Requirements on human resources in joint ventures

Question: (A Germany-headquartered transportation company): We want to set up a joint venture with a Vietnamese partner, operating in trade and export.

What does Việt Nam require for members of board of management, establishment of a supervisory board, recruitment of foreign accountants, and dismissal of laborers?  

Answer: (Lawyer NHQuang’s Office, B23 Trung Hòa–Nhân Chính Villa Complex, Thanh Xuân District, Hà Nội)

1. Members of the board of management

Under Article 109 of the Law on Enterprises, the Board of Management shall consist of at least three members and no more than 11. The number of members of the Board of Management residing in Việt Nam is stipulated in the joint venture's Charter. The term of the Board of Management is five years.

Article 110 of the same Law sets criteria and conditions for members of the Board of Management. Accordingly, a member of the Board of Management must have sufficient capacity for civil conduct, fall outside the scope of subjects which are prohibited from business management (as stipulated in this Law) and own at least 5% of ordinary shares of the company or have expertise and experience in business management. 

2. Establishment of a board of supervisors

A joint venture with 11 or more shareholders must establish a Board of supervisors. If the company has less than 11 members, it can decide whether to set up the supervisory board in line with requirements of the Board of Management.

3. Recruitment of foreign accountants in joint ventures

A joint venture can employ a foreign chief accountant and accountants who have accounting certificates recognized by the Vietnamese Ministry of Finance and at least two-year experience (with one year working in Việt Nam).

4. Terminating labor contracts

According to Article 39 of the Labor Code, the joint venture shall not be permitted to terminate unilaterally a labor contract if the employee is suffering from illness or injury caused by a work-related accident or occupational disease, is on annual leave or during pregnancy, maternity or raising a child under 12 months old.

Under Article 41 of the Code, when an employer unilaterally and illegally terminates a labor contract, he must recruit the employee for the position in the signed contract and must pay compensation equal to the amount of wages and wage allowance (if any) for the period the employee was not allowed to work, plus at least two months' wages and wage allowance (if any)./.