According to information on the website of Duc Giang Chemical Group Corporation (HoSE: DGC), Mr. Dao Huu Huyen is currently the Chairman of the Board of Directors, and Mr. Huyen's son - Mr. Dao Huu Duy Anh - is the General Director.
According to the management report for the first 6 months of 2024, Mr. Dao Huu Huyen (born in 1956) has been Chairman of the Board of Directors since May 2007, while Mr. Dao Huu Duy Anh (born in 1988) has been a member of the Board of Directors since April 2015 and General Director since March 2020.
This is a violation of the provisions of the Enterprise Law 2020, effective from January 1, 2021.
Specifically, Point b, Clause 5, Article 162 of the Law on Enterprises stipulates: for public companies, state-owned companies in which the State holds more than 50% to less than 100% of the charter capital or total voting shares, and subsidiaries of state-owned enterprises, the director or general director must not be a person having a family relationship with the enterprise manager, controller of the company and parent company; representative of state capital, representative of enterprise capital at the company and parent company.
Previously, on December 26, TNG Investment and Trading Joint Stock Company (HNX: TNG) was fined by the Inspectorate of the Department of Planning and Investment of Thai Nguyen province for appointing a general director of the company who has a family relationship with the business manager who is the chairman of the board of directors.
Specifically, TNG appointed Mr. Nguyen Duc Manh as General Director. Mr. Manh is the son of Chairman of the Board of Directors Nguyen Van Thoi. TNG was fined 25 million VND and forced to remove Mr. Nguyen Duc Manh from the position of General Director. The time limit for implementing the remedial measures is 10 days from the date of receipt of this decision (December 26, 2024).
So with similar violations, the question is whether DGC will be punished and Mr. Duy Anh will be forced to resign like TNG?
Will Duc Giang Chemicals be fined?
Sharing with VietNamNet , lawyer Truong Thanh Duc - Director of ANVI Law Firm - said that the appointment of the general director of DGC mentioned above does not violate the provisions of the 2014 Enterprise Law, but violates the provisions of the 2020 Enterprise Law effective from January 1, 2021. This violation must end from the first day of 2021.
According to lawyer Duc, the above violation, from January 1, 2021, will be punished according to the provisions of Point d, Clause 1, Article 34, Decree No. 50/2016/ND-CP dated June 1, 2016 of the Government "Regulations on administrative sanctions for violations in the field of planning and investment" and from January 1, 2022, Decree No. 122/2021/ND-CP dated December 28, 2021 (replacing Decree No. 50/2016/ND-CP).
According to Clause 1, Article 81 of Decree No. 122/2021/ND-CP, for violations occurring from 2021 and earlier that are discovered or considered for a penalty decision from 2022, the provisions of Decree No. 122/2021/ND-CP shall be applied for handling.
Lawyer Truong Thanh Duc said that Article 52 of Decree 122/2021/ND-CP stipulates a fine of 20 to 30 million VND for the act of appointing an unqualified person as a general director. And the remedial measure is: forcing the dismissal of the general director position for a person who is not qualified and eligible to be a general director.
According to the lawyer, if an administrative violation occurs more than 1 year before being discovered, the statute of limitations for punishment has expired. However, in the case of DGC, the statute of limitations has not expired because the violation is still ongoing.
The lawyer noted that a publicly listed company where the father is chairman and the son is general director is easily associated with a family business.
Responding to this issue at the 2023 Annual General Meeting of Shareholders, according to Nhip Song Thi Truong, Chairman of Duc Giang Chemicals Dao Huu Huyen said that the term of the Board of Directors is 2 years. He has discussed with the State Securities Commission, after 2 years when the term ends, he can resign to ensure regulations and let Mr. Duy Anh continue to be the general director.
A representative of ANVI Law Firm said that some types of companies are more strictly restricted in terms of conditions and standards in management and operation, to ensure objectivity, impartiality, and protect the rights of shareholders, especially minority shareholders.
If it is systematic and professional, the company also needs to strictly implement the prohibitions of the law to increase the trust of investors and the public. For example, an individual can own 99% of the shares of a listed company without violating the law (except for some restricted areas such as banking or foreign shareholders in some companies). But the more one person owns, the more the company is dependent on and dominated by a few shareholders, reducing its popularity, professionalism and trustworthiness.
Duc Giang Chemicals has a scale of billions of dollars
Duc Giang Chemicals is famous on the stock market with a very high stock price, soaring in recent years thanks to profits of thousands of billions of dong.
DGC shares are currently priced at VND115,500/share, equivalent to a capital size of more than VND43,800 billion (about USD1.7 billion).
In 2023, DGC reported a profit after tax of VND3,240 billion. In 2022, DGC recorded a record profit after tax of more than VND6,000 billion thanks to the benefit of soaring yellow phosphorus prices.
This company has a huge “money printing machine” called Vietnam Apatite Phosphorus with a revenue of thousands of billions of VND from yellow phosphorus. DGC is the largest yellow phosphorus producer in Vietnam, owning its own ore mine.
By mid-2024, Mr. Dao Huu Huyen held nearly 69.8 million DGC shares, equivalent to 18.38%. In total, Mr. Huyen and related parties held more than 40% of DGC's capital. Of which, Mr. Dao Huu Duy Anh held more than 3%.
Chairman Dao Huu Huyen has assets from stocks worth more than 8,200 billion VND, ranking 10th in the list of richest businessmen on the stock market.
City Auto Joint Stock Company (Ford car distributor) has just passed a resolution approving the resignation of Mr. Tran Lam from the position of General Director "according to personal wishes" from January 3, 2025. Notably, Mr. Tran Lam is the son of Mr. Tran Ngoc Dan, Chairman of the Board of Directors and legal representative of City Auto. He has been the General Director of City Auto for 1 month, from December 3, 2024. |
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