Vietnamese businesses investing in China — and vice versa — must get used to a corporate governance structure different from the one they know at home. This article compares the board of directors of the two countries based on the laws currently in force: Vietnam’s Enterprise Law 59/2020/QH14, and China’s 2023 Company Law Revision (adopted 29/12/2023, effective 01/7/2024, replacing the 2018 version). Only points verified against reliable sources are presented; no inference is made about which model is “better”.
Vietnam: Enterprise Law 59/2020/QH14
1. Board size. The board of a joint-stock company has 03 to 11 members; the company charter sets the specific number (Clause 1, Article 154 — verified against the full text).
2. Term. A board term does not exceed 05 years; directors may be re-elected for unlimited terms. Independent directors may not serve more than 02 consecutive terms (Clause 2, Article 154 — verified against the full text).
3. LLCs are not required to have a board. A limited liability company’s governance consists of the Members’ Council or the company President, plus the Director/General Director — the law does not mandate a board model as it does for joint-stock companies.
4. Independent directors only required in certain cases. The independent-director requirement applies to public and listed companies under the Securities Law 54/2019/QH14 — ordinary joint-stock companies are not required to have them.
5. Legal representative. A company may have one or more legal representatives; the charter specifies who serves — commonly the Chairman of the board or the Director/General Director. Businesses should check the full text of the Enterprise Law before settling the representation mechanism for their company.
China: 2023 Company Law (effective 01/7/2024)
First point to remember: do not compare against the 2018 Company Law — it was replaced by the 2023 revision effective 01/7/2024. The major new points, verified by two independent research teams:
1. Flexible governance — the biggest change. Small companies or those with few shareholders may dispense with a board of directors (a single director suffices) and may dispense with a supervisory board (one supervisor or none). This is a landmark departure from the previous rigid model, significantly easing compliance for small businesses.
2. Mandatory employee representation in large companies. Companies with 300 or more employees must include employee representatives on the board of directors or the supervisory board (unless the supervisory board already includes employee representatives). This directly affects large FDI enterprises, including many Vietnamese companies investing in China.
3. Expanded legal representative. No longer confined to the chairman or general manager — any director or manager who performs work on the company’s behalf may serve as legal representative; resigning as director/manager simultaneously ends the legal-representative status.
4. LLC board size. An LLC’s board has at least 03 members with no maximum cap (previously capped); small LLCs may flexibly operate with a single director as noted above.
5. Term. Board terms in China are set by the company charter — this article states no specific number of years, as that content has not been fully verified.
Source note: article numbers of China’s Company Law are cited following law-firm analyses; businesses should check the original text before citing specific article numbers in legal filings.
Key comparison table
| Criterion | Vietnam | China (from 01/7/2024) |
|---|---|---|
| Board size | 03–11 (Article 154, Enterprise Law) | LLC: 03 or more, no cap; small LLC may have a single director |
| Term | Max 05 years, unlimited re-election | Set by the charter |
| Supervisory board | Separate, independent model (Supervisory Board) | Small companies may dispense with it |
| Employee representation | Not mandatory | Mandatory at 300+ employees |
| Legal representative | Chairman/Director per the charter | Any director/manager performing company work may serve |
Application notes
This article presents legal differences between the two systems without judging which model is superior. The China-side points are limited to cross-verified content; other law-firm analyses (such as expanded loyalty and diligence duties, or audit committees replacing supervisory boards) lacked sufficient verification and are excluded. Companies operating in both countries should review their charters periodically for compliance with each country’s latest instruments.
Related reading
- Vietnamese Outbound Investment into China: Procedures
- Vietnamese–Chinese Bilingual Labour Contracts: Key Notes
Investing or planning to set up a company in China and need your governance structure reviewed? Reach us via the Contact page of FLAT Law Firm.
The legal content of this article is reviewed by FLAT’s AI Legal Council and submitted to the owner for approval; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.
The information in this article is for reference only and does not constitute legal advice.