A meeting to elect the General Director is an essential activity aimed at identifying an individual with adequate capability, integrity, and experience to lead the enterprise toward effective operations. Through such a meeting, the enterprise not only ensures democracy and transparency in its leadership structure but also lays a solid foundation for sustainable future development. Below, NPLaw invites valued readers to explore the legal issues related to convening a meeting to elect the General Director.
I. Definition and role of the meeting to elect the General Director in an enterprise
A meeting to elect the General Director in an enterprise is a meeting convened to select and appoint an individual to hold the position of General Director, who is responsible for managing the company’s day-to-day production and business activities in accordance with the orientation set by the Board of Directors or the owner.
The roles of such a meeting include:
- Ensuring the selection of a person with sufficient capability, integrity, and experience to manage the enterprise;
- The elected General Director will be responsible for implementing business strategies, managing finance and human resources, and ensuring the enterprise operates in the right direction;
- Guaranteeing an open and objective appointment process, thereby avoiding favoritism or baseless appointments.
II. Legal regulations on the meeting to elect the General Director
1. Authority to convene the meeting to elect the General Director in different types of enterprises
According to Articles 82, 100, and 162 of the Law on Enterprise 2020, the Members’ Council or the Company’s Chairman has the authority to appoint or hire a Director or General Director.
Thus, the authority to convene the meeting to elect the General Director in various types of enterprises belongs to the Members’ Council or the Company’s Chairman.
2. Conditions and qualifications for candidates participating in the election of the General Director
Pursuant to Articles 64, 82, and 101 of the Law on Enterprise 2020, candidates nominated or self-nominated to participate in the election of the General Director must meet the following legal conditions and qualifications:
- Not falling under the prohibitions stipulated in Clause 2, Article 17 of the Law on Enterprise 2020;
- Possessing professional qualifications and experience in business administration or in the company’s business line;
- Meeting other conditions specified in the company’s Charter, not concurrently holding a management position in another enterprise, not having family relationships with the head or deputy head of the owner’s representative agency, members of the Members’ Council, the Company’s Chairman, Deputy Directors, General Director, Chief Accountant, Controllers of the company, and not having been dismissed from an equivalent position in any State-owned enterprise (applicable to joint stock companies);
- For State-owned enterprises, the candidate must not have family relationships with company managers, controllers, or representatives of State capital at the parent company or subsidiaries.
Thus, candidates for the election of the General Director must have full legal capacity, professional qualifications, ethical standards, and management experience, must not violate prohibitions under the law, and must avoid conflicts of interest or prohibited familial relationships under applicable regulations.
3. Rights and obligations of the person elected as General Director after the meeting
According to Articles 63, 82, 100, and 162 of the Law on Enterprise 2020, the rights and obligations of the individual elected as General Director after the meeting are stipulated as follows:
- Managing day-to-day business operations and being accountable to the Members’ Council;
- Organizing the implementation of resolutions and decisions of the Members’ Council;
- Deciding day-to-day business matters;
- Implementing business and investment plans;
- Issuing internal management regulations;
- Appointing and dismissing personnel;
- Signing contracts on behalf of the company;
- Submitting financial statements, making proposals on profit distribution or loss handling;
- Recruiting employees;
- Exercising other rights under the company charter, resolutions of the Members’ Council, and employment contracts.
Therefore, the individual elected as General Director after the meeting shall have the above rights and obligations in accordance with the detailed provisions of Articles 63, 82, 100, and 162 of the Law on Enterprise 2020.
III. Clarifications on several legal questions regarding the meeting to elect the General Director
1. What voting ratio is required for a candidate to be elected General Director?
The Law on Enterprise 2020 does not specifically stipulate the voting ratio for electing a General Director, as the appointment of the General Director does not fall under the authority of the General Meeting of Shareholders, but rather of the Board of Directors (for joint stock companies) or the Owner/Company’s Chairman (for limited liability companies).
2. What contents must the minutes of the meeting and the appointment decision include?
According to Article 158 of the Law on Enterprise 2020, the minutes of the meeting to elect the General Director must include the following details:
- The name, head office address, and enterprise code;
- The time and venue of the meeting;
- The purpose, agenda, and contents of the meeting;
- A list of attending members;
- A record of matters discussed at the meeting, especially the election of the General Director, clearly stating any differing opinions;
- A summary of members’ statements, especially those related to electing the General Director;
- The voting results, including the number of votes in consents, objections, and abstentions, clearly stating the voting ratio for the election of the General Director;
- Identification of matters resolved (the election of the General Director) and the ratio by which such matters were approved;
- The signatures of the Chairperson and a person taking the minute.
Thus, the contents of the meeting minutes and appointment decision must fully comply with Article 158 of the Law on Enterprise, ensuring accurate, transparent, and complete information.
3. Under what circumstances does the term of the General Director terminate after being elected?
According to Article 102 of the Law on Enterprise 2020, the term of the General Director may terminate under the following circumstances:
- No longer meeting the standards and conditions specified in Article 101 of the Law on Enterprise;
- Obtaining voluntary resignation;
- Being reassigned or retiring;
- Failing health or losing credibility necessary to continue as a member of the Members’ Council;
- Lacking the qualifications and capabilities needed to meet the enterprise’s new development strategy and business plan;
- Violating the rights, obligations, and responsibilities of managers under Articles 97 and 100 of the Law on Enterprise;
- Being convicted by a court with a legally effective judgment or decision;
- The enterprise failing to preserve capital as required by law;
- The enterprise failing to achieve its annual business objectives;
- The enterprise violating the law;
- Other cases as specified in the company’s Charter.
Therefore, the General Director may be dismissed or removed under these circumstances. These regulations aim to ensure effective, transparent, and proper management of the enterprise, while protecting the interests of shareholders, employees, and related parties.
4. Can the meeting to elect the General Director be conducted online?
Under the provisions of the Law on Enterprise 2020, there is no explicit regulation allowing the meeting to elect the General Director to be conducted online. For meetings of the Board of Directors or the Members’ Council, including such meetings are usually held in person at the company’s headquarters or at a notified location in advance.
5. How are disputes over the results of the meeting to elect the General Director handled?
When having disputes over the results of the meeting to elect the General Director, the resolution process will generally include:
- Verifying the legality of the meeting. The meeting must comply with the company charter, the Law on Enterprise 2020, and related decrees and circulars. It must be properly convened by the competent authority, attended by eligible members, and follow a valid voting procedure;
- The meeting minutes must clearly record discussed matters, voting results, and decisions. Any deficiencies or ambiguities in the minutes could lead to disputes;
- The enterprise should seek to resolve internal disputes through mediation among relevant parties, such as among Board members, shareholders, or other stakeholders. Mediation may reduce conflict and help find reasonable solutions;
- If there are faults in the election process or disputes over results are identified, the company may reconvene the meeting following the correct procedure to ensure fairness and transparency.
IV. Legal advisory services related to the meeting to elect the General Director
The above article by NPLaw provides an overview of the meeting to elect the General Director. With a team of experienced lawyers and legal experts, NPLaw is always ready to accompany, advise, and support our valued clients on legal matters related to electing the General Director. For further assistance on related legal issues, please contact us at:
