Question:
Whether a joint stock company able to sign a labor contract with the Chief Controller and the members of the Board of Controllers?
Answer:
According to the current regulations, Board of Controllers of a joint stock company (“JSC”) is assigned by the General Meeting of Shareholders with the function of: “Supervising the Board of Directors and the Director/General Director managing the company”[1]. The Board of Controllers comprises of the Chief Controller and the members.
Article 169.1(d) of the 2020 Law on Enterprises on requirements to be satisfied by Controllers stated that: “Is not a company’s executive or is not necessarily a company’s shareholder or employee, unless otherwise prescribed by the company’s charter”.
Article 286.2(a) of Decree 155/2020/NĐ-CP elaborating the 2019 Law on Securities also stipulated: Members of the Board of Controllers “shall not work at the accounting or finance department of the company”.
Therefore, the current legal regulations neither force nor prohibit members of the Board of Controllers to be employees or sign a labor contract with the company. However, in case of being an employee of the company, the Chief Controller/members of the Board of Controllers must not hold manager positions (applicable to all enterprises) and must not work at the accounting/finance department of the company (particularly applicable to public Companies).
In addition, the determination of whether the Chief Controller/members of the Board of Controllers is/are able/required to sign labor contracts with the company, is also based on the company’s charters. Accordingly, there are various cases where companies possess other regulations or supplements different than those provided by law. In these cases, the regulations in the company’s charters shall prevail.
According to the corporate governance practices, stemming from the role of the Board of Controllers, in order to ensure the objectivity and independence of the Chief Controllers/member of the Board of Controllers, enterprises often appoint shareholders or their representatives who are not the company’s employees to these positions.
[1] Article 170.1 of the 2020 Law on Enterprises.
Comment: