Internal Governance Structures of Vietnamese Companies under the Enterprise Law 2005

Since Vietnamese company law provides different internal governance structures for Limited Liability Companies (LLCs) and Shareholding Companies (SCs), this section examines these systems in separate sub-sections. This section concludes that the Enterprise Law 2005 provides different fixed internal governance structures for Company types with mandatory powers and functions for each corporate governance body.

1. INTERNAL GOVERNANCE STRUCTURES OF LIMITED LIABILITY COMPANIES (LLCS)Under the Enterprise Law 2005, LLCs are classified into two forms:
   1. LLCs with two or more shareholders and
   2. Single-member LLCs.

   Unlike company laws of other jurisdictions, the 2005 law provides different internal governance structures for LLCs.

   1. LLCs with two or more shareholdersUnder the Enterprise Law 2005, the mandatory governance structure of a multiple shareholder LLC consists of:
      • Members’ Council (hereinafter, MC);
      • Chairperson of the MC;
      • CEO and
      • If the company has more than 10 shareholders, a Board of Supervisors.
   2. Internal governance structures of one-shareholder LLCsThe Enterprise Law 2005 provides for two types of single-member LLCs, organization- owners versus human-owners, with two different mandatory internal governance structures.
      1. Single-organisation-owned LLCsThe mandatory governance structure of this company type is more complicated than that of a one-natural-shareholder-owned LLC and consists of the following three constituents:
         1. The Company President and the Members’ Council
         2. Chief Executive Officer
         3. Supervisors
      2. One-natural-person-owned LLCsCompared to single-organisation-owned LLCs, the internal governance structure of a single-natural-shareholder LLC is much simpler. The mandatory internal governance structure of this company type comprises a company president and a CEO. The company owner is established as the company president, and the powers and obligations of the president are also as those of the company owner, with the supreme power to decide upon any matter of the company. The CEO is selected by the owner to run the daily operations of the company.In conclusion, the Enterprise Law 2005 provides different statutory internal governance structures for LLCs owned by single and multiple shareholders with particular mandatory powers of corporate governance bodies. These powers may be expanded, but not decreased, by the company’s constitution.
2. THE INTERNAL GOVERNANCE STRUCTURE OF A SHAREHOLDING COMPANYThe mandatory governance structure of a shareholding company consists of four governance bodies:
   1. Shareholders’ meeting;
   2. Board of Management (BOM);
   3. CEO, and
   4. if the company has more than 11 shareholders being natural persons or one (or more) institutional shareholder(s) holding more than 50 percent of the equity capital, a Board of Supervisors (BOS).

   In short, the mandatory internal governance structure of an SC under the Enterprise Law 2005 comprises four constituents: the general meeting, a BOM, a CEO, and a BOS with respective statutory powers and functions respectively. Besides the statutory powers prescribed in the Law, the company’s constitution can expand, but not decrease, the powers of the above corporate governance bodies.