Understanding of chairperson of the members’ council of a partnership with NPLaw

A partnership is a distinctive type of enterprise in which the Members’ Council plays a crucial role in the management and administration of the company. Within such a council, the Chairperson of the Members’ Council holds a central position with significant powers and responsibilities to ensure that the partnership operates smoothly and in compliance with applicable laws. However, many people still do not fully understand such a position, particularly issues relating to eligibility requirements, rights and obligations, as well as the relationship between the Chairperson of the Members’ Council and other titles within a partnership.

Below, NPLAW respectfully invites our readers to explore main issues relating to the Chairperson of the Members’ Council of a partnership.

I. Overview of the Chairperson of the Members’ Council of a partnership

1. Concept of the Chairperson of the Members’ Council of a partnership

Pursuant to Clause 1 Article 182 of the Law on Enterprise 2020, the Members’ Council is regulated as follows:

• The Members’ Council comprises all members. The Members’ Council shall elect one general partner as the Chairperson of the Members’ Council, who may concurrently serve as the Director or General Director of the company, unless otherwise stipulated in the company’s Charter.

Under the above provision, the Chairperson of the Members’ Council of a partnership must be a general partner.

2. Organizational model and management structure of a partnership; the role of the Chairperson of the Members’ Council

According to Clause 1 Article 177 of the Law on Enterprise 2020, a partnership is an enterprise in which:

• There must be at least two members who are joint owners of the company and conduct business under a common name (hereinafter referred to as general partners). In addition to general partners, the company may have capital-contributing partners;
• General partners must be individuals and take unlimited liability with all of their assets for the obligations of the company;
• Capital-contributing partners may be organizations or individuals and are liable for the company’s debts only within the scope of the capital they have committed to contribute.

Pursuant to Clause 1 Article 82 of the Law on Enterprise 2020, the organizational structure and management model of a partnership include: The Members’ Council, headed by the Chairperson of the Members’ Council, and the Director or General Director. The Members’ Council comprises all members (including both general partners and capital-contributing partners).

Regarding the role of the Chairperson of the Members’ Council of a partnership, according to Clause 2 Article 182 and Clause 1 Article 183 of the Law on Enterprise 2020, the Chairperson of the Members’ Council has the authority to convene meetings of the Members’ Council if it is necessary or upon request of a general partner.

II. Legal regulations on the Chairperson of the Members’ Council of a partnership

1. Conditions for becoming the Chairperson of the Members’ Council of a partnership

Pursuant to Clause 1 Article 82 of the Law on Enterprise 2020, the Members’ Council elects one general partner to act as the Chairperson of the Members’ Council. Accordingly, to become the Chairperson of the Members’ Council, an individual must be a general partner of the partnership.

Specifically, under Point b Clause 1 Article 177 of the Law on Enterprise 2020, to be a general partner, the individual must be a natural person who takes unlimited liability with all of their assets for the obligations of the company.

2. Procedures for election and removal of the Chairperson of the Members’ Council of a partnership

Regarding the procedure for electing the Chairperson of the Members’ Council, according to Clause 2 Article 182 of the Law on Enterprise 2020, the Chairperson is a general partner elected by the Members’ Council. The election process generally proceeds as follows:

• Step 1: The Members’ Council convenes a meeting to discuss and nominate candidates from among the general partners.
• Step 2: The general partners conduct a vote.
• Step 3: The general partner who receives the required number of votes in accordance with the ratio stipulated in the company’s Charter (commonly more than 50% or 75% of the total number of general partners) shall become the Chairperson of the Members’ Council.
• Step 4: The election results are announced and notified to relevant parties within the company.

Regarding the removal of the Chairperson of the Members’ Council, according to Clause 1 Article 185 of the Law on Enterprise 2020, removal may occur in the following cases:

• The Chairperson voluntarily resigns;
• The Chairperson no longer satisfies the conditions to remain a general partner;
• The Chairperson seriously violates his or her obligations, adversely affecting the company’s operations;
• The Members’ Council decides to dismiss the Chairperson due to loss of confidence.

The removal procedure is implemented as follows:

• Step 1: The Members’ Council convenes a meeting to consider the grounds for removal.
• Step 2: The general partners vote on the removal in accordance with the ratio stipulated in the company’s Charter.
• Step 3: If the removal decision is approved, the Members’ Council elects a new Chairperson in accordance with the election procedure mentioned above.
• Step 4: The decision on removal and the election of the new Chairperson are announced and notified to relevant parties within the company.

