WHAT ARE CONDITIONS FOR THE BOARD OF DIRECTORS IN JOINT STOCK COMPANY?

My company is discussing recruiting a foreigner with a high level of expertise in the field of production and business as a member of the board of directors who participates in running the company. My company is a joint-stock company specializing in the production of high-end household goods. Therefore, I would like FDVN Law Firm (FDVN) to advise me on the conditions which the foreigner needs to meet. Do I need to apply for a work permit for this person? I hope to receive your response soon. Sincerely thank you!

FDVN’s Opinion:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

[1]. Conditions for employment of foreign citizens

Pursuant to Article 170 of the Labor Code 2012, conditions for employment of foreign citizens are provided as follows:

“1. Domestic enterprises, agencies, organizations, individuals, and contractors may only employ foreign citizens in such positions as manager, managing director, expert and technical worker which Vietnamese employees are still unable to fill to meet production and business requirements.

2. Foreign enterprises, agencies, organizations, individuals and contractors shall, before employing foreign citizens to work in the territory of Vietnam, explain their labor demands and obtain written approval from competent state agencies.”

Besides, pursuant to Article 169 of the Labor Code 2012, conditions for foreign citizens to work in Vietnam are:

“1. A foreign citizen wishing to work in Vietnam must fully meet the following conditions:

a/ Possessing full civil act capacity;

b/ Possessing technical and professional qualifications and skills and health appropriate to the work requirement;

c/ Not being a criminal or subject to penal liability examination according to Vietnamese and foreign laws;

d/ Possessing a work permit granted by a competent Vietnamese state agency, except the cases specified in Article 172 of this Code.

2. Foreign employees working in Vietnam shall comply with the labor law of Vietnam and treaties to which Vietnam is a contracting party which have different provisions, and are protected by Vietnamese law.”

Thus, in case your company wants to bring a qualified foreigner to work in your company as a member of the Board of Directors, he/she needs to meet the conditions on foreign employees as stated first.

[2]. Conditions for foreigners to become members of the Board of Directors

Pursuant to Article 151 of the Law on Enterprises 2014, foreign employees need to meet the following conditions to become a member of the Board of Directors:

“Article 151. Standards and conditions for Members of the Board of Directors

1. Members of the Board of Directors must:

a) be legally competent, not be banned from business administration as prescribed in Clause 2 Article 18 of this Article;

b) has qualifications and experience of business administration; Members of the Board of Directors are not necessarily shareholders of the company, unless otherwise prescribed by the company’s charter.

c) Members of the Board of Directors may concurrently hold the position of Members of the Board of Directors of other companies.

d) With regard to the subsidiaries over 50% of charter capital of which is held by the State, Members of the Board of Directors must not be spouses, parents, adoptive parents, children, adopted children, siblings of the Director/General Director and other managers of the building work; must not be related persons of the manager and the person competent to designate the manager of the parent company.

2. Unless otherwise prescribed by regulations of law on securities, independent members of the Board of Directors prescribed in Point b Clause 1 Article 134 of this law must:

a) Not be a current employee of the company or its subsidiaries; not be a person that used to work for the company or the company’s subsidiaries over the previous 03 consecutive years.

b) Not be a person receiving salaries, wages from the company, except for the benefits to which Members of the Board of Directors are entitled;

c) not have a spouse, birth parent, adoptive parent, birth child, adopted child, or sibling being a major shareholder of the company, being a manager of the company or the company’s subsidiary;

d) not directly or indirectly hold at least 1% of the company’s voting shares;

dd) Not ever hold the position of Member of the Board of Directors, the Control Board over at least the previous 05 consecutive years.

3. Independent members of the Board of Directors must notify the Board of Directors of their failure to satisfy the conditions prescribed in Clause 2 of this Article. Such members are obviously no longer independent members of the Board of Directors from the day on which conditions are not satisfied. The Board of Directors shall report the cases in which independent members of the Board of Directors no longer satisfy conditions at the nearest General Meeting of Shareholders or convene a General Meeting of Shareholders to elect new independent members within 06 months from the day on which the independent member’s notification is received.”

Thus, you should note that when the foreigner is recruited to work at your company as a member of the Board of Directors, he/she must meet the conditions under the Law on Enterprises as stated.

[3]. Do foreigners need to apply for a work permit when holding the position of a member of the Board of Directors in a joint-stock company?

Pursuant to Article 172 of the Labor Code 2012 providing the cases where the foreign citizens working in Vietnam who are exempt from work permit, members of the Board of Directors of joint-stock companies do not need to apply for a work permit.

Above is FDVN Law Firm's opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.

Dinh Thi Thong – FDVN Law Firm

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