GSM’s delegation to the Board under Vietnamese law

Under the law of Vietnam, it is unclear whether the General Shareholder’s Meeting (GSM) of a joint stock company (JSC) is allowed to authorise (or delegate) its power to the Board or to what extent can the GSM delegate its power to the Board, if the former is possible. In particular:

  • Article 15.4 of Decree 156/2020 imposes a penalty on the Chairman of the Board if he/she does not report to the GSM on the implementation of the GSM’s resolution except when he/she is authorised by the GSM. This provision suggests that the GSM of a public JSC may delegate the chairperson of the Board to make change to matters already decided by the GSM. Arguably, if the GSM could delegate its power to the chairperson of the Board then arguably the GSM could delegate its power to the Board.

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Written by Nguyen Quang Vu On In ,

The completion time of a de-merger of a Vietnamese company

In case of a de-merger of a company, the Enterprise Law 2020 does not make clear when will the de-merger of the new company from a de-merged company (or existing company) be considered as legally competed. However, it appears that a de-merger could be considered completed when (1) a new enterprise registration certificate of the new company is issued, and (2) assets and liabilities of the existing company are transferred to the new company in accordance with the de-merger decision of the owners/shareholders of the existing company. This is because the Enterprise Law 2020 provides that:

  • after registration of the enterprise, the new company and the existing company are jointly liable for the obligations and liabilities of the existing company; and

  • the new company will automatically inherit all rights and obligations allocated to it in accordance with the de-merging decision of the owners/shareholders of the existing company.

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Written by Nguyen Quang Vu On In ,

Unclear de-listing grounds for listed companies in Vietnam

Under Decree 155/2020, from 1 January 2022, a listed company will be delisted if the financial statements of such company for three consecutive years are qualified by the company’s auditor. This is a new de-listing ground. Recently, the Ho Chi Minh City Stock Exchange (HSX) has decided to delist a company whose audited financial statements of 2019, 2020, and 2021 which are subject to qualifications by its auditors. The de-listing decision of HSX gives rise to several issues. In particular,

  • Decree 155/2020 is not clear whether regarding the three financial statements of the three- year periods described in the de-listing ground, (1) all three statements need to be all completed after 1 January 2022, (2) only the last statement need to be completed after 1 January 2022, or (3) all three statements need not to be completed after 1 January 2022.

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Written by Nguyen Quang Vu On In ,

Is the list of related persons of a Vietnamese joint stock company expanded?

When determining who is a related person of a non-public joint stock company (JSC), as a routine, one would turn to Article 4.23 of the Enterprise Law 2020. Article 4.23 lists out the related persons of a company. However, Article 167.1 of the Enterprise Law 2020 on related party transactions (RPTs) applicable to JSCs suggests that the list of related persons under Article 4.23 might not be exhaustive.

Article 167.1 reads that: the General Meeting of Shareholders or the Board of Directors approve contract and transactions between the JSC and “the following related persons”:

(a) shareholders, authorized representatives of shareholders holding more than 10% ordinary shares and their related persons;

(b) members of the Board of directors, (general) director and their related persons; and

(c) enterprises that the members of the Board of directors, supervisory committee, (general) directors, and other managers of the company have an interests and must report to the JSC in accordance with Article 164.2 of the Enterprise Law 2020.

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Written by Nguyen Quang Vu On In ,