When a company falls into dispute — with shareholders, partners, or regulators — the first question is usually: how far does management’s liability reach? This article maps the liability of managers of Vietnamese enterprises (Board of Directors, Director/General Director, Board of Controllers) under the current Enterprise Law (consolidated text 67, effective 01/7/2025), carefully distinguished from the company’s own liability.
The three core duties of managers (Article 165.1)
Managers must exercise their assigned rights and duties honestly, prudently, and to the best of their ability in the lawful interests of the enterprise; must be loyal to the interests of the enterprise and its shareholders/members; and must not use the enterprise’s information, know-how, or business opportunities, nor abuse their position or the enterprise’s assets for self-interest or the benefit of other organizations or individuals. Courts and regulators use this standard to judge conduct when disputes arise.
Liability for breach (Article 165.2–165.3)
A manager breaching these duties bears personal or joint liability: compensating lost benefits, returning to the enterprise benefits obtained through the breach, and paying damages to the company and others. The key point: this is the individual manager’s liability, separate from the company’s liability as a legal person — the two must not be conflated when assessing a case.
Update: personal liability of the legal representative (Article 13.2)
Law 76/2025/QH15 added a significant new rule in Article 13.2: the legal representative bears personal liability for damage caused to the enterprise through breach of their duties. This tightens the accountability of the person at the top in disputes — “signing for the company” no longer means “the company bears it all”.
Joint liability of Board members (Article 153.4)
A Board member who voted for a resolution contrary to law or the charter, causing damage to the company, bears joint liability with the company and must compensate the damage. A member who dissented — with the dissent recorded in the minutes — is exempt. Recording dissent in Board minutes therefore has real protective value.
Disclosing related interests and controlling insider transactions
- Declaring related interests (Article 164): managers must declare their related interests in the company in writing within 07 working days of the interest arising; declarations are kept at the head office.
- Transactions with related persons (Article 167): contracts and transactions between the company and a manager’s related persons must follow the statutory approval process (Board or GMS approval depending on value and counterparty). Non-compliant transactions may be declared void, with the manager liable for damages.
Missing the 07-working-day declaration is a common error that strips managers of their defense when a transaction is later questioned.
Who may sue managers? (Article 166)
Shareholders or groups holding 01% or more of ordinary shares, held continuously for 06 months, may sue in the company’s name for the civil liability of Board members, the Director/General Director, and other managers who breach their duties. This is a vital tool for minority shareholders to protect the company against managerial misconduct.
Board meetings in proper order (Article 157)
Convening procedures, quorum conditions, decision-making, and minutes of Board meetings are governed by Article 157. Procedural breaches — late notices, insufficient attendees — are frequent grounds for disputing the validity of Board resolutions and decisions.
Liability of Controllers / the Board of Controllers (Articles 168–174)
Controllers and the Board of Controllers supervise the Board of Directors and the Director/General Director in managing the company, review financial reports, and recommend corrective measures. Where lax supervision allows damage, Controllers may also face joint liability as prescribed.
Where are disputes with managers resolved?
Under Article 30 of the Civil Procedure Code (consolidated text 99, effective 01/7/2025), disputes between the company and its managers, or among members and managers relating to company operations, are business/commercial disputes within court jurisdiction. The Regional People’s Court hears them at first instance (Art. 35 after Law 85/2025) — including foreign-element cases.
Risks and recommendations
For managers: strictly observe the three core duties (Art. 165.1), declare related interests within 07 working days, and record dissent in minutes when disagreeing with a Board resolution. For shareholders: gather evidence early (minutes, contracts, records) when misconduct surfaces, and note the 01%-for-06-months standing requirement for derivative suits. For companies: build internal rules on approving related-person transactions so insider dealings are controlled before disputes erupt.
FAQs
How far does a manager’s personal liability reach? Compensating lost benefits, returning obtained benefits, and paying damages to the company and others (Art. 165.2–165.3); legal representatives additionally face personal liability under the new Art. 13.2 (Law 76/2025).
Is a dissenting Board member jointly liable for an unlawful resolution? No, if the dissent is recorded in the meeting minutes (Art. 153.4).
How fast must related interests be declared? Within 07 working days of the interest arising (Art. 164).
Can small shareholders sue the Director? Yes — shareholders/groups with 01%+ of ordinary shares held continuously for 06 months may sue in the company’s name (Art. 166).
Is manager liability the same as company liability? No. The company is liable as a legal person; managers bear personal/joint liability for breaching their own duties — the distinction matters in every case assessment.
Sources
- Enterprise Law — consolidated text 67/VBHN-VPQH (Laws 59/2020/QH14, 03/2022/QH15, 76/2025/QH15), effective 01/7/2025: Art. 13 (13.2 — new, Law 76/2025), 153.4, 157, 164, 165, 166, 167, 168–174.
- Civil Procedure Code — consolidated text 99/VBHN-VPQH, effective 01/7/2025: Art. 30, 35.
Contact FLAT Law Firm
If you need an assessment of management liability in a specific dispute, or internal rules on related-person transactions and corporate governance, please contact our lawyers at contact us.
This article provides general legal information and does not replace legal advice for any specific case. Content has been QA-reviewed by the AI Legal Council; it was not reviewed by a human lawyer.