losses in the event of failure of business operations in
accordance with the principles stipulated in the charter of the
partnership;
• Act honestly and diligently for the lawful interests of the
partnership when managing or conducting business on behalf
of, or when representing the partnership;
• Comply strictly with the internal regulations of the
partnership;
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Limited liability partners (Rights)
37
• Participate in discussions and vote on amendment of and
addition to the rights and obligations of limited liability
partners as stipulated in the charter of the partnership and on
the reorganization and dissolution of the partnership;
• Receive distribution of profits and distribution of residual
values of assets upon dissolution of the partnership as
stipulated in the charter of the partnership;

• Assign their shares of equity in the partnership to others;
• Be informed of the business operation and management of the
partnership; sight the accounting books and other records of
the partnership;
• Other rights as provided for in the charter of the partnership.
Ha, Thi Thanh Binh (LLD)
Limited liability partners (Obligations)
38
• Contribute the amount of capital as undertaken and to be
liable for the liabilities of the partnership to the extent of the
amount of capital undertaken to contribute to the
partnership.
• Not to be involved in the management of the partnership or
conduct business activities in the name of the partnership.
• To comply strictly with the internal regulations and decisions
of the partnership;
• Other obligations as provided for in the charter of the
partnership.
Ha, Thi Thanh Binh (LLD)
ONE- MEMBER LIMITED LIABILITY COMPANY
39
• Definition
• Characteristics
• Management
• Owner of the company
Ha, Thi Thanh Binh (LLD)
Definition
40
A
one member limited liability company is an

enterprise owned by an organization or an
individual (hereinafter referred to as company
owner); the owner shall be liable for all debts and
other property obligations of the enterprise
within the amount of the charter capital of the
enterprise. (Art. 63)
Ha, Thi Thanh Binh (LLD)
Characteristics
41
• is owned by either an organization or an individual
• The owner of the company has limited liability.
• is not entitled to issue shares.
• shall have legal entity status from the date of
issuance of the enterprise registration certificate.
Ha, Thi Thanh Binh (LLD)
Management
42
• One member limited liability owned by an
organization
• One member limited liability owned by an
individual
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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One member limited liability owned by an
organization
43
• The first model of management structure shall
comprise the Member’s Council, the director
(general director) and controller(s)

• The second model of management structure shall
comprise the president of the company, the director
(general director) and controller(s).
Ha, Thi Thanh Binh (LLD)
One member limited liability owned by an
individual
44
• President
• Director
Ha, Thi Thanh Binh (LLD)
Rights of the company owner (Art. 64)
45
• To make decisions on the contents of the amendment of and addition
to the charter of the company;
• To make decisions on the organizational and management structure of
the company, to appoint, remove or dismiss managerial personnel of
the company.
• To make decisions on adjustments of charter capital of the company;
• To make decisions on investment projects valued at 50% or more of the
total value of the assets recorded in the accounting books of the
company;
• To organize supervision and assessment of the business operation of
the company;
• To make decisions on the use of profits;
• To make decisions on reorganization of the company…
Ha, Thi Thanh Binh (LLD)
Obligations of the
company owner (Art. 65)
46
• To contribute capital in full and on time as registered.

• To comply with the charter of the company;
• To keep assets of the company and that of the owner separated. The
owner of the company being an individual must separate between
expenditures of himself or herself and that of the director if he or she acts
as the director of the company;
• To comply with the laws on contracts and relevant laws on any purchase,
sale, borrowing, lending, leasing or other transactions between the
company and the owner;
• To perform other obligations in accordance with the law.
Ha, Thi Thanh Binh (LLD)
Restrictions on the rights of the company
owners (Art. 66)
47
• Must not directly withdraw part or all of the capital
already contributed to the company.
• May only withdraw capital by way of assignment of
part or all of the capital to other organizations and
individuals.
• Must not withdraw profits of the company in case
the company has not paid in full all debts and other
property obligations due and payable.
Ha, Thi Thanh Binh (LLD)
LIMITED LIABILITY COMPANY WITH TWO OR
MORE MEMBERS
48
• Definition
• Characteristics
• Management
• Members
Ha, Thi Thanh Binh (LLD)

