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| A JSC will be managed and organised under new regulations from July 1. — Photo bravolaw.vn |
HA NOI (Biz Hub) – Significant changes in the management and organisation of joint stock companies (JSCs) have been made in the 2014 Law on Enterprises, whichwill take effect on July 1.
Under the new regulations, a JSC is entitled to choose its organisational structure according to either of two models: One includes a General Meeting of Shareholders (GMS), Board of Management (BOM), Board of Supervision and the Director/General Director, and the other includes the GMS, BOM (where at least 20 percent are independent members and an internal audit division is under BOM's control) and the Director/General Director. The independent members shall be responsible for supervising and auditing the JSC's management and operations without directly managing performance.
The new law helps JSCs to choose their initial legal representative(s) (Chairman and/or Director/General Director). In cases of more than one legal representative being available, the Chairman and the Director/General Director shall both automatically be the company's legal representatives, which should be clearly stated in the company's Charter.
The law also adjusts and supplements a number of provisions related to the rights and obligations of the GMS and BOM and the structure, criteria, rights and obligations of BOM members, independent members and the chairman as well as of legal representatives of the JSC. Accordingly, the BOM is entitled to elect, dismiss, and discharge its chairman.
Conditions, modality of convening, conducting the GMS meeting
The new law provides that the GMS is conducted when the number of attending shareholders represents at least 51 percent and 33 percent of the voting shares for the first and second meetings convened by the GMS, respectively.
Subject to the issues to be approved by the GMS, the voting threshold in the new law is reduced from the current 65 percent and 75 percent of votes of attending shareholders to 51 percent and 65 percent of votes of attending shareholders, as stated in the 2005 Law of Enterprises.
It is noted that the 2014 Law of Enterprises stipulates a broad range of technology applications in the meetings. The shareholders are allowed to attend and vote through online conferences, mail, fax or email, and such methods of attendance and voting must be clearly stated in the JSC's Charter.— PLF Law Firm