At the 9th session, National Assembly XIV, Enterprise Law 2020 (Law) was approved and will officially take effect on January 1, 2021. The following will be 5 new points specified in the next 3 chapters (Chapter IV, Chapter V, Chapter VI) of Law 2020, specifically the article will go into details as follows:
- Amending regulations on the Supervisory Board in State Enterprises:
According to Clause 1, Article 103 of Law 2020: “Based on the size of the company, the representative agency that decides the establishment of the Supervisory Board has from 01 to 05 Supervisors, including the Head of the Supervisory Board. The term of Supervisor is no more than 05 years and may be reappointed but not more than 02 consecutive terms in that company. If the Supervisory Board has only 01 Supervisor, that Supervisor is also the Head of the Supervisory Board and must meet the criteria of the Head of the Supervisory Board.”
According to Clause 1, Article 102 of Law 2014, “Based on the size of the company, the representative agency decides to appoint 01 Supervisor or establish a Supervisory Board consisting of 03 to 05 Supervisors. The term of Supervisor is no more than 05 years and is reappointed, but each individual may be appointed as the Supervisor of a company no more than 02 terms. ”
Thus, we can see the differences here are:
Firstly, Law 2020 stipulates: State enterprises must have a Supervisory Board, this Supervisory Board has a number of Supervisors from 1 to 5 people. In it must have 1 Head of the Supervisory Board. Law 2014 stipulates: State enterprises can appoint one person or establish a Supervisory Board from 3 to 5 people, and do not required to have a Head of Supervisory Board.
Secondly, the new regulation for Supervisors is reappointed but no more than 2 consecutive terms in that Company, that is, if 2 terms are not consecutive, they will still be reappointed as Supervisors. However, Law 2014 does not allow reappointment of Supervisors for more than 2 terms (regardless of whether the term is continuous or not).
- Supplementing the regulations on depository certificates (basis common shares) without voting rights
Under Clause 6, 7, Article 114 of the Law 2020 adding new provisions on depository certificates (also known as basis common shares) do not have the following voting rights:
6. Common shares used as the underlying asset to issue depository certificates without voting rights are called basic common shares. Depository certificates without voting rights have economic benefits and obligations corresponding to basic common shares, except voting rights.
7. The Government shall provide for depository certificates without voting rights.
- Amending regulations on rights of Common shareholders
Law 2020 has amended and supplemented for Law 2014 a number of contents related to common shareholder rights, specifically as follows:
Firstly, the amendment of regulations on shareholders or groups of shareholders has some special rights:
Article 114 of Law 2014 stipulates that: shareholders or groups of shareholders have some special rights, namely: Shareholders or groups of shareholders owning 10% or more of the common shares for a continuous period of at least 06 months or one Other ratios are smaller than those prescribed in the company’s charter.
Article 115 of law 2020 stipulates that shareholders or groups of shareholders have some special rights: Shareholders or groups of shareholders owning 05% or more of the common shares or one Other ratios are smaller than those prescribed in the company’s charter.
Secondly, expand one of the rights of a shareholder or group of shareholders related to reviewing, searching, extracting documents of the company, specifically:
Law 2020: Provisions on the right to review, search and extract contracts, transactions must go through the Board of Directors and other documents, except documents related to trade secrets, business secrets of the company.
Law 2014: None of the above.
- Adding obligations of shareholders
Accordingly, besides inheriting the provisions on obligations of common shareholders in Article 115 of Law 2014, Clause 5 Article 119 of Law 2020 adds the following content: “Confidentiality of information provided by the company according to the regulations specified in the company’s charter and the law; only use the information provided to perform and protect their legitimate rights and interests; prohibit the distribution or copying of information provided by the company to the group, other organizations and individuals. “
- Adding responsibilities of joint-stock company managers
Compared to the current regulations, Clause 5 Article 165 of Law 2020 adds the responsibilities of a joint stock company manager as follows: “Member of Board of Directors, Director or General Director and other managers are violating the provisions of Clause 1 of this Article shall personally or jointly compensate for lost interests, return the received benefits and compensate all damage to the company and the third party. “
The above are 5 new points specified in the next 3 chapters (Chapter IV, Chapter V, Chapter VI) of Law 2020, these regulations will be valid as soon as the Law 2020 takes effect (from January 1, 2020).
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