All decisions regarding the election and removal of the Chairperson of the Members’ Council must be recorded in the minutes of the Members’ Council meeting to ensure legal validity.

3. Rights and obligations of the Chairperson of the Members’ Council of a partnership

Pursuant to Clauses 1 and 3 Article 182 of the Law on Enterprise 2020, the Chairperson of the Members’ Council is a general partner elected to lead the Members’ Council. Unless otherwise provided in the company’s Charter, the Chairperson may concurrently serve as the Director or General Director. The Chairperson has the following rights and obligations:

• Convening meetings of the Members’ Council if necessary or upon request of a general partner;
• Directing and coordinating the activities of the Members’ Council, ensuring decision-making on important matters of the company, including:
• Development orientation and business strategy of the company;
• Amendments and supplements to the company’s Charter;
• Admission or expulsion of general partners;
• Decisions on investment projects, loan, and transactions involving major assets;
• Approval of financial statements and profit distribution;
• Decisions on dissolution or filing for bankruptcy of the company.

In addition, the specific rights and obligations of the Chairperson of the Members’ Council may be further detailed in the company’s Charter and internal regulations. 

III. Questions regarding the Chairperson of the Members’ Council of a partnership

1. When may the Chairperson of the Members’ Council convene a Members’ Council meeting?

Pursuant to Clause 1 Article 183 of the Law on Enterprise 2020, the Chairperson of the Members’ Council of a partnership may convene a Members’ Council meeting if it is necessary or upon request of a general partner. 

If the Chairperson fails to convene a meeting as requested by a general partner, such a general partner has the right to convene the meeting independently. This provision ensures that the Members’ Council can promptly consider and resolve important issues of the company, preventing delays adversely affecting business operations.

2. What is the term of office of the Chairperson of the Members’ Council of a partnership?

The Law on Enterprise 2020 does not stipulate a specific term of office for the Chairperson of the Members’ Council of a partnership. Instead, such a matter is usually determined by the company’s Charter.

However, several important points should be noted:

• The Chairperson of the Members’ Council is elected by the general partners (Clause 1 Article 182 of the Law on Enterprise 2020);
• There is no statutory fixed term of office, meaning it may vary depending on the agreement among the general partners.

Removal or replacement of the Chairperson may occur if such a person is no longer a general partner or according to a decision of the Members’ Council.

Accordingly, the term of office of the Chairperson of the Members’ Council of a partnership is not fixed by law but depends on the company’s Charter and the decision of the Members’ Council.

3. May the Chairperson of the Members’ Council of a partnership concurrently serve as the Director or General Director?

Pursuant to Clause 1 Article 182 of the Law on Enterprise 2020, the Members’ Council elects a general partner to act as the Chairperson of the Members’ Council and concurrently as the Director or General Director of the company, unless otherwise stipulated in the company’s Charter. Accordingly, the Chairperson of the Members’ Council of a partnership may concurrently serve as the Director or General Director.

4. In which cases may the Chairperson of the Members’ Council of a partnership be removed?

Currently, the Law on Enterprise 2020 does not contain a separate provision specifically regulating the removal of the Chairperson of the Members’ Council of a partnership. However, particularly Clause 1 Article 185 of the Law on Enterprise 2020, which provides that a general partner’s status shall terminate in the following cases:

• Voluntary withdrawal of capital from the company;
• Death, disappearance, restriction or loss of civil act capacity, or having difficulties in cognition or control of behavior;
• Expulsion from the company;
• Serving a prison sentence or being prohibited by a court from practicing a profession or performing certain work in accordance with law;
• Other cases as stipulated in the company’s Charter.

Accordingly, the removal of the Chairperson of the Members’ Council of a partnership is mainly based on the company’s Charter and provisions relating to the status of general partners under the Law on Enterprise 2020.

IV. Consulting services and implementation of procedures relating to the Chairperson of the Members’ Council of a partnership

In the context of an increasingly complex legal environment, using legal consulting services is an optimal solution to ensure full and proper compliance with legal regulations. Lawyers will provide advice on issues relating to the Chairperson of the Members’ Council of a partnership and propose the most effective solutions for clients.

Ngoc Phu Law Company Limited, with a team of experienced lawyers, is ready to assist clients with all matters relating to the Chairperson of the Members’ Council of a partnership. We are committed to providing effective legal solutions and maximizing the protection of our clients’ legitimate rights and interests.