Conditions for foreigners to work as directors of Vietnamese company

Many companies in Vietnam invite foreigners to hold the position of company director to promote the market and increase business efficiency. However, in case of foreigners working as directors of Vietnamese companies, certain conditions must be met. In the following article, Viet An Law Firm will answer the conditions for foreigners to be directors of Vietnamese companies.

Legal bases

• Labor Code 2019;
• Enterprise Law 2020;
• Decree No. 152/2020/ND-CP regulating foreign workers working in Vietnam and recruiting and managing Vietnamese workers to work for foreign organizations and individuals in Vietnam, amended and supplemented by Decree 70/2023/ND-CP.

What does “director” mean in Vietnam?

Pursuant to Clause 1, Article 63 of the Enterprise Law 2020 stipulates: “The director or general director of the company is the person who runs the day-to-day business activities of the company, is responsible to the Members’ Council, the company’s president, the board of directors for the exercise of their rights and obligations.”

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 in order to legally work in Vietnam, foreigners must meet the conditions and complete the procedures for applying for a work permit.

Conditions for foreigners to act as directors of Vietnamese companies

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

• Firstly, conditions for residence: foreigners must reside in Vietnam, have a temporary residence card or permanently reside in Vietnam
• Second, civil capacity. Foreigners acting as directors of Vietnamese companies must have full capacity for civil acts and not be subject to enterprise management according to regulations.
• Third, professional qualifications, experience in business administration of the company and other conditions prescribed by the company’s charter..

Conditions on subjects for new foreign workers to work in Vietnam

Pursuant to Clause 1, Article 151 of the 2019 Labor Code, foreign workers need to meet the following conditions to be able to work in Vietnam. As follows:

• Be at least 18 years old and have full civil act capacity;
• Have professional, technical, skilled and work experience; if the company’s charter does not provide otherwise.
• Be in good health as prescribed by the Minister of Health;
• Not being a person who is serving a penalty or has not had his/her criminal record cleared or is being examined for penal liability in accordance with foreign or Vietnamese laws;
• Have a work permit issued by a competent state agency of Vietnam, except for workers working in Vietnam who are not eligible for work permits.
• The term of the labor contract for foreign workers working in Vietnam must not exceed the term of the work permit. When employing foreign workers to work in Vietnam, the two parties may agree to enter into multiple definite-term labor contracts.
• Foreign workers working in Vietnam must comply with Vietnamese labor laws and be protected by Vietnamese law, unless otherwise provided for in treaties to which the Socialist Republic of Vietnam is a contracting party.

Conditions on recruitment of foreign workers to work in Vietnam

Pursuant to Article 152 of the 2019 Labor Code stipulating conditions for recruiting and employing foreign workers to work in Vietnam

• Enterprises, agencies, organizations, individuals and contractors may only recruit foreign workers to work in managerial, executive, expert and technical positions that Vietnamese workers have not yet met according to production and business needs.
• Enterprises, agencies, organizations and individuals, before recruiting foreign workers to work in Vietnam, must explain the demand for labor use and obtain the written approval of competent state agencies.
• Before recruiting and employing foreign workers to work in Vietnam, the contractor must declare in detail the job positions, professional and technical qualifications, working experience, working time that needs to use foreign workers to implement the bidding package and obtain the written approval of the competent state agency.

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

Conditions to become a Director of a Vietnamese company

Pursuant to Article 64 of the 2020 Law on Enterprises stipulating criteria and conditions for working as a director. Accordingly, for foreigners to work as company directors in Vietnam, the following basic conditions must be met:

• Not subject to regulations that do not have the right to establish and manage enterprises in Vietnam:
• Having professional qualifications, experience in business administration of the company and other conditions prescribed by the company’s charter. Pursuant to Decree No. 152/2020/ND-CP amended and supplemented by Decree 70/2023/ND-CP, foreign workers who are executives must meet the following conditions: “Be trained for at least 1 year and have at least 3 years of experience suitable to the job position that the foreign worker plans to work in Vietnam”.
• For state-owned enterprises that are organized and managed in the form of limited liability companies, joint-stock companies and subsidiaries of state-owned enterprises as prescribed, the director or general director must meet the prescribed standards and conditions and must not be a family member of the company manager, Controllers of the company and of the parent company; the representative of the capital portion of the enterprise, the representative of the state capital portion in the company and the parent company.

What are the procedural conditions and application for a work permit for the director position?

In addition to meeting the conditions in terms of content, for foreigners to act as directors of Vietnamese companies, they must also meet the conditions in terms of form. That is, the company must complete the procedures and documents for work permit application for foreigners:

Step 1: Submit an application for a letter approving the demand for employing foreigners at the agency competent to issue a work permit

Pursuant to Point a, Clause 1, Article of Decree No. 70/2023/ND-CP stipulating the determination of the need to employ foreign workers: “At least 15 days before the expected date of employment of foreign workers, the employer (except the contractor) is responsible for determining the demand for foreign workers for each job position that the employee Vietnam has not responded and reported to the Ministry of Labor, War Invalids and Social Affairs or the Department of Labor, War Invalids and Social Affairs where the foreign worker is expected to work”.

Processing time: maximum 10 working days from the date of receipt of the explanatory report, the Ministry of Labor, War Invalids and Social Affairs or the Department of Labor, War Invalids and Social Affairs will respond with approval or disapproval.

Step 2: Submit the application for a work permit to the work permit authority.

A dossier of renewal of a work permit for the title of manager who is a director of the company will include the following documents:

• A written request for a work permit for a foreigner in the prescribed form.
• A written confirmation and proof of being a director includes the following contents: the company’s charter or operation regulations of agencies, organizations or enterprises; enterprise registration certificate or certificate of establishment or establishment decision or other document of equivalent legal validity; Resolutions or decisions on appointment of agencies, organizations or enterprises.
• Written approval on the enterprise’s use of foreign workers issued by a competent authority.
• The decision to appoint foreigners to the position of director.
• Health certificate of examination abroad or hospitals or medical facilities in Vietnam according to regulations of the Ministry of Health (in the last 12 months).
• Vietnamese criminal record card or written confirmation that the foreigner is not a person being examined for criminal liability of a foreign country, valid for no more than 6 months from the date of issue;
• Notarized or certified copy of passport or valid document in place of valid passport as prescribed by law (accompanied by Vietnam Visa valid for work permit).
• 2 color photos (photos submitted no older than 6 months from the time of application).

Note: Documents such as qualifications, work experience, legal background documents, health certificates … issued by foreign agencies must be consular legalized and notarized and certified into Vietnamese.

Above are some conditions for foreigners to be directors of Vietnamese companies that Viet An Law informs to you. If you have any questions about labor relations consulting, corporate law, company establishment, business registration change, please contact Viet An Law for the most effective support.