Vietnam Business Law is a website managed by lawyers of Venture North Law Limited (VNLaw). Venture North Law Limited (VNLaw) is a Vietnamese commercial law firm. We won the Rising Law Firm of the Year Award at the Southeast Asia Law Awards for the years 2020 and 2021 held by The Legal 500. Very few Vietnamese law firms have achieved a similar regional recognition.
Posted in: Corporate
In December 2020, we published a comprehensive Legal Guide To Merger Control In Vietnam (see here). In April 2023, the Government established the Vietnam Competition Commission (VCC). On this occation, we update our legal guide to reflect the establishment of the VCC. The updated guide can be downloaded here.
The guide is updated by Le Minh Thuy.
Under Article 157.8 of the Enterprise Law 2020, a meeting of the Board will be conducted where three quarters (3/4) or more of the total Board directors are in attendance. However, it is not clear whether (1) this quorum only needs to be satisfied at the beginning of the meeting or (2) this quorum must be maintained from the beginning to the end of Board meeting. If interpretation (1) is adopted then a decision approved by more than half of attending Board directors at the Board meeting is still valid even when the quorum is lost during the meeting (e.g. a director leaves the meeting).
Arguments supporting interpretation (1) include:
Article 157.8 of the Enterprise Law 2020 could be interpreted to mean that the quorum applies only at the beginning of a Board meeting. The Enterprise Law 2020 only provides that a Board decision will be passed if it is approved by more than half of the attending Board directors. There is no specific requirement that the quorum must be satisfied at the time of the voting or throughout a Board meeting.
Under the Enterprise Law 2020, the General Shareholder Meeting (GSM) of a joint stock company (JSC) can decide to change its agenda and approve the new agenda when the meeting commences. There is no such provision with regard to a Board meeting. Accordingly, it is not clear if the Board can decide to change the agenda of a Board meeting during the meeting. That said, it is reasonable that the Board should be entitled to do so.
In particular, the Board could decide to change the agenda of a Board meeting based on the following grounds:
the Enterprise Law 2020 does not prohibit the Board from changing the agenda of a Board meeting at the meeting;
it is reasonable that the provisions concerning a meeting of GSM could apply to a meeting of the Board by analogy. In such case, the Board should have the right to change the agenda of a Board meeting as the GMS does; and
in practice, allowing the Board to change the agenda of a Board meeting will make the operation of a JSC more efficient. Since instead of scheduling for another meeting, the Board could decide on the relevant matter immediately at the current meeting.
A Vietnamese company which satisfies public company requirements but which has not registered its public company status with the State Securities Commission (SSC) may arguably not need to comply with various obligations of a public company under Vietnamese law.
Under the Securities Law 2019, a public company is a joint stock company that satisfies the following conditions (the Required Conditions):
· having a minimum paid-up charter capital of 30 billion dongs, and
· having at least 10% of the voting shares held by at least 100 investors not being major shareholders.
The Securities Law 2019 also provides that:
· a company satisfying the Required Condition must register its public company status with the State Securities Commission (the SSC); and
· after the SSC confirms the registration of public company status, the relevant company will have various rights and obligations of a public company such as public disclosure, corporate governance, and registration for trading.
However, the law is silent on the obligations of a company which satisfy the Required Conditions but which has not obtained the SSC’s confirmation on public company status.