Legal Representatives of Enterprises under Vietnamese Law

1. Concept of an enterprise

“An enterprise is an organization with its own name, assets and transaction office, established or registered for establishment in accordance with the law for business purposes”,under Clause 10, Article 4 of the Law on Enterprises 2020.

2. Who is the legal representative of a juridical person?

Under Articles 134 and 137 of the Civil Code 2015, specifically:

“Article 134. Representation

1. Representation means an individual or juridical person (hereinafter collectively referred to as the representative) establishing and performing civil transactions in the name and for the benefit of another individual or juridical person (hereinafter collectively referred to as the principal).

2. Individuals and juridical persons may establish and perform civil transactions through representatives. An individual may not let another person represent them if the law requires them to personally establish and perform such transactions.

3. Where the law so provides, the representative must have civil legal capacity and civil act capacity appropriate to the civil transaction being established and performed.”

….

Article 137. Legal representatives of juridical persons

1. The legal representative of a juridical person includes:

a) A person designated by the juridical person under its charter;

b) A person authorized to represent under the law;

c) A person appointed by the Court during court proceedings.

2. A juridical person may have multiple legal representatives, and each representative has the right to represent the juridical person under Articles 140 and 141 of this Code.”

It can be seen that:

– Representation means an individual or juridical person (hereinafter collectively referred to as the representative) establishing and performing civil transactions in the name and for the benefit of another individual or juridical person (hereinafter collectively referred to as the principal).

– The legal representative of a juridical person includes: a person designated by the juridical person under its charter; a person authorized to represent under the law; a person appointed by the Court during court proceedings. A juridical person may have multiple legal representatives, and each representative has the right to represent the juridical person as prescribed.

3. Who is the legal representative of an enterprise?

Under Article 12 of the Law on Enterprises 2020 on the legal representative of an enterprise, as follows:

– The legal representative of an enterprise is the individual representing the enterprise in exercising rights and performing obligations arising from the enterprise’s transactions, representing the enterprise as the petitioner in civil matters, plaintiff, defendant, or person with related rights and obligations before arbitration and courts, and exercising other rights and performing other obligations as prescribed by law.

– Limited liability companies and joint stock companies may have one or more legal representatives. The company charter specifies the number, management titles, and rights and obligations of the enterprise’s legal representative. If the company has more than one legal representative, the company charter specifies the rights and obligations of each legal representative. Where the division of rights and obligations of each legal representative is not clearly defined in the company charter, each legal representative of the company is a fully authorized representative of the enterprise vis-a-vis third parties; all legal representatives are jointly liable for damage caused to the enterprise under civil law and other relevant laws.

– The enterprise must ensure that at least one legal representative resides in Vietnam at all times. When only one legal representative residing in Vietnam remains, that person, upon exiting Vietnam, must authorize in writing another individual residing in Vietnam to exercise the rights and perform the obligations of the legal representative. In this case, the legal representative remains liable for the exercise of the authorized rights and performance of the authorized obligations.

– Where the authorization period under Clause 3 of this Article expires and the enterprise’s legal representative has not returned to Vietnam and has no other authorization, the following shall apply:

+ The authorized person continues to exercise the rights and perform the obligations of the legal representative of the private enterprise until the enterprise’s legal representative returns to work at the enterprise;

+ The authorized person continues to exercise the rights and perform the obligations of the legal representative of the limited liability company, joint stock company or partnership until the company’s legal representative returns to work at the company or until the company owner, Members’ Council or Board of Directors decides to appoint another person as the enterprise’s legal representative.

– Except as provided in Clause 6 of this Article, for an enterprise with only one remaining legal representative who is absent from Vietnam for more than 30 days without authorizing another person to exercise the rights and perform the obligations of the enterprise’s legal representative, or who dies, is missing, is under criminal prosecution, is in temporary detention, is serving a prison sentence, is serving an administrative handling measure at a compulsory drug rehabilitation facility or compulsory education facility, has limited or lost civil act capacity, has difficulty in cognition and behavior control, or is banned by the Court from holding positions, practicing or doing certain work, the company owner, Members’ Council or Board of Directors shall appoint another person as the company’s legal representative.

– For a two-member limited liability company, if a member being an individual who is the company’s legal representative dies, is missing, is under criminal prosecution, is in temporary detention, is serving a prison sentence, is serving an administrative handling measure at a compulsory drug rehabilitation facility or compulsory education facility, absconds from the place of residence, has limited or lost civil act capacity, has difficulty in cognition and behavior control, or is banned by the Court from holding positions, practicing or doing certain work, the remaining member automatically becomes the company’s legal representative until a new decision of the Members’ Council on the company’s legal representative is issued.

– Courts and other competent proceeding-conducting authorities have the right to appoint a legal representative to participate in proceedings as prescribed by law.

Based on the above provisions, the main points can be summarized as follows:

– The legal representative of an enterprise is the individual representing the enterprise in exercising rights and performing obligations arising from the enterprise’s transactions, representing the enterprise as the petitioner in civil matters, plaintiff, defendant, or person with related rights and obligations before arbitration and courts, and exercising other rights and performing other obligations as prescribed by law.

– Limited liability companies and joint stock companies may have one or more legal representatives. The company charter specifies the number, management titles, and rights and obligations of the enterprise’s legal representative.

The enterprise must ensure that at least one legal representative resides in Vietnam at all times. When only one legal representative residing in Vietnam remains, that person, upon exiting Vietnam, must authorize in writing another individual residing in Vietnam to exercise the rights and perform the obligations of the legal representative.

4. What are the responsibilities of the enterprise’s legal representative?

Under Article 13 of the Law on Enterprises 2020 on the responsibilities of the enterprise’s legal representative, as follows:

“Article 13. Responsibilities of the enterprise’s legal representative

1. The legal representative of an enterprise has the following responsibilities:

a) Exercise assigned rights and perform assigned obligations honestly, carefully and in the best manner to ensure the lawful interests of the enterprise;

b) Be loyal to the interests of the enterprise; not abuse position and use the enterprise’s information, know-how, business opportunities and other assets for self-interest or to serve the interests of other organizations or individuals;

c) Promptly, fully and accurately notify the enterprise of enterprises which they or their related persons own or in which they hold shares or contributed capital as prescribed by this Law.

2. The legal representative of an enterprise is personally liable for damage to the enterprise caused by violations of the responsibilities prescribed in Clause 1 of this Article.”

Accordingly, the enterprise’s legal representative has the following responsibilities:

– Exercise assigned rights and perform assigned obligations honestly, carefully and in the best manner to ensure the lawful interests of the enterprise;

– Be loyal to the interests of the enterprise; not abuse position and use the enterprise’s information, know-how, business opportunities and other assets for self-interest or to serve the interests of other organizations or individuals;

– Promptly, fully and accurately notify the enterprise of enterprises which they or their related persons own or in which they hold shares or contributed capital as prescribed by this Law. The enterprise’s legal representative is personally liable for damage to the enterprise caused by violations of the prescribed responsibilities.

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