Minh Nguyen 7/20/2012
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Definition
49
A limited liability company is an enterprise
which has two or more members contributing
to its capital. A limited liability company has
legal entity status. A member shall be liable for
the debts and other property obligations of the
enterprise within the amount of capital that it
has undertaken to contribute to the enterprise.
A limited liability company must not issue
shares.
Ha, Thi Thanh Binh (LLD)
Characteristics
50
• The company has legal entity status.
• A member may be an organization or an individual, the
number of the members shall be at least two and shall not
exceed fifty (50).
• A member shall be liable for the debts and other property
obligations of the company within the amount of capital
that it has undertaken to contribute to the company
(limited liability).
• The transfer of capital contribution of each member may be
conducted in accordance with Art. 44 of the LOE.
• The company must not issue shares.
Ha, Thi Thanh Binh (LLD)
Management Structure
51

• Members’ Council
• Director (General Director)
• Controlling Board (if required)
Ha, Thi Thanh Binh (LLD)
Members’ Council
52
• Shall comprise all members. Where a member is an
organization, such member shall appoint its representative
to be on the Members’ Council.
• Shall be the highest decision-making authority of the
company.
• Shall meet at least once a year.
• The Members’ Council shall pass resolutions within its
authority by way of voting at meetings or obtaining written
opinions.
Ha, Thi Thanh Binh (LLD)
Members’ Council Meeting
53
• Conditions to conduct a meeting
– The participation of members representing of at
least 75% of the charter capital.
– If the 1
st
meeting fails, the 2
nd
meeting must be
held within 15 days and with the participation of
members representing at least 50% of the charter
capital.
– If the 2

nd
meeting fails, the 3
rd
meeting must be
held within 10 days regardless of the number of
participating members.
Ha, Thi Thanh Binh (LLD)
Passing of Resolutions in the Members’ Council
Meeting
54
• approved by the number of votes representing at least 75% of the capital
of the attending members (the specific percentage shall be stipulated in
the charter of the company) in respect of decisions such as those relating
to the sale of assets valued at 50% or more of the total value of assets
recorded in the accounting books of the company, or the smaller
percentage as stipulated in the charter of the company; the amendment
of and addition to the charter of the company, the re-organization or
dissolution of the company .
• approved by the number of votes representing at least 65% of the capital
of the attending members in respect of decisions on other matters. The
specific percentage shall be stipulated in the charter of the company.
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Passing of resolutions by obtaining written
opinions
55
• must be approved by members representing at least
75% of the charter capital. The specific percentage
shall be stipulated in the charter of the company.

Ha, Thi Thanh Binh (LLD)
The Members’ Council’s rights and duties
(Art. 47.2)
56
• Include but not limited to the following:
– Decide on the development strategy and annual business plan;
– Decide on the increase or decrease of the charter capital, time and methods for
mobilizing capital;
– Decide on method of investment and investment projects values at over 50% of total
value assets recorded in the financial statement most recently published by the
company or at a smaller ratio provided for in the company’s charter;
– Elect, remove or dismiss the chairman of the Members’ Council
– Decide to appoint, remove, dismiss, sign or terminate contracts with director or general
director;
– Decide on the management organizational structure of the company;
– Decide on opening of subsidiary companies, branches and/or representative offices;
– Decide on the company’s reorganization…
Ha, Thi Thanh Binh (LLD)
Chairman of the Members’ Council
57
• shall be elected by the Members’ Council.
• may concurrently act as the director of the company.
• His or her rights and duties are stipulated in Art 49.2
of the LOE.
• The term of the chairman shall not exceed 5 years
and may be re-elected for unlimited number of
terms.
Ha, Thi Thanh Binh (LLD)
Director
(General Director)

58
• is the person who manages the day-to-day business operation
of the company
• is responsible to the Members’ Council for the exercise of his
or her rights and the performance of his or her obligations.
• shall be the legal representative of the company if the charter
of the company does not provide that the chairman of the
Members’ Council is the legal representative of the company.
• The director’s rights and duties are stipulated in Art 55.2 of
the LOE.
Ha, Thi Thanh Binh (LLD)
Controlling Board
59
• A company having eleven or more members must set
up a Controlling Board.
• Rights, obligations, criteria, conditions and working
rules of the Controlling Board and its head shall be
provided for in the company’s charter.
Ha, Thi Thanh Binh (LLD)
Ways to become a company member
60
An organization or an individual may become a
member of a two or more members limited liability
company by one of the following ways:
• Contribute capital to the company when the company
is established.
• Contribute capital to the company when the company
admits new members.
• Be assigned shares of equity (capital transfer) by
members of the company.

