Under the Enterprise Law, certain matters of a joint stock company (JSC) are within the power of the Shareholders Meeting such as increase of the number of shares authorized for sale, change of charter, or sale of important assets. The procedures to convene and pass a resolution of the Shareholders’ Meeting of a JSC especially for a listed JSC may take time. To avoid following such procedures and to have more operational flexibility, some JSCs have procured the Shareholders’ Meeting to authorise or delegate the powers to decide the matters within the authorities of the Shareholders Meeting to the Board. However, such authorization and delegation are not without legal risks (not to mention the potential conflict of interest in case the Board is controlled by a number of shareholders). In particular,

• The Shareholders Meeting and the Board are two corporate bodies under the Enterprise Law. However, under the Civil Code, the Shareholders’ Meeting and the Board are not recognised as an entity which can enter into contract or transaction including authorisation transaction; and

• Article 96.2 of the Enterprise Law provides that the Shareholders Meeting will have “the following rights and obligations”.  The use of the word “obligation” implies that the matters within the authorities of the Shareholders Meeting needs to be decided by the Shareholders Meeting itself. Under Vietnamese law, one could authorise its rights but the same cannot be said for obligations.