A recurring issue in Vietnam corporate governance is whether a former member of the Board of Directors can be appointed as an “independent” Board member in the subsequent term, provided that all other statutory criteria are satisfied. This typically arises where companies want to retain a former board member while still complying with independence requirements under Article 155.2 of the Enterprises Law 2020 as amended in 2025 (Enterprises Law 2020).

Under Article 155.2(dd) of Enterprises Law 2020, an independent Board member must “not hold the position of member of the Board of the company within the last 05 years or longer unless he/she was designated in 02 consecutive terms.”

However, the law does not clearly state whether the “two consecutive terms” exception applies (i) to any prior Board membership, or (ii) only to independent members. Therefore, this gives rise to two possible interpretations:

Interpretation 1: A person who has served only one prior term (even as a non-independent member) may still qualify as an independent member of Board in the following term, on the basis that this would constitute the second consecutive term.
Interpretation 2: The exception applies only to independent members of the Board; as this clause should be in conjunction with Article 154.2 of Enterprises Law 2020, which limits independent members to a maximum of 02 consecutive terms. This means a former non-independent Board member must wait at least five years before qualifying as “independent”.

This ambiguity creates uncertainty for companies when structuring their Board, as both interpretations remain legally arguable. That said, a former board member may not be able to act independently when dealing with issues which relate to their actions in the past as a non-independent Board member. Therefore, to protect the interests of the shareholders, Interpretation 2 seems more reasonable.

This post is written by Dang Ha Anh and edited by Nguyen Quang Vu.

Vietnam Business Law