Conditions for foreigners to be directors of a company in Vietnam

With the economy increasingly integrating and developing, many companies in Vietnam invite foreigners to hold company director positions to promote the market and increase business efficiency. However, in the case of a foreigner acting as a director of a Vietnamese company, certain conditions must be met. In the article below, Viet An Law will answer the Conditions for foreigners to be directors of a company in Vietnam.

Legal basis

• Labor Code 2019;
• Law on Enterprise 2020;
• Decree No. 152/2020/ND-CP on foreign workers working in Vietnam and recruitment and management of Vietnamese workers working for foreign employers in Vietnam, as amended and supplemented by Decree 70/2023/ND-CP.

What is a director?

Pursuant to Clause 1, Article 63 of the Law on Enterprise 2020 stipulates: “The Director/General Director is the person who manages the company’s everyday business operation and is responsible to the Board of Members for his/her performance.”

A company can have one or more directors depending on the provisions of the company’s charter. Vietnamese companies can hire or appoint foreigners as company directors, but to work legally in Vietnam, foreigners must satisfy the conditions and complete the procedures for applying for a work permit in Vietnam.

Conditions for foreigners to be directors of a company in Vietnam

Director is a title and position in an enterprise, so foreigners working as directors will also be considered foreign workers and shall meet the following conditions:

• The residence conditions: foreigners must reside in Vietnam, and have a temporary residence card or permanent residence card in Vietnam.
• The civilian capacity: Foreigners who serve as directors of Vietnamese companies must have full civil capacity and are not subject to being prohibited from managing businesses under Vietnamese law.
• The company’s professional qualifications, experience in business administration, and other conditions prescribed by the company’s charter.

Subject conditions for new foreign workers to work in Vietnam

Under Clause 1, Article 151 of the Labor Code 2019, foreign workers need to satisfy the following conditions to work in Vietnam. Specifically:

• Be 18 years old or older and have full civil capacity;
• Have professional qualifications, techniques, skills, and work experience; if the company charter has no other provisions.
• Have good health according to the regulations of the Minister of Health;
• Not a person who is serving a sentence or has not had a criminal record erased or is being prosecuted for criminal liability according to foreign or Vietnamese law;
• Have a work permit issued by a competent Vietnamese state agency, except for workers working in Vietnam who are not subject to a work permit.
• The term of the labor contract for foreign workers working in Vietnam must not exceed the term of the Work Permit. When using foreign workers to work in Vietnam, the two parties can agree to enter into multiple, fixed-term labor contracts.
• Foreign workers working in Vietnam must comply with Vietnamese labor laws and be protected by Vietnamese law, otherwise prescribed in international treaties to which Vietnam is a member.

Conditions for recruiting foreign workers to work in Vietnam

Pursuant to Article 152 of the Labor Code 2019 regulating conditions for recruiting and employing foreign workers working in Vietnam:

• Enterprises, agencies, organizations, individuals, and contractors are only allowed to recruit foreign workers to fill management, executive, expert, and technical positions that Vietnamese workers do not meet production and business needs.
• Before recruiting foreign workers to work in Vietnam, businesses, agencies, organizations, and individuals must explain their need for labor and obtain written approval from a competent state agency.
• Contractors, before recruiting and using foreign workers to work in Vietnam, must specifically declare the job positions, professional and technical qualifications, work experience, and working time for which they need to employ workers. abroad to carry out the bidding package and receive written approval from a competent state agency.

Thus, before an enterprise recruits a foreign worker as a company director, it must make a written explanation of its need to use labor to the Department of Labor, Invalids and Social Affairs where the head office of the enterprise is located. In this explanation, the enterprise must prove that the foreign worker holding that director position meets the working conditions and must be approved by a competent state agency.

Conditions to become Director of a Vietnamese company

Pursuant to Article 64 of the Enterprise Law 2020, it stipulates the standards and conditions to become a director. Accordingly, for foreigners to be directors of companies in Vietnam, they must meet the following basic conditions:

• Not subject to regulations and do not have the right to establish and manage businesses in Vietnam.
• Have professional qualifications and experience in business administration of the company and other conditions stipulated by the company charter. Under Decree No. 152/2020/ND-CP, as amended and supplemented by Decree 70/2023/ND-CP, foreign workers who are executive directors must meet the following conditions: “Trained at least 1 year and have at least 3 years of experience suitable for the job position that the foreign worker intends to work in Vietnam”.
• For state-owned enterprises organized and managed in the form of limited liability companies, joint stock companies and subsidiaries of state-owned enterprises according to regulations, the Director or General Director must meet the standards, specified conditions and must not be a person related to the family of the company’s manager, controller of the company and of the parent company; representative of the enterprise’s capital, representative of the state capital at the company and parent company.

Conditions for procedures and application for a work permit for director

In addition to meeting the content conditions, for a foreigner to be a director of a Vietnamese company, he or she must also meet the formal conditions. That is, the company must complete the procedures and application for a work permit as follows:

Step 1: Submit an application for official dispatch approving the need to employ foreigners at the agency competent to issue work permits

Under Point a, Clause 1, Article of Decree No. 70/2023/ND-CP regulating the determination of the need to use foreign workers: “At least 15 days in advance from the expected date of using foreign workers, employers (except contractors) are responsible for determining the need to use foreign workers for each job position that Vietnamese workers cannot meet and reporting to the Ministry or Department of Labor, Invalids and Social Affairs where the foreign worker is expected to work.

The duration of the process is a maximum of 10 working days from the date of receiving the explanation report, the Ministry or the Department of Labor, Invalids and Social Affairs will respond with approval or disapproval (with the specific reason).

Step 2: Apply for a work permit from the competent agency.

The application for a new work permit for the management position of company director will include the following documents:

• Written request for a work permit for foreigners according to the prescribed form.
• Document confirming and proving that he is a director includes the following contents: company charter or operating regulations of agencies, organizations, or enterprises; Enterprise registration certificate or establishment certificate or establishment decision or other documents of equivalent legal value; Resolution or Appointment Decision of agencies, organizations, or enterprises.
• Written approval for the enterprise to use foreign workers issued by the competent authority.
• Decision to appoint foreigners to the position of director.
• Health certificate examined abroad or at a hospital or medical facility in Vietnam according to regulations of the Ministry of Health (in the last 12 months).
• Vietnamese criminal record document or document certifying that the foreigner is not a person being prosecuted for criminal liability by a foreign country, valid for no more than 6 months from the date of issue;
• Notarized or certified copy of passport or valid passport replacement document according to law (attached with valid Vietnamese visa to obtain a work permit).
• 2 color individual photos (photos must be submitted no more than 6 months from the time of application).

Note: Documents such as degrees, work experience, documents confirming criminal records, and health certificates… issued by foreign agencies must be consular legalized and notarized/certified translation into Vietnamese.

Above are some conditions for foreigners to be directors of a company in Vietnam that Viet An Law informs you about. If you have any questions about consulting on labor relations or corporate law, please contact Viet An Law for the most effective support.