When determining who is a related person of a non-public joint stock company (JSC), as a routine, one would turn to Article 4.23 of the Enterprise Law 2020. Article 4.23 lists out the related persons of a company. However, Article 167.1 of the Enterprise Law 2020 on related party transactions (RPTs) applicable to JSCs suggests that the list of related persons under Article 4.23 might not be exhaustive.

Article 167.1 reads that: the General Meeting of Shareholders or the Board of Directors approve contract and transactions between the JSC and “the following related persons”:

(a) Shareholders, authorized representatives of shareholders holding more than 10% ordinary shares and their related persons;

(b)  Members of the Board of directors, (general) director and their related persons; and

(c) Enterprises that the members of the Board of directors, supervisory committee, (general) directors, and other managers of the company have an interests and must report to the JSC in accordance with Article 164.2 of the Enterprise Law 2020.

The words “the following related persons” in Article 167.1 imply that the counterparties of JSCs in RPTs as listed in items (a), (b), and (c) above are related persons of JSCs. However, it is not clear if the draftsman of the Enterprise Law 2020 actually intends to expand the scope of related persons of a JSC.

Interestingly, similar Articles of the Enterprise law on RPTs do not refers to the counterparties of companies in RPTs as “related person”:

• Article 162.1 of the Enterprise Law 2014 applicable to JSCs reads that the contracts and transactions between the company and “persons” (“đối tượng” in Vietnamese) require approval of General meeting of shareholders or Board of directors; and

• Article 67.1 of the Enterprise Law 2020 applicable to multi-member limited liability companies (LLC) also refers to the counterparties of a LLC in RPTs as “persons” (“đối tượng” in Vietnamese) not “related persons”.

This post is written by Ha Thanh Phuc and edited by Nguyen Quang Vu.