New Model Charter for a Public Joint Stock Company in Vietnam

On 22 September 2017, the Ministry of Finance issued a model charter of public companies under Circular 95/2017 following the new governance regulations of Decree 71/2017. This model charter (New Model Charter) is to replace the old one (Old Model Charter) provided under Circular 12/2012, which is based on the now-defunct Enterprise Law 2005. These charters are not legally compulsory, thus should be read with reference purpose only.

Most changes to the New Model Charter reflect changes in the Enterprise Law 2014 and Decree 71/2017 (find out more here). Besides, the New Model Charter introduces the following notable changes:

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:

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.

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.