WHEN IS A LABOUR CONTRACT AUTOMATICALLY RENEWED IN VIETNAM?

Under Article 22.2 of the Labour Code 2012, where a definite term labour contract or seasonal labour contract (Old Contracts) expires, and the employee continues to work, then within 30 days from the expiry date of such Old Contracts (Expiry Date) the parties must enter into a new one; if the new labour contracts is not established, then the Old Contracts will become an indefinite term contract or a definite term contract with term of 24 months collectively (New Contracts). This provision has been interpreted in different manners as follows:

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Written by Nguyen Quang Vu On

Annual and irregular meetings of the Shareholder Meeting in Vietnam

The Shareholder Meeting of a joint stock company (JSC) must convene a meeting at least once a year during the first four months or, if permitted by the Business Registration Authority and the Board, six months after the end of a financial year. Such meeting is called the annual meeting (cuộc họp thường niên) and other meetings of the Shareholder Meeting are called irregular meetings (cuộc họp bất thường). The Enterprise Law 2014 is not clear if there are two or more meetings of the Shareholder Meeting of a JSC in the first four months after the end of a financial year, then whether the first meeting among these meetings is regarded as the annual meeting or the JSC may have flexibility in deciding which meeting is the annual meeting.

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Written by Nguyen Quang Vu On

Can a Board director in a Vietnamese joint stock company be removed by the courts?

A Vietnamese court does not have clear authority to remove a Board director from the Board of a Vietnamese joint stock company like other more developed jurisdictions. Under Article 156.1 of the Enterprise Law 2014,  a Board director may be dismissed (miễn nhiệm) if he/she:

  • fails to maintain the qualifications of a Board director including not having full capacity for civil acts or belonging to the types of persons who are not allowed to manage an enterprise in Vietnam;   
  • fails to participate in activities of the Board for six consecutive months, except in the case of an event of force majeure; and
  • tenders a written resignation.
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Written by Nguyen Quang Vu On In ,

Corporate criminal liability in Vietnam – Entities subject to criminal liability

Under the Penal Code 2015, only “commercial legal person” (pháp nhân thương mại) could be subject to criminal liability. A commercial legal person is a legal person with the main objective of “seeking profit” which is distributed to its members. However, the concept of commercial legal person may raise several issues as follows:

  • The Criminal Proceedings Code 2015 only refers generally to “legal person”. It is not clear why the Criminal Proceedings Code 2015 does not use the term commercial legal person despite being drafted and passed at the same time as in the Penal Code 2015.
  • A commercial legal person’s main objective is “seeking profit” (tìm kiếm lợi nhuận). With the exception of “social enterprise” (doanh nghiệp xã hội), an enterprise in Vietnam is established for “the purpose of doing business” (mục đích kinh doanh). And “doing is business” has the purpose of “generating benefit” (sinh lợi). There is a slight difference between the use of words in the Enterprise Law 2014 and the Civil Code 2015. However, presumably, “generating benefit” under the Enterprise Law 2014 is intended to have the same meaning as “seeking profit” under the Civil Code 2015.
  • The Civil Code 2015 considers social enterprises to be non-commercial legal person. Under the Enterprise Law 2014, a social enterprise is set up to solve social or environment issues for public benefit. However, a social enterprise still has the objective of making profit and still distributes profit to its members as long as it retains at least 51% of its profit for its social purpose. In practice, a social enterprise can still commit the crimes which apply to other enterprises (e.g. polluting the environment or tax evasion). Therefore, in the author’s opinion, the classification of social enterprises being non-commercial legal person under the Civil Code 2015 is a mistake and social enterprises should still be subject to criminal liability under the Penal Code 2015.
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Written by Nguyen Quang Vu On In ,