Circular 116/2020/TT-BTC on corporate governance officially took effect on February 15, 2021
In this Circular, for the first time, the template of the Operation Regulation of the Board of Directors has been issued for construction reference. Accordingly, enterprises should note the following main contents:
Members of the Board of Directors
Standards of the members of the Board of Directors:
- Must have qualifications and experience in business administration or in the field, line of business of the Company and be allowed to establish and manage an enterprise.
- A member of the Board of Directors of the Company may concurrently be a member of the Board of Directors of another company.
- It should be noted that an individual can only be an independent member of the Board of Directors for no more than 2 consecutive terms.
How to elect members of the Board of Directors:
- A group of shareholders owning at least 10% of the common shares (or smaller percentage as prescribed in the charter) and the incumbent Board of Directors have the right to nominate and introduce candidates for members of the Board of Directors. Voting to elect members of the Board of Directors must be conducted by the method of cumulative voting, unless otherwise provided by the charter.
Rights and obligations of members of the Board of Directors:
- Members of the Board of Directors have full rights in accordance with the Law on Securities, relevant laws and the company’s charter.
- Members of the Board of Directors must attend the meeting fully, report interests, related transactions and disclose information when trading shares of the company.
Board of Directors
The Board of Directors has the right to decide on the strategy, medium-term development plan, annual business plan; decide to sell unsold shares within the number of authorized shares of each class and raise capital in other forms; decision to buy back shares; Supervise, direct the Director or General Director and other managers in running daily business …
The remarkable new point, the Chairman of the Board of Directors, in case of the death, missing, detainment, imprisonment or impossibility to hold longer the position, the Board of Directors shall elect a new temporary Chairman.
Report and disclosure of interest
Public companies have high requirement on transparency in their business operations. Therefore, the Operation Regulation of the Board of Directors reserved chapter V for this content. Accordingly, at the end of a fiscal year, the Board of Directors must submit to the General Meeting of Shareholders the following reports:
- Report on business results of the Company;
- Financial report;
- Report on evaluation of the management and administration of the Company;
- Appraisal reports of the Supervisory Board for the above 3 types of reports.
Members of the Board of Directors of the Company must declare to the company within 07 working days from the date of arising of their related interests, including:
- The enterprises in which they contribute capital or have shares;
- The enterprises that their related people jointly own or own more than 10% of charter capital.
Members of the Board of Directors must give explanations and must be approved by the remaining members of the Board of Directors when on behalf of individuals or on behalf of others to perform work within the scope of business of the Company. If this obligation is violated, all income earned from that activity belongs to the Company.
