Limited Liabilities Companies established under the former Law on Foreign Investment and those under Enterprise Law can be compared as follows:
- identical features:
a) allocation of rights and responsibilities pro rata capital contribution:
The Law on Foreign Investment (Article 6, Article 15): joint venture parties or investors marking capital contributions shall share profits and risks pro rata capital contribution (except otherwise agreed in the joint Venture Agreement or the Charter of the Enterprise).
Under the Enterprise Law (Article 38, 36): members or owners of the company must be responsible for the debts and other assets obligation of the enterprise or the amount of charter capital of the company.
b) no right to issue shares.
- difference: in the organization and management of the enterprise:
a) under the form Law on Foreign Investment:
The Board of Management is the steering body of the enterprise (Article 11 Law on Foreign Investment);
Form of approving decisions of BOM in the form of votes at BOM meetings:
Principles for passing BOM decisions (Article 14 of the Law on foreign Investment):
With respect to important issues (appointment, dismissal of General Director, first General Director; amendment or supplement to the enterprise's charter) according to the unanimous principles;
With respect to other issues, the principle of majority vote of members present at the meeting shall apply.
a) under the Enterprise Law
the Member Board is the highest deciding body of Limited Liabilities Companies with at the least two members (Article 47 of the Enterprise Law);
form to pass Member Board's decision:
+ voting at BOM meeting;
+ collecting written votes;
+ other forms stipulated in the company's Charter.
Principles for passing Member Board's decision (Article 52 Enterprise Law):
+ voting at meetings of the board of Members with respect to the following issues: (i) amending and supplementing the charter, (ii) deciding the development orientations, (iii) electing, dismissing and removing from office the Chairman of the Board of Members, (iv) approving annual financial reports and (v) reorganization or principle the it is agreed by at least 65% of total capital contribution of the member present at the meeting as stipulated in the charter, and for the sale of assets and amendments to the Charter, and re-organization of the Company, the required percentage is at least 75%.
For cases of gathering of written approvals: approval of at least 75% of the charter capital as stipulated in the charter.
It is worth to note that since 11/1/2007, the provisions on the quorum for a meeting, (ii) the form to pass a decision and (iii) issues under the authority to decide or (iv) the necessary percentage of votes needed to pass a decision of the Member Board, General Shareholders' meeting shall be agreed by the parties and stipulated in the Charter of the Company in accordance with Vietnam' WTO commitments.
