Chairman of the Board and Director/General Director are two different titles in a joint stock company. In many enterprises, the Chairman of the Board concurrently holds the title of Director and General Director. Does the law allow businesses to do so? In this article, we will answer the above question and analyze the order and procedures for the Chairman of the Board be holding together the position of Director and General Director.
I.Definition of “Chairman of the Board, Director/General Director”
- The Chairman of the Board is a member of the Board of Directors, elected as the head, representing the Board of Directors – the most powerful body in the company.
- The Director, or General Director, is the person who runs the day-to-day business of the enterprise and will be under the supervision of the Board of Directors. The director can be a member of the Board of Directors by appointment or an outside individual hired by the company under a contract. The term of office of the Director in accordance with the Law on Enterprises shall not exceed 05 years and may be re-appointed for an unlimited number of terms.
II. Can the Chairman of the Board also holding together Director/ General Director potision at the same time?
Currently, the law on enterprises does not directly stipulate whether the Chairman of the Board of Directors can concurrently hold the position of Director or General Director. However, in Article 156 of the Enterprise Law 2020, the law provides for two cases where the Chairman of the Board of Directors cannot concurrently be the Director/General Director, specifically: “The President of the Board of Directors of a public company or a joint stock company prescribed in Point b Clause 1 Article 88 of this Law must not concurrently hold the position of Director/General Director.” Therefore, in the spirit of the Enterprise Law, the Chairman of the Board may holding together the position of Director/General Director if that individual does not fall into any of the following cases:
- Being the chairman of the Board of a public company;
- Being the chairman of the Board of a joint-stock company in which more than 50% of charter capital is held by the State or the total number of voting shares (except for enterprises in which 100% of charter capital is held by the State).
III. Procedure for the Chairman of the board to be holding together the position of Director
Step 1: Evaluate the condition
The Chairman of the Board who is appointed as the Director/General Director must ensure the conditions and requirements on professional capacity and behavioral capacity are not prohibited by law. Specifically:
– Have full capacity for civil acts and are not prohibited by law from managing an enterprise, for example: not being a minor or being criminally prosecuted; serving a sentence; Officials and public employees; Commissioned officers, non-commissioned officers in agencies and units of Vietnam People’s Army and in police authorities and units;
– Having experience and professional qualifications in business administration of the company or the qualifications specified in the company’s charter.
– Especially for enterprises in which the State holds more than 50% of the charter capital or the total number of voting shares and its subsidiaries, the individual may be appointed to the position of Director, General Director must not be a relative of the executives and controllers of the company and the parent company, of the representative of enterprise’s investment or state investment in the company and the parent company. “relatives” of a person include: the spouse, biological parents, adoptive parents, parents-in-law, biological children, adopted children, children-in-law, biological siblings, siblings-in-law and biological siblings of the spouse.
Step 2. Board of Directors Meeting
- The Board of Directors holds a meeting and collects opinions on the appointment of the Chairman of the Board of Directors concurrently with the position of Director/General Director and approves the appointment of the Director by direct vote. Opinions will be taken in writing or in other forms prescribed by the company’s charter.
- The appointment of the Chairman of the Board concurrently with the position of Director/General Director of the company is approved when the majority of the members of the Board of Directors (> 50%) approve unless the company’s charter obligation higher rates.
Step 3. Issue the Minutes of the Board of Directors’ meeting, the Board’s Decision/Resolution, and the Appointment Decision
After the Board of Directors approves the appointment of the Chairman of the Board as the Director/General Director, the company will issue the Minutes of the Board of Directors meeting, the Decision/Resolution of the Board of Directors, and the appointment of the Director/General Director.
Step 4: Carry out business registration or legal representative changes
The company carries out procedures for business registration/change of legal representative with the Business Registration Office – Ministry of planning and investment, where the company’s head office is located in accordance with the law.
In the event that the appointment of the new Director or General Director changes the legal representative, the company needs to carry out procedures for changing the legal representative. Enterprises need to submit resolutions, decisions, and a copy of the minutes of the Board of Directors meeting to prove that the change of directors has been recognized by the company.
Above is the article “Can the chairman of the board be completed director/general director?” We hope this article was useful to you.