Conditions for foreigners to be directors of Vietnamese companies

Article overview

Foreigners to be directors of Vietnamese companies need to meet the conditions of professional qualifications, management experience and legality. They must have a valid work permit, temporary residence card and business registration. Hiring foreign directors can bring benefits in terms of international experience and market expansion, but also carries risks of cultural barriers and high costs. The following article will analyze the relevant requirements and regulations in detail.

Foreigners to be directors of Vietnamese companies
Foreigners to be directors of Vietnamese companies

Can I hire a foreigner to be a director of a Vietnamese company?

The Law on Enterprise 2020 allows Vietnamese companies to hire foreigners as directors. This opens up opportunities for businesses to access high-quality international human resources. However, the following conditions need to be met:

Pursuant to Clause 1, Article 63 of the Law on Enterprises 2020, the director or general director of the company is the person who runs daily business activities and is responsible to the higher management agency. The company may have one or more directors depending on the provisions of the charter.

To work legally in Vietnam, foreigners must meet the conditions of professional capacity, experience and complete procedures for applying for a work permit. This process ensures that foreigners are capable of assuming senior management positions and comply with Vietnamese law.

Hiring foreign directors also depends on the type of business and the specific regulations of each industry. Some sectors may impose restrictions on the appointment of foreigners to senior management positions to protect national interests.

Conditions for foreigners to work in Vietnam

Foreigners working in Vietnam must comply with strict legal regulations. Article 151 of the 2019 Labor Code sets out specific requirements for foreign workers in Vietnam. These conditions are intended to ensure the quality of human resources and protect the domestic labor market.

  • Foreign workers must be 18 years of age or older and have full civil act capacity.
  • Legally, foreign workers must not be serving a sentence, have not had their criminal record erased, or be prosecuted for criminal liability under foreign or Vietnamese law.
  • A work permit issued by a competent state agency is an important requirement for most foreign workers. However, there are some cases where work permits are exempted such as owners or capital contributing members of limited liability companies with capital contribution value of 3 billion VND or more, Chairman of the Board of Directors or members of the Board of Directors of joint stock companies. equivalent capital contribution.
  • Heads of representative offices and projects of international organizations and foreign non-governmental organizations in Vietnam are also exempt from work permits. People who enter Vietnam for less than 3 months to offer services or handle complex technical problems are also exempt from permits. Foreign lawyers who have been granted a license to practice in Vietnam do not need to apply for a separate work permit.
Conditions for foreigners to work in Vietnam
Conditions for foreigners to work in Vietnam

Conditions for foreigners to be directors of Vietnamese companies

Foreigners who want to take on director positions at Vietnamese companies must meet strict standards and conditions. Article 64 of the Law on Enterprise 2020 provides detailed regulations on this issue, to ensure the management capacity and legal compliance of people holding this important position.

  • First of all, candidates must not be banned from establishing and managing businesses in Vietnam according to the provisions of Clause 2, Article 17 of the Law on Enterprises 2020.
  • Have professional qualifications and experience in business administration of the company and other conditions prescribed by the Company Charter, Decree No. 152/2020/ND-CP (amended by Decree 70/2023/ND-CP) requires foreign executives to be trained for at least 1 year and have at least 3 years of experience appropriate to the expected job position in Vietnam. This requirement is to ensure that the director has enough knowledge and skills to run the business effectively.
  • For state-owned enterprises and subsidiaries of state-owned enterprises, there are additional conditions regarding family relationships. The Director or General Director must not be a person who has a family relationship with the company manager, the company’s Controller, and the parent company, as well as the representative of the enterprise or state capital in the company and parent company.
  • In addition, the Company Charter may set additional conditions depending on the specific industry and development strategy of the business. This allows the company to be flexible in choosing the director who best suits the direction and culture of the business.

Benefits and risks for businesses when hiring people as directors

Hiring foreigners as directors of Vietnamese companies brings both benefits and risks. This decision requires careful consideration from the business side, based on the company’s development strategy and specific conditions.

In terms of benefits, foreign directors often bring valuable international experience and expertise. They can introduce new ideas and strategies, helping businesses access and expand global markets more effectively. Their international relationship network is also an important asset, facilitating connections with foreign partners, investors and customers.

The presence of foreign directors can enhance a company’s reputation and image, especially in fields that require international expertise. Their diverse management thinking and modern working methods can drive process improvements, increase productivity and work quality across the enterprise.

However, hiring foreign directors also poses many risks. Language and cultural barriers can cause difficulties in communication and management, leading to reduced work efficiency. Limited knowledge of local laws can lead to unexpected violations of tax, labor or other regulations.

The cost of hiring foreign directors is often higher than that of domestic directors, creating financial pressure for businesses. Complicated administrative procedures related to work permits, temporary residence cards and other legal documents also require considerable time and effort to complete.

Businesses need to carefully consider the benefits and risks and develop an effective risk management plan when deciding to hire foreign directors. This requires careful financial, legal and human resource management preparation to ensure the hiring and working process goes smoothly, bringing optimal efficiency to the business.

Brings new ideas and strategies
Brings new ideas and strategies

Consulting services on conditions for foreigners to be directors of Vietnamese companies in Long Phan

Long Phan provides professional consulting services on conditions for foreigners to be directors of Vietnamese companies. Our team of experts will assist customers with the following issues:

  • Consulting on conditions for foreigners to become directors
  • Evaluate candidates’ suitability for the director position
  • Instructions for preparing documents and necessary procedures
  • Consulting on risk management strategies when hiring foreign directors
  • Support in the process of applying for a work permit and temporary residence card
  • Answer questions about the rights and obligations of foreign directors

With extensive experience in the field of business consulting, we are committed to providing optimal solutions, helping your business comply with the law and achieve high efficiency in hiring foreign directors. Contact us immediately via hotline 0906735386 for detailed advice and timely support.