• Inherit shares of equity from members of the
company…
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Termination of members
61
Status as a member may be terminated in the
following cases:
- When a member of the company transfers or
gives their shares of equity to others.
- When a member dies.
- When company buys back the capital shares in
limited circumstances.
Ha, Thi Thanh Binh (LLD)
Rights and obligations of a member
62
- Rights (Art. 41 of the LOE)
- Obligations (Art. 42 of the LOE)
Ha, Thi Thanh Binh (LLD)
Transfer of capital shares
63
• A member shall have the right to assign a part
or all of its shares of equity to all other
members in proportion to their shares of
equity in the company on the same terms;
• Assignment to non-members shall only be
permitted where the other members of the
company do not purchase or do not purchase
in full.

Ha, Thi Thanh Binh (LLD)
Increase and decrease of the
charter capital
64
• Increase of the charter capital
• Decrease of the charter capital
Ha, Thi Thanh Binh (LLD)
Contracts, transactions subject to approval of
the Members’ Council
65
• Contracts concluded between the company and
– Its members or their authorized representatives and related persons;
– Director (GD) or the legal representative of the company and his or her
related persons;
– Managers or persons who have competence to appoint managers of
its parent company and related persons.
• Note: members related to contracts or transaction shall not
be entitled to vote
Ha, Thi Thanh Binh (LLD)
JOINT STOCK COMPANY
66
• Definition
• Characteristics
• Types of shares
• Management
• Shareholders
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
yiuyuiu 12
Definition

67
Joint stock (shareholding) company is an enterprise
in which the charter capital shall be divided in to
equal portions called shares. Shareholders shall be
liable for the debt and other property obligations of
the enterprise within the amount of capital
contributed to the enterprise. Shareholding company
may issue securities to the public in accordance with
legislation on securities.
Ha, Thi Thanh Binh (LLD)
Characteristics
68
• The charter capital of the company shall be divided in to equal
portions called shares.
• Shareholders shall be liable for the debt and other property
obligations of the company within the amount of capital contributed
to the company.
• Shareholders are entitled to freely transfer their shares to others
except for several cases (to be discussed later on).
• Shareholders may be organizations or individuals, the minimum
number of shareholders shall be three and there shall be no
restriction on the maximum number.
• The company may issue securities to the public in accordance with
legislation on securities.
• The company shall have legal entity status from the date of issuance
of enterprise registration certificate.
Ha, Thi Thanh Binh (LLD)
Types of shares
69
• Joint stock company must have ordinary shares. Owners of

ordinary shares shall be called ordinary shareholders
• Joint stock company may have preference shares. Owners
of preference shares shall be called preference shareholder.
Preference shares may include the following:
• Voting preference shares;
• Dividend preference shares;
• Redeemable preference shares;
• Other preference shares stipulated in the charter of the
company.
Ha, Thi Thanh Binh (LLD)
Ordinary share
70
• Ordinary share must be issued by every joint stock
company
• The holder of an ordinary share is called an
ordinary shareholder.
• Ordinary shareholder shall have the rights as
stipulated in Art. 79 and obligations stipulated in
Art. 80 of the LOE.
Ha, Thi Thanh Binh (LLD)
Voting preference share
71
• Shall carry more vote than an ordinary share. The numbers
of votes per voting preference share shall be stipulated in
the charter of the company.
• A holder of a voting preference share is called a voting
preference shareholder.
• Only organizations authorized by the Government and
founding shareholders may hold voting preference shares.
• The voting preference shares held by founding shareholders

shall be valid for only three years from the date of issuance
of the business registration certificate of the company and
then be converted into ordinary shares.
Ha, Thi Thanh Binh (LLD)
Voting preference shareholder
(cont.)
72
• Voting preference shareholders shall have the rights:
• To vote on maters which fall within the authority of the
General Meetings of Shareholders with the number of
votes as provided for in the charter of the company.
• Other rights as ordinary shareholder. However, voting
preference shareholders shall not assign such shares to
other persons.
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
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Dividend preference share
73
• A dividend preference share is a share for which dividend
shall be paid at a rate higher than that paid for an
ordinary share or at an annual fixed rate.
• Annually paid dividends shall include fixed dividends and
bonus dividend.
• Fixed dividend shall not depend on the outcome of the
business of the company.
• The specific rate of fixed dividends and method for
determination of bonus dividends shall be stated in the
certificate of dividend preference share.
Ha, Thi Thanh Binh (LLD)

