Time to separate the positions of chairman and general director

This year, when the maximum term of 5 years from the date the Enterprise Law 2020 takes effect expires, enterprises are required to separate the positions of Chairman of the Board of Directors and General Director.

This year, when the maximum term of 5 years from the date the Enterprise Law 2020 takes effect expires, enterprises are required to separate the positions of Chairman of the Board of Directors and General Director.

Recently, when a company was fined for having a father and son as Chairman of the Board of Directors and General Director, businesses began to push for the separation of these two important positions.

At City Auto Joint Stock Company, Mr. Tran Lam, son of Mr. Tran Ngoc Dan, Chairman of the Board of Directors, was elected to the position of General Director on December 3, 2024, but on January 3, 2025, he suddenly resigned for personal reasons.

It is known that Mr. Tran Lam was born in 1983 and is the third largest shareholder at City Auto, owning more than 7.5 million shares, accounting for 8.4% of charter capital.

Previously, in July 2020, Mr. Le Viet Hieu, son of Chairman Le Viet Hai, was elected to the position of General Director of Hoa Binh Construction Group. However, in July 2022, Mr. Le Viet Hieu suddenly resigned from the position of General Director and moved to the position of Permanent Deputy General Director.

Explaining the resignation of Mr. Le Viet Hieu, Hoa Binh Construction said that the Company complied with the provisions of the Enterprise Law 2020 on separating the positions of Chairman of the Board of Directors and General Director.

In fact, there are still companies on the stock exchange that have not separated the two important positions mentioned above, such as the case of Duc Giang Chemical Group Joint Stock Company (code DGC). In which, Mr. Dao Huu Huyen is the Chairman of the Board of Directors, while his son, Dao Huu Duy Anh, holds the position of General Director.

Responding to a question from a reporter from Dau Tu Newspaper about the Chairman and General Director of Duc Giang Chemical Group Joint Stock Company being related persons at the 2023 Annual General Meeting of Shareholders, Mr. Dao Huu Huyen, Chairman of Duc Giang, said that the term of the Board of Directors has 2 years left, when the term ends, he will resign to ensure compliance with regulations.

Similarly, at SSI Securities Corporation (code SSI), Mr. Nguyen Duy Hung is the Chairman of the Board of Directors and his younger brother, Mr. Nguyen Hong Nam, is the General Director. At Century Fiber Corporation (code STK), Ms. Dang My Linh is the Chairman of the Board of Directors and her brother, Dang Trieu Hoa, is the General Director.

It is known that point b, clause 5, Article 162, Law on Enterprises stipulates: "For public companies, the general director must not be a relative of the enterprise manager, controller of the company and parent company; representative of state capital, representative of enterprise capital at the company and parent company".

Article 218 of the Enterprise Law 2020 has transitional provisions regarding the issue of the chairman and general director of a public company being a relative. That is, the subjects are business managers, controllers and authorized representatives who do not meet the standards and conditions specified in Point b, Clause 5, Article 14; Clause 3, Article 64; Clause 3, Article 93; Clause 3, Article 101; Points a, b and c, Clause 3, Article 103; Point d, Clause 1, Article 155; Point b, Clause 5, Article 162 and Clause 2, Article 169 of the Enterprise Law 2020 shall continue to perform their duties until the end of the remaining term.

In addition, the Enterprise Law stipulates that the term of office of a general director of an enterprise shall not exceed 5 years and may be reappointed for an unlimited term.

Thus, 2025 is the year that businesses will be forced to separate the positions of Chairman of the Board of Directors and General Director when the previous appointment term expires.

Many businesses have been separated since the Enterprise Law 2020 took effect.

At Hai An Transport and Stevedoring Joint Stock Company, from June 2018 to June 2023, Mr. Vu Ngoc Son was the Chairman of the Board of Directors and his son Vu Thanh Hai held the position of General Director. However, in June 2023, Mr. Vu Ngoc Son resigned and handed over the position of Chairman of the Board of Directors to Mr. Vu Thanh Hai, and appointed Mr. Nguyen Ngoc Tuan to the position of General Director.

Similarly, at Nam Viet Joint Stock Company, before 2020, Mr. Doan Toi held the positions of Chairman of the Board of Directors and General Director. However, from July 1, 2020 to present, Mr. Doan Toi only holds the position of General Director and the Company appointed Mr. Do Lap Nghiep as Chairman of the Board of Directors.

Regarding the issue of separating the positions of chairman and general director, Mr. Lam Van Van, representative of ECI Capital Investment Fund, said that if this separation is just a formality, it does not have much meaning, but if it actually happens, it will bring many benefits to the enterprise, strengthening the control factor, because the board of directors will control the executive board, thus minimizing risks for the enterprise, especially risks for small shareholders who do not control the enterprise.

Source: https://baodautu.vn/den-thoi-diem-tach-bach-vi-tri-chu-cich-va-tong-giam-doc-d240121.html