The director is an important position responsible for managing the business operations of a compnay. During the course of its operations, there may be times when the company needs to change its director to better align with its work and development orientation.

So, what is the current situation regarding the change of company directors? What are the legal regulations concerning the change of company directors? What issues need to be clarified in relation to the change of company directors? 

I. The current situation of changing company directors

The director is an important position responsible for managing the business operations of a company. During the course of its operations, there may be times when the compnay needs to change its director to better align with its work and development orientation. Currently, the situation regarding the change of company directors is as follows:

- Many companies, during their operations, have appointed or hired a new director who is the legal representative of the company to manage the business operations in place of the former director but have either not carried out or delayed the procedure to change the company director in accordance with the law (or register the change of the company’s legal representative).

- Many companies have directors who are the legal representatives of the company, but these directors have left the country without providing written authorization to another individual residing in Vietnam, have absconded, etc., and therefore need to undergo the procedure to change the company director but have not done so or have delayed doing so as required.

The situation of not carrying out or delaying the change of directors is primarily due to most companies not understanding the procedures or knowing but intentionally not complying with legal regulations. This leads to the risk of being administratively sanctioned if violations are detected during inspection. 

II. Regulations on changing the company director

The current regulations regarding changing the company director are as follows:

1. Concept of changing a company director

The current law does not specifically define the concept of changing a company director. It can be understood as the process of transferring the role of the company’s director to another person to ensure the management of the company’s business operations.

2. Changing the company director does not always mean changing the legal representative

Not every case of changing the company director results in a change of the legal representative. For example:

- In a single-member limited liability company (LLC) where the owner is an organization, there is one legal representative who is the Chairman of the company, while the company director is another person (as per Article 79 of the Enterprise Law 2020).

- In a joint-stock company, the legal representative is the Chairman of the Board of Directors, while the company director is another person (as per Clause 2, Article 137 of the Enterprise Law 2020).

- In a partnership company, the general partners are the legal representatives of the company, and the company director may not be a general partner of the company (as per Clause 1, Article 182, and Clause 1, Article 184 of the Enterprise Law 2020).

- In a sole proprietorship, the owner of the sole proprietorship is the legal representative of the company, and the director can be another hired individual (as per Clauses 2 and 3, Article 190 of the Enterprise Law 2020).

Changing the company director only implies changing the legal representative when the company director also serves as the legal representative of the company.

III. Some common questions regarding changing the company director

Here are some frequently asked questions that need clarification regarding changing the company director:

1. Is it necessary to notify the Business Registration Authority about the change of the company director?

To determine whether it is necessary to notify the Business Registration Authority about the change of the company director, it depends on the type of enterprise and the company’s charter regarding the legal representative of the company. Specifically:

- In a limited liability company (LLC) or a joint-stock company (JSC), if the director is also the legal representative, the Business Registration Authority must be notified of the change of the company director (according to Article 40 of Decree No. 01/2021/ND-CP).

- In a partnership company, if the company director is a general partner, the Business Registration Authority must be notified of the change of the company director (according to Article 49 of Decree No. 01/2021/ND-CP).

2. Is the decision to change the company director a mandatory document when the company change its director?

A decision to change the company director is a mandatory document when a company changes its director.

3. Is the approval of the General Meeting of Shareholders required for changing the company director?

To determine the authority to approve the change of the company director, it is necessary to base on the company charter. If the change of the company director also changes the legal representative and changes the content of the company charter, it must be approved by the General Meeting of Shareholders; if the change of the company director, who is also the legal representative, does not change the content of the company charter, except for the name, surname and signature of the legal representative of the company, it does not require the approval of the General Meeting of Shareholders but only requires the approval of the Board of Directors (according to point c clause 1 Article 50 of Decree No. 01/2021/ND-CP).

IV. Legal consulting services related to changing a company director

NGOC PHU LAW FIRM has extensive experience in advising and carrying out legal procedures related to changing the company director, with a process that includes the following:

- Receiving client information for consultation, and conducting legal procedures related to changing the company director;

-  Providing advice and supporting clients in preparing documents necessary to complete the legal procedures for changing the company director;

- Drafting documents and representing clients in dealings with the competent state authorities;

- Drafting the appointment decision and other internal documents of the company;

- Receiving and delivering the results to the client.

The above is information provided by NPLAW to address common questions about changing the company director. If readers have any additional questions that need clarification, please contact NPLAW using the following details: