Which shareholders are entitled to nominate people to the Board of Directors?

Article overview

The right to nominate people to the Board of Directors is one of the rights of shareholders, helping to ensure that company management decisions reflect the aspirations and interests of shareholders. Participating in the nomination process not only creates opportunities for shareholders to express their voices but also contributes to improving transparency and efficiency in corporate governance activities.

Shareholders have the right to nominate people to the Board of Directors
Shareholders have the right to nominate people to the Board of Directors

Conditions to become a member of the Board of Directors

According to the provisions of Clause 1, Article 155 of the Law on Enterprise 2020, members of the Board of Directors must meet the following criteria and conditions:

  • Not on the list of people ineligible to establish and manage businesses in Vietnam as prescribed in Clause 2, Article 17 of this Law.
  • Must have professional qualifications as well as experience in business administration or in the field or industry in which the company operates. Members do not necessarily have to be shareholders, unless the company charter stipulates otherwise.
  • Members of the Board of Directors have the right to simultaneously hold positions on the Board of Directors of other companies.
  • For state-owned enterprises, according to the provisions of Point b, Clause 1, Article 88 of the Law on Enterprise 2020, as well as subsidiaries of state-owned enterprises, members of the Board of Directors cannot be people with family relationships. Communicate with the Director, General Director or other managers of the company, as well as with the person who has the authority to appoint management of the parent company.

In addition, the Board of Directors also has independent members, who must meet the conditions in Clause 2, Article 155 of the Law on Enterprise 2020, specifically:

  • Members must not be people currently working at the company, parent company, or subsidiary; nor must they be people who have worked at these units for at least the previous 3 years.
  • Do not receive salary or remuneration from the company, except for prescribed allowances for members of the Board of Directors.
  • Must not be a person related by marriage or blood to the company’s major shareholders, as well as the managers of the company or its subsidiaries.
  • Must not directly or indirectly hold at least 1% of the company’s total voting shares.
  • Must not be a person who has held a position on the Board of Directors or Supervisory Board of the company for at least the past 5 years, unless appointed consecutively for 2 terms.
Conditions to become a member of the Board of Directors
Conditions to become a member of the Board of Directors

Term and number of members of the Board of Directors

The term and number of members of the Board of Directors are specified in Article 154 of the Law on Enterprise 2020, specifically as follows:

  • The Board of Directors consists of from 3 to 11 members, with the specific number specified by the company’s Charter.
  • The term of each member of the Board of Directors is a maximum of 5 years and can be re-elected an unlimited number of times. However, an individual can only be elected as an independent member of a company’s Board of Directors for a maximum of 2 consecutive terms.
  • In the event that all members of the Board of Directors expire, they will continue to hold their positions until new members are elected and take up their duties, unless otherwise specified in the company’s charter.
  • The company charter will also clearly stipulate the number, powers, obligations, as well as the method of organization and coordination of activities among independent members of the Board of Directors.

The regulations on the term and number of members of the Board of Directors in the Law on Enterprise 2020 mentioned above are meant to ensure the management structure, helping to maintain stability and continuity in management activities, avoiding the situation of disruption and creating transparency in management, and helping members clearly understand their roles in the organization.

Term of membership of the Board of Directors
Term of membership of the Board of Directors

Who are shareholders entitled to nominate people for the Board of Directors?

According to the provisions of Clause 5, Article 115 of the Law on Enterprise 2020, a shareholder or group of shareholders holding 10% or more of the total number of common shares, or a smaller percentage as prescribed in the company’s Charter, has the right to nominate people to the Board of Directors.

Consulting services and support for shareholders in exercising their right to nominate people to the Board of Directors.

Long Phan provides consulting services and supports shareholders in exercising their nomination rights, with the following diverse services:

  • Legal advice: Detailed explanation of the right to nominate and related regulations in the Enterprise Law and Company Charter.
  • Nomination process instructions: Provide specific instructions on the steps to take to nominate candidates to the Board of Directors.
  • Document drafting: Helps you draft necessary documents for the nomination process, ensuring legality and completeness.
  • Organize shareholder group meetings: Assist in organizing meetings among shareholders to discuss and decide on nominations.
  • Represent shareholders in meetings.
  • Nomination strategy consulting: Support you in building an effective nomination strategy, helping to increase the candidate’s likelihood of success.
  • Consulting on other related issues.

Understanding the rights and interests of shareholders will help ensure rights, including the right to nominate people to the Board of Directors. We at Long Phan provide professional, dedicated service, helping you exercise your right to nominate effectively, and conveniently. Please contact us today via the hotline 0906735386 to receive the best support in exercising your rights!