Tiếng Việt
中文The legal representative of an enterprise who abuses their position and exceeds their authority may be sanctioned under the law, depending on the nature and seriousness of the violation.
1. Who is the legal representative of an enterprise?
Under Article 12 of the Law on Enterprises 2020, the legal representative of an enterprise is the individual representing the enterprise in exercising the rights and obligations arising from the enterprise’s transactions, representing the enterprise as a petitioner for settlement of civil matters, plaintiff, defendant, person with related rights and obligations before Arbitration and Courts, and other rights and obligations as prescribed by law.
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A limited liability company and a joint-stock company may have one or more legal representatives. The company charter specifically prescribes the number, managerial titles, and rights and obligations of each legal representative.
2. Liability when exceeding authority
Under Article 13 of the Law on Enterprises 2020 (Clause 2 as amended by Law No. 76/2025/QH15, effective from 01/07/2025), the legal representative has the responsibility to:
- Exercise the assigned rights and 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 their position or title for personal gain or to serve the interests of other organizations or individuals;
- Be personally liable under the law for damage caused to the enterprise by breach of the above responsibilities.
3. Forms of sanction
Depending on the nature and seriousness, a legal representative exceeding their authority may be subject to:
- Civil liability: compensating the enterprise for damage; transactions exceeding authority may be invalidated;
- Administrative liability: administrative penalties under specialized regulations;
- Criminal liability: criminal prosecution where the act constitutes a crime (for example: embezzlement, abuse of trust to appropriate property).
Notes on application
Law No. 76/2025/QH15 has expanded the scope of the legal representative’s personal liability (“under the law”) instead of limiting it to internal liability as before. Enterprises need to clearly define each representative’s authority in the company charter.
Common risks to note
- The company charter does not clearly distinguish the authority among representatives;
- Signing transactions beyond the scope of authorization;
- Failure to promptly detect and prevent abuse of position.
How can ANT Legal help?
ANT Legal assists in reviewing the company charter, defining representatives’ authority, and advising on handling when violations arise. For advice, please contact an ANT Legal lawyer.
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