Dividend preference share (cont.)
74
Dividend shareholders shall have the rights
• To receive dividends at the rates said above.
• Upon dissolution of the company to receive a part of
the remaining assets in proportion to the number of
shares held in the company after the company has paid
in full its creditor and redeemable preference
shareholders.
• Dividend preference shareholders shall not have the
right to vote, the right to attend General Meetings of
Shareholders or the right to nominate candidates to the
BOM and the Controlling Board.
Ha, Thi Thanh Binh (LLD)
Redeemable preference share
75
• A redeemable preference share is a share which shall be
redeemed by the company at any time upon demand by its
owner or in accordance with the conditions stated in the
redeemable preference share certificate.
• Redeemable preference shareholder shall not have the right
to vote, the right to attend GM of Shareholder or the right to
nominate candidates to the BOM and the Controlling Board.
Ha, Thi Thanh Binh (LLD)
Issuance of bonds
76
• A bond is a debt certificate issued by a joint stock company to
borrow money from the public.
• A joint stock company is not allowed to issue bonds in the
following cases:

– The company fails to make full repayment for the principal and
interest of issued bonds or has not yet paid or not paid in full due
debts over the last three consecutive years;
– The average after-tax profit ratio of the last three consecutive years is
not higher than the intended interest paid to bonds to be issued.
Ha, Thi Thanh Binh (LLD)
Management
77
• General Meeting of Shareholders
• Board of Management
• Director (general director)
• Controlling Board (compulsory in joint stock
companies of more than 11 shareholders being
individuals or with a shareholder being an
organization holding more than 50% of the total
shares)
Ha, Thi Thanh Binh (LLD)
Management
78
Shareholders General Meeting
Controlling BoardBoard of Management
Director (GD)
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yiuyuiu 14
General Meeting of Shareholders
79
• Shall include all shareholders which have the right to
vote.
• Shall be the highest decision-making authority of a

shareholding company.
• Ordinary (Annual) General Meeting of Shareholders
shall be held once a year and the extraordinary
General Meeting of Shareholders may be held in
accordance with Art. 97.3 of the LOE.
Ha, Thi Thanh Binh (LLD)
Shareholders General Meeting
80
• Conditions to conduct a meeting
– The participation of shareholders representing at
least 65% of the voting shares.
– If the 1
st
meeting fails, the 2
nd
meeting must be
held within 30 days and with the participation of
shareholders representing at least 51% of the
voting shares.
– If the 2
nd
meeting fails, the 3
rd
meeting must be
held within 20 days regardless of the voting shares
represented by participating shareholders.
Ha, Thi Thanh Binh (LLD)
Passing of Resolutions in the Shareholders
Meeting
81

• approved by at least 75 % of the total votes of all participating
shareholders (the specific percentage shall be stipulated in
the charter of the company) in important matters such as
those relating to the investment projects or the sale of assets
valued at 50% or more of the total value of assets recorded in
the company latest financial report, the amendment of and
addition to the charter of the company, the re-organization or
dissolution of the company .
• approved by at least 65% of total votes of all participating
shareholders in respect of decisions on other matters.
Ha, Thi Thanh Binh (LLD)
Passing of resolutions by obtaining written
opinions
82
• must be approved by a number of shareholders who
own at least 75% of the total votes. The specific
percentage shall be stipulated in the charter of the
company.
Ha, Thi Thanh Binh (LLD)
The Shareholders Meeting’s rights and
duties (Art. 96.2)
83
• Include but are not limited to the following
– Decide on the development strategies and annual business plans;
– Decide on types and total quantity of shares of each type allowed to
offer; decide on the annual amount of dividend per share of each
type;
– Decide on investment or approve that sale of 50% or more of total
value assets recorded in company latest financial statement or at a
smaller ratio provided for in the company’s charter;

– Elect, remove or dismiss members of Management Board and the
Controlling Board;
– Decide on amendment of or supplementation to the company’s
charter…
Ha, Thi Thanh Binh (LLD)
Board of Management
84
• Members
• Duties and responsibilities
• Meetings
Ha, Thi Thanh Binh (LLD)
Minh Nguyen 7/20/2012
yiuyuiu 15
Members
85
• shall have no more than 11 members (may include outsider(s)
• Nomination and election of members
• The term of member will be no more than 5 years
Ha, Thi Thanh Binh (LLD)
Duties and responsibilities
(Art. 108.2)
86
• is the managing body of the company;
• shall have full authority to make decision in the name of the
company on all issues relating to the objectives and benefits
of the company, except for issues which fall within the
authority of the General Meeting of Shareholders;
• shall pass resolutions by way of voting at meetings, obtaining
written opinions, or other ways as stipulated in the charter of
the company.

Ha, Thi Thanh Binh (LLD)
Meetings
87
• Each member shall have one vote.
• Meetings of the BOM shall be convened at any time necessary but
at least one every quarter and may convene extraordinary as per
request of the Controlling Board, director or general director or at
least five other managers or at least 2 member of the BOM.
• A meeting of the BOM shall be conducted where there are three-
quarters (3/4) or more of the total number of its members.
• A resolution of the BOM shall be passed when it is so approved by
the majority of the participating members. In case of a tied vote,
the final decision shall be made in favor of the vote of the chairman
of the BOM.
Ha, Thi Thanh Binh (LLD)
Director
88
• Appointment
• Duties and responsibilities
Ha, Thi Thanh Binh (LLD)
Appointment
89
• The BOM shall appoint one of its members or another person
as a director of a company (general director).
• The chairman of the BOM concurrently acts as the director
(general director) of the company. Where the charter of the
company does not provide that the chairman of the BOM is
the legal representative, the director (general director) shall
be the legal representative of the company.
Ha, Thi Thanh Binh (LLD)

Qualifications
90
• Not necessary being a shareholder, but if he is one of
shareholders, he must own at least 10% of the
charter capital unless the charter of the company
provide otherwise.
• Cannot be concurrently acting as director or general
director of any other enterprises.
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Duties and responsibilities
91
• The director shall carry out the day-to-day business
operation of the company and shall be responsible to
the BOM for the exercise of his or her delegated
powers and the performance of his or her delegated
duties.
• The director of the company shall have the rights and
duties as stipulated in Art. 116.3 of the LOE.
Ha, Thi Thanh Binh (LLD)
Duties and responsibilities (cont.)
92
• Include but are not limited to the following:
– To decide on matters related to day-to-day business operation of the
company, which do not require decisions of the BOM;
– To organize the implementation of business and investment plans;
– To organize the implementation of decisions adopted by the BOM;
– To appoint, remove or dismiss managers of the Company
– To recruit laborers and decide on their salary and allowance…

Ha, Thi Thanh Binh (LLD)
Controlling Board
93
• Members
• Rights and duties
Ha, Thi Thanh Binh (LLD)
Members
94
• A joint stock company having over 11 shareholders being individuals or with a
shareholder being an organization holding more than 50% of the total shares must
have a Controlling Board of three or five members
• Members of the Controlling Board are not necessarily shareholders or employees
of the company.
• More than half of the members must permanently reside in Vietnam and at least
one member is an accountant or auditor.
• Members shall not hold any managerial position in the company.
• The Controlling Board shall elect one of its members to be the head of the
Controlling Board. The head of the Controlling Board must be a shareholder.
• The rights and duties of the head of the Controlling Board shall be stipulated in the
charter of the company.
Ha, Thi Thanh Binh (LLD)
Rights and duties
95
• The rights and duties of the Controlling Board is governed by
Art. 123 of the LOE, such as:
– To supervise the management and direction of the company by the
BOM, director (GD), to be responsible to the SGM for the performance
of its assigned tasks;
– To verify the reasonability, legality, truthfulness and carefulness of
business management and direction, accounting and statistical work,

and making of financial statements;
– To verify business reports, annual and biannual financial statements of
the company’s management of the BOM…
Ha, Thi Thanh Binh (LLD)
Dissolution of an enterprise
96
• Voluntary dissolution
• Compulsory dissolution
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Voluntary dissolution
97
• When
– The operation duration stated in the company’s charter expires without any decision to
renew;
– By decision of the highest decision making authority in the enterprise,
• How
– Adopting a decision on the dissolution of the enterprise;
– Making publicly available the schedule for settling debts;
– Carrying out the plan on settlement of debts as per the above schedule
– The legal representative of the enterprise sends the dossier on the dissolution to the
business registration office.
– The business registration office will withdraw the enterprise’s business certificate and
erase the name of the enterprise in its business registration book.
Ha, Thi Thanh Binh (LLD)
Compulsory dissolution
98
• When
– A company no longer has the minimum number of members as

provided for by the Law on Enterprises,
– The business registration certificate is withdrawn.
• How
– Similar to that of voluntary dissolution. However, in case the business
registration certificate of the enterprise is withdrawn, such enterprise
must be dissolved within six months as from the date of such
withdrawal.
Ha, Thi Thanh Binh (LLD)
Re-structuring a company
99
• Consolidation
• Merger
• Separation
• Division
• Conversion
Ha, Thi Thanh Binh (LLD)