Does The Company Charter Need To Be Adjusted When The Enterprise Law 2020 Come Into Effect?

25/01/2021, 08:43 AM

Recently, on January 1, 2021, the Enterprise Law 2020 officially came into effect with many changing regulations to meet the general goal of completing the legal framework for corporate governance to meet standard Good practice and popular regional and international. With the change in regulations, will enterprises need to amend and supplement the company's charter or not and how to change in accordance with the Enterprise Law 2020?

1. The changed contents related to the company's Charter

The company's Charter includes: Charter when registering an enterprise and the Charter amended and supplemented during its operation. The content of the Charter must include the main contents detailed in Clause 2, Article 24 of the Law on Enterprises 2020.

Compared with the provisions of the Law on Enterprises 2014, the Enterprise Law 2020 requires that the contents of the company's Charter must detail:

  • Quanity, managerial position and rights and obligations of the legal representative of the enterprise;
  • Division of rights and obligations of the legal representative in case the company has more than one legal representative;

Some changes related to the company charter between the 2014 Enterprise Law and the Enterprise Law 2020:

Amened

The Enterprise Law 2020

The Enterprise Law 2014

The Supervisory Board in the limited company

A limited company with two or more members has a Board of members, chairman of the Board of members, director or general  director. Limited companies that are state-owned enterprises under Point b, Clause 1, Article 88 and subsidiary companies of state-owned enterprises under Clause 1, Article 88 of the 2020 Law on Enterprises must establish a control committee. control; other cases decided by the company.

A limited liability company with two or more members has a Board of members, chairman of the Board of members, director or general director. A limited company with 11 or more members must set up a control board; In case there are less than 11 members, the Board of Supervisor can be set up in accordance with corporate governance requirements.

Change the way resolutions are accepted

A resolution of the Board of members in a limited company is accepted when more than 50% of the attending members agree or the attending members own more than 50% of the total number of votes for approval.

A resolution of the Board of members in a limited company is accepted when it is approved by more than half of the attending members.

Change of interests of shareholders, groups of shareholders

A shareholder or group of shareholders owning from 05% of the total number of common shares or more or a smaller percentage as stipulated in the company's charter has the right to request convening a meeting of the General Meeting of Shareholders in case The Board of Directors seriously violates the rights of shareholders and the obligations of managers, etc,…

A shareholder or a group of shareholders owning 10% or more of the total number of common shares for at least six consecutive months or a smaller percentage specified in the company's charter has the right to request convening a meeting. General meeting of shareholders in case the Board of Directors seriously violates the rights of shareholders, obligations of the manager, etc.

Stipulating rights and obligations of each legal representatives in case the company charter is not specified

If the company has more than one legal representative, the company's charter specifies rights and obligations of each legal representative. In case the division of rights and obligations of each legal representative is not specified in the company's charter, the legal representative of the company will be the authorized representative of the enterprise to the third party; All legal representatives are jointly liable for any damage caused to the enterprise in accordance with the Civil law and other relevant laws.

No regulation

2. Do businesses need to amend and supplement the company's charter when the Enterprise Law 2020 takes effect?

The Law on Enterprises 2020 does not stipulate cases in which an enterprise must amend and supplement the company's charter, but this amendment will be done by the Board of members, the owner of a limited company, or a partnership; The General Meeting of Shareholders for a joint stock company decides. Modes of amendment and supplementation are specified in the company's charter.

 

Currently, normally, when there are modifications and additions related to such contents as: enterprise name: Company name; head office; authorized capital or management organization structure, rights and obligations of members/ shareholders, etc., the enterprise will make amendments to the company's charter.

 

According to the analyzed content, the Enterprise Law 2020 has changed a number of outstanding contents in the company's charter related to the rights of shareholders, groups of shareholders; legal representative; management organizational structure of the limited company, etc. Thus, in order to ensure that the contents of the company's charter are consistent with current law provisions as well as avoid conflicts in the application of regulations when administering and operating the enterprise should make amendments. and supplement the company's charter according to the latest regulations.

 

3.  Amendments and supplements to the company charter must be re-registered with the business registration office?

When registering an enterprise establishment, the company charter is one of the required documents to be submitted to the state business registration agency, except for the case of establishing a private enterprise.

Under the provisions of Articles 30 and 31 of the Law on Enterprises 2020, enterprises shall:

  • Registration of changing contents of an enterprise registration certificate: When there is a change of one or more of the contents on the Certificate of Business registration.
  • Notice of change of business registration content: When changing one of the contents about: industry, business lines; founding shareholders and shareholders being foreign investors of joint-stock companies, except for listed companies; other content in the application for business registration.
     

However, there is no regulation that requires enterprises to re-register/ notify the business registrar when amending or supplementing the company's charter during its operation. Thus, the amendment and supplement to the company's charter will be decided and implemented by a private enterprise without having to re-register / notify the business registration agency.

Source: Thu Vien Phap Luat

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