Changing and electing the chairman of the board of directors of a joint stock company

Changing and electing the Chairman of the Board of Directors of a joint stock company is a strategic step to restructure leadership, promote management efficiency and improve competitiveness. This decision not only reflects operational flexibility but also demonstrates the company’s commitment to sustainable development. The following article analyzes the legal regulations on changing and electing the chairman of the board of directors of joint stock companies.

Regulations on the rights and obligations of the Chairman of the Board of Directors of a joint stock company

The chairman of the board of directors of a joint stock company plays a key role in the corporate governance structure. This position has clearly defined rights and responsibilities under Vietnamese law. According to the provisions of Clause 3, Article 156 of the Law on Enterprise 2020, The Chairman of the Board of Directors has the following rights and obligations:

• Prepare programs and operational plans of the Board of Directors;
• Prepare agenda, content, and documents for meetings; convene, chair and chair meetings of the Board of Directors;
• Organize the adoption of resolutions and decisions of the Board of Directors;
• Supervise the process of organizing and implementing resolutions and decisions of the Board of Directors;
• Chair the General Meeting of Shareholders;
• Other rights and obligations according to the provisions of the Law on Enterprise and the company Charter.

The Chairman of the Board of Directors also represents the Board of Directors in signing documents, resolutions and decisions of the Board of Directors. In cases where the company has only one legal representative, the Chairman of the Board of Directors usually assumes this role, unless otherwise stipulated in the company charter.

Regarding responsibilities, the Chairman of the Board of Directors must comply with the regulations as prescribed in Clause 1, Article 165 of the Law on Enterprises 2020, which include:

• Implement assigned rights and obligations according to the provisions of this Law, other relevant laws, the company’s Charter, and resolutions of the General Meeting of Shareholders;
• Carry out assigned rights and obligations honestly, carefully, and in the best way to ensure the company’s maximum legitimate interests;
• Loyal to the interests of the company and shareholders; Do not abuse your position or position and use information, know-how, business opportunities, or other company assets for personal gain or to serve the interests of other organizations or individuals;
• Timely, fully and accurately notify the company of the content specified in Clause 2, Article 164 of the Law on Enterprise 2020;
• Other responsibilities according to the provisions of this Law and the company’s Charter.

>>> See more: Standards for the Chairman of the board of directors of a joint stock company.

Forms of changing and electing the Chairman of the board of directors of joint stock companies

To change the title of Chairman of the Board of Directors, a Joint Stock Company needs to clearly understand the following change cases:

Election of Chairman of the board of directors of a joint stock company

According to Article 153 of the Law on Enterprise 2020, the Chairman of the Board of Directors is elected at the first meeting of the Board of Directors of that term. This meeting must be held within 07 working days from the closing date of the election of the Board of Directors. The member with the highest number of votes or highest percentage of votes will convene and preside over the election of the Chairman of the Board of Directors.

In case there is more than one member with the highest and equal number of votes or percentage of votes, the members of the Board of Directors will vote according to the majority principle to select 01 person among them to convene a meeting of the Board of Directors. This regulation ensures democratic principles and avoids deadlock in electing the Chairman of the Board of Directors.

The election process of the Chairman of the Board of Directors needs to be recorded in minutes, fully recording meeting proceedings, voting results, and other related content. This minutes is the legal basis for issuing the decision to elect the Chairman of the Board of Directors of the company. After the election results are available, the company will issue a Decision to elect the Chairman of the Board of Directors, serving as the legal basis for exercising the rights and obligations of the person holding this title.

The company charter can stipulate in more detail the process and procedures for electing the Chairman of the Board of Directors, but must not violate the mandatory provisions of the Law on Enterprise 2020. The election of the Chairman of the Board of Directors needs to be carried out publicly, transparently and in compliance with the law and the company’s Charter.

Removal of the Chairman of the board of directors of a joint stock company

Dismissal of the Chairman of the Board of Directors is a legal process based on the grounds specified in the Law on Enterprise 2020. This form applies when the position holder no longer meets the conditions or voluntarily resigns. Dismissal procedures need to comply with the law and the company’s charter.

Pursuant to Clause 1, Article 160 of the Law on Enterprise 2020, the Chairman of the Board of Directors will be dismissed in the following cases:

• Not meeting the standards and conditions to be a member of the Board of Directors as prescribed in Article 155 of the Law on Enterprises 2020;
• There is a resignation letter and is approved by the Board of Directors;
• Other cases as prescribed in the company’s Charter.

The process of dismissing the Chairman of the Board of Directors is carried out through a meeting of the Board of Directors. The Board of Directors must meet and vote to approve the dismissal decision. Steps include: convening a meeting of the Board of Directors, conducting the meeting, voting and issuing a dismissal decision.

When dismissing the Chairman of the Board of Directors, the company should note: if this person is also the legal representative, the company must carry out procedures to change the legal representative with the business registration agency within 10 days from the date of change. Failure to comply on time may result in administrative sanctions.

After dismissing the Chairman of the Board of Directors, the Board of Directors needs to elect a replacement according to the provisions of Article 153, Law on Enterprises 2020. The procedure for electing a replacement is similar to the initial process when electing the Chairman of the Board of Directors.

Dismissal of the Chairman of the board of directors of a joint stock company

Removal of the Chairman of the Board of Directors is a legal measure when the position holder violates his or her obligations or fails to complete their duties. This process differs from dismissal in its coercive nature and basis for implementation. The law strictly regulates the order and procedures for dismissal.

According to the provisions of Clause 2, Article 160 of the Law on Enterprise 2020, the General Meeting of Shareholders dismisses the Chairman of the Board of Directors in the following cases:

• Not participating in the activities of the Board of Directors for 06 consecutive months, except in cases of force majeure;
• Failure to complete assigned tasks;
• Serious violations of the company charter and internal regulations;
• Violating the law leads to affecting the company’s reputation;
• Or other cases according to the provisions of the Company’s Charter.

Procedures for dismissing the Chairman of the Board of Directors need to comply with the following steps:

Step 1: Convene a meeting of the Board of Directors in accordance with the provisions of Article 157, Law on Enterprises 2020.

Step 2: Send meeting invitations to members of the Board of Directors.

Step 3: Conduct meetings and vote on dismissal.

Step 4: Prepare meeting minutes to record voting results and issue a dismissal decision.

If the company Charter does not have other provisions, the dismissal decision will be passed by voting at the meeting of the Board of Directors, provided that a majority of the Board of Directors members approve (over 50%). Some companies may stipulate a higher voting percentage in the Charter.

After dismissing the Chairman of the Board of Directors, the Board of Directors needs to elect a replacement as soon as possible to ensure continuous operations of the company. In case the Chairman of the Board of Directors is dismissed and is also the legal representative, the company must carry out procedures to change the legal representative with the business registration agency.

Does the change or election of the Chairman of the board of directors of a joint stock company need to be notified to the authorities?

The issue of notifying the change of the Chairman of the board of directors to the authorities depends on the role of this person in the joint stock company. The  Law on Enterprise 2020 clearly stipulates cases where notification is required and related procedures. Complying with this regulation helps businesses avoid administrative sanctions.

According to the provisions of Clause 1, Article 31, Law on Enterprises 2020, the change of the Chairman of the Board of Directors is not required to be notified to the business registration agency, except in cases where the Chairman of the Board of Directors is also the legal representative of the company.

For companies with the Chairman of the Board of Directors as the legal representative, changing this title will result in a change of the legal representative. According to the provisions of Article 30 of the Law on Enterprise 2020, the company must register changes to the contents of the Enterprise Registration Certificate within 10 days from the date of Change legal representative.

In addition, the company also needs to pay attention to updating information about the change of Chairman of the Board of Directors in internal documents such as shareholder registration book, Board of Directors meeting minutes book, and other corporate governance documents. For public companies, changing the Chairman of the Board of Directors must also comply with regulations on information disclosure according to the provisions of the Law on Securities and guiding documents.

Consulting services on changing the title of Chairman of the board of directors of a joint stock company at Long Phan Consulting Company

The procedure for changing the title of Chairman of the Board of Directors of a joint stock company is an important process to help businesses structure their personnel and do business effectively. Long Phan Consulting Company provides comprehensive services on changing and electing the chairman of the board of directors of joint stock companies. This service helps businesses comply with legal regulations and optimize implementation processes.

Consulting services at Long Phan Consulting Company include the following items:

• Consulting on the process and procedures for electing, dismissing and dismissing the Chairman of the Board of Directors in accordance with the provisions of the Law on Enterprise 2020;
• Drafting necessary legal documents: meeting notices, meeting agendas, meeting minutes, resolutions, decisions on election/dismissal/dismissal;
• Support in implementing change registration procedures with the business registration agency in case the Chairman of the Board of Directors is the legal representative;
• Consulting on information disclosure obligations for public companies;
• Update and complete internal documents related to the change of Chairman of the Board of Directors.

With practical experience and in-depth expertise in corporate law, Long Phan Consulting Company is committed to providing optimal solutions, ensuring benefits for businesses and related parties.

Frequently asked questions

Below are frequently asked questions about the procedure for changing the Chairman of the Board of Directors for a Joint Stock Company.

What specific powers does the Chairman of the Board of Directors of a joint stock company have?

The Chairman of the Board of Directors has the right to plan activities of the Board of Directors, prepare meeting contents, convene and chair meetings of the Board of Directors, organize the adoption of resolutions, supervise the implementation of resolutions, chair the General Meeting of Shareholders and other rights according to law and the company’s charter.

What are the main responsibilities of the Chairman of the Board of Directors?

The Chairman of the Board of Directors must exercise his rights and obligations honestly and carefully, ensure maximum benefits for the company, be loyal to the interests of the company and shareholders, not abuse his position and promptly notify relevant information in accordance with the provisions of law and the company’s charter.

Who has the right to convene the first meeting of the Board of Directors to elect the Chairman?

The member with the highest number of votes or highest percentage of votes will convene and chair the first meeting of the Board of Directors to elect the Chairman.

What principle applies when many members have an equal number of votes for Chairman?

In case there is more than one member with an equal number of votes, the members of the Board of Directors will vote according to the majority principle to choose a person to convene a meeting to elect the Chairman.

What circumstances lead to the dismissal of the Chairman of the Board of Directors?

The Chairman of the Board of Directors may be dismissed if he is not qualified to be a member of the Board of Directors, has a resignation letter approved by the Board of Directors, or other cases according to the provisions of the company’s charter.

How does the Board of Directors carry out the process of dismissing the Chairman?

The process of dismissing the Chairman of the Board of Directors is carried out through a meeting of the Board of Directors, conducting a vote and issuing a dismissal decision.

When can the Chairman of the Board of Directors be dismissed?

The Chairman of the Board of Directors may be dismissed when not participating in the activities of the Board of Directors for 06 consecutive months (except in cases of force majeure), failing to complete his duties, seriously violating the company charter, violating the law affecting the company’s reputation, or other cases according to the company charter.

What conditions must a decision to dismiss the Chairman of the Board of Directors meet to be approved?

The decision to dismiss the Chairman of the Board of Directors is usually passed by voting at a meeting of the Board of Directors with a majority of members in favor, unless the company’s charter has other provisions on the voting ratio.

In what cases does the change of the Chairman of the Board of Directors need to be notified to the business registration agency?

Changing the Chairman of the Board of Directors requires notification to the business registration agency if the Chairman of the Board of Directors is also the legal representative of the company.

What documents are included in the notification of change of legal representative?

Documentation for notification of change of legal representative includes notice of change of legal representative, a valid copy of the meeting minutes of the Board of Directors on change of legal representative and other relevant documents as prescribed.

Is a joint stock company required to have a Chairman of the Board of Directors?

The Law on Enterprise 2020 stipulates that a joint stock company must have a Board of Directors, and the Board of Directors must elect a Chairman. Therefore, having a Chairman of the Board of Directors is mandatory.

Conclude

Changing and electing the chairman of the board of directors of a joint stock company is an important procedure that requires strict compliance with the provisions of law on enterprises. Long Phan Consulting Company provides professional services, accompanying businesses in complying with legal regulations, optimizing processes and ensuring the rights of stakeholders. Customers who need detailed advice on procedures for changing the Chairman of the Board of Directors, please contact the hotline: 1900636389 for dedicated and professional support.