Obligations of a Vietnamese company satisfying public company requirements pending an SSC registration

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.

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Written by Nguyen Quang Vu On In ,

Can a small-size Vietnamese joint stock company operate without an inspection committee and an independent director?

Article 137 of the Enterprise Law 2020 provides that a joint stock company (JSC) can decide to organise itself in accordance with the two options below:

  • Option 1: A General Meeting of Shareholders, a Board of Directors, and an Inspection Committee and general director; and

  • Option 2: A General Meeting of Shareholders, a Board of Directors with at least 20% members being independent directors and a general director.

Under Option 1, the Enterprise Law 2020 further provides that if a JSC has less than 11 shareholders and the shareholders being organizations together own less than 50% of the charter capital of the company, then the company does not have to have an Inspection Committee. However, if a JSC selects option 1 and decides not to have an inspection committee, then on its face, such JSC is organised under option 2. Accordingly, it is not clear if the Board of such JSC must have at least 20% members being independent directors.

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Written by Nguyen Quang Vu On In

